LINCOLNSHIRE, IL--(BUSINESS WIRE)--
Camping World Holdings, Inc. (NYSE: CWH) (“Camping World,” “CWH,”
“Company,” “we,” “us” or “our”) today reported results for the third
quarter ended September 30, 2018.
Third quarter highlights and year-over-year financial comparisons
include:
-
Revenue increased 6.2% to $1.313 billion;
-
Gross profit increased 5.9% to $376.3 million, and gross margin was
flat at 28.7%;
-
Income from operations, net income and diluted earnings per share of
Class A common stock were $83.9 million, $47.9 million, and $0.38,
respectively, and included $5.8 million of pre-opening store costs
associated with the Gander Outdoors store openings;
-
Adjusted EBITDA(1) decreased 17.0% to $100.1 million;
-
The number of Active Customers and Good Sam Club members reached
all-time high levels of 4.5 million and 2.0 million, respectively; and
-
At September 30, 2018, the Company operated a total of 227 unique
locations.
(1) Adjusted EBITDA is a non-GAAP measure. For a
reconciliation of this non-GAAP measure to the most directly comparable
GAAP measure, see the “Non-GAAP Financial Measures” section later in
this press release.
Marcus A. Lemonis, Chairman and Chief Executive Officer, stated, “We
have spent the last 15 years building a unique business that combines a
comprehensive portfolio of RV products and services with iconic industry
brands, a large customer database, leading size and scale, a core of
high-margin recurring revenue products and services, a variable cost
structure, and a capital efficient model. In a highly fragmented
industry that is primarily comprised of smaller independent operators,
we believe we have a strategic operating advantage. No RV dealer in the
industry has more combined resources, experience and scale than Camping
World, and our model was designed with the goal navigating through the
various ups and downs of the industry and delivering long-term
profitable growth. At a time of excess channel inventory, rising input
costs, rising interest rates, volatility in the stock market and
uncertainty around the broader economy, we aggressively managed our RV
inventory levels, controlled SG&A expenses, stayed disciplined on our
pricing, and focused on margins and cash flow. This allowed us to
generate more than $100 million of adjusted EBITDA in the third quarter
and put us in an opportunistic buying position over the next several
months.”
Change in Segment Reporting
During the quarter ended September 30, 2018, the Company’s board of
directors appointed Brent Moody, formerly the Chief Operating and Legal
Officer, as President of the Company. In this new role, the Company
determined that Mr. Moody now performs the role of chief operating
decision maker together with the Chief Executive Officer. Additionally,
responsibilities of certain members of senior management of the Company
were realigned to maximize the contributions of the Company’s recent
acquisitions of Retail businesses. As a result of these changes, the
Company has determined that its reportable segments have changed. The
Company’s new reportable segments have been identified based on various
commonalities amongst the Company’s individual product lines, which is
consistent with the Company’s operating structure and associated
management structure and management evaluates the performance of and
allocates resources to these segments based on segment revenues and
segment profit. The segment reporting for prior comparative periods has
been restated to conform to the current period presentation.
The Company previously had two reportable segments: (i) Consumer
Services and Plans; and (ii) Retail. Following the realignment, the
Company now has three reportable segments: (i) Consumer Services and
Plans, (ii) Dealership, and (iii) Retail. The Company’s Consumer
Services and Plans segment remains the same as prior periods and
primarily derives revenue from the sale of emergency roadside
assistance; property and casualty insurance programs; travel assist
programs; extended vehicle service contracts; co-branded credit cards;
vehicle financing and refinancing; club memberships; and publications
and directories. The Company has separated the prior Retail segment into
two distinct segments: Dealership and Retail. The Company’s Dealership
segment primarily derives revenue from the sale of new and used RVs; RV
parts, services and other items; and finance, insurance, and protection
products. The Company’s Retail segment primarily derives revenue from
the sale of products, parts, and services for RVs and the sale of
merchandise, supplies, and services for outdoor activities such as
camping, hunting, fishing, skiing, snowboarding, bicycling,
skateboarding, and marine and watersports. Corporate and other is
comprised of the corporate operations of the Company.
The reportable segments identified above are the business activities of
the Company for which discrete financial information is available and
for which operating results are regularly reviewed by the Company’s
chief operating decision maker to allocate resources and assess
performance. The Company’s chief operating decision maker is a group
comprised of the Chief Executive Officer and the President.
Third Quarter 2018 Results
Consolidated Results
-
Revenue increased 6.2% to $1.313 billion.
-
Gross profit increased 5.9% to $376.3 million and gross margin was
flat at 28.7%.
-
Income from operations, net income and diluted earnings per share of
Class A common stock were $83.9 million, $47.9 million, and $0.38,
respectively, and included $5.8 million of pre-opening store costs
associated with the Gander Outdoors store openings.
-
Adjusted EBITDA(1) decreased 17.0% to $100.1 million
-
The number of Active Customers and Good Sam Club members reached
all-time high levels of 4.5 million and 2.0 million, respectively
-
At September 30, 2018, the Company operated a total of 227 unique
locations, which included 136 dealership locations, 129 Camping World
RV products, parts and services locations (including 115 co-located
with a dealership), 60 Gander Outdoors locations (including 5
co-located with a dealership), and 22 other retail locations.
(1) Adjusted EBITDA is a non-GAAP measure. For a
reconciliation of this non-GAAP measure to the most directly comparable
GAAP measure, see the “Non-GAAP Financial Measures” section later in
this press release.
Consumer Services and Plans
-
Revenue(2) increased 12.7% to $52.0 million
-
Gross profit(2) increased 17.1% to $30.5 million and gross
margin(2) increased 219 basis points to 58.7%
-
The number of participants across our Consumer Service and Plans
offerings increased 8.5% to 3.0 million
-
The Company added 95,876 Good Sam Club members in the third quarter
2018 and membership reached an all-time-high of more than 2.0 million
members, an increase of 12.8% from the third quarter 2017
Dealership
-
Revenue(2) increased 0.7% to $1.076 billion
-
Gross profit(2) decreased 1.5% to $277.8 million and gross
margin(2) decreased 59 basis points to 25.8%
-
Vehicle units sold increased 2.3% to 28,288 units
-
New vehicle units sold increased 2.1% to 19,512 units
-
Used vehicles units sold increased 2.6% to 8,776 units
-
Average selling price per unit sold decreased 2.8% to $31,641
-
New vehicles decreased 4.3% to $35,738 per unit
-
Used vehicles increased 2.9% to $22,534 per unit
-
New travel trailer units sold as a percentage of total new units sold
increased 193 basis points to 67.2%, contributing to the decrease in
average selling price per vehicle
-
Same store unit volume of new vehicles decreased 4.5%, with towables
down 1.5% and motorized down 19.6%
-
Gross profit per vehicle sold including finance and insurance
decreased 5.1% to $8,581
-
Finance and insurance revenue as a percentage of total vehicle revenue
increased 103 basis points to 12.2%
-
New vehicle inventory per dealership decreased 12.2% to $6.7 million
from September 30, 2017.
-
New motorized unit inventory per dealership decreased 38.1%
-
New towable unit inventory per dealership decreased 1.8%
Retail
-
Revenue(2) increased 52.6% to $184.5 million.
-
Gross profit(2) increased 44.4% to $67.9 million and gross
margin(2) decreased 209 basis points to 36.8%.
-
Retail same store sales decreased 10.1% across the same store base of
116 Camping World RV products, parts and services stores.
-
At September 30, 2018, there were 129 Camping World RV products, parts
and services locations, 60 Gander Outdoors locations, and 22 other
retail locations.
-
The Company closed one Gander Outdoors location in the third quarter.
(2) Revenue, gross profit and gross margin are after
elimination of inter-segment revenues.
Select Balance Sheet and Cash Flow Items
The Company's working capital and cash and cash equivalents on September
30, 2018 were $594.5 million and $125.4 million, respectively. Total
inventories increased 24.8% to $1.50 billion on a year-over-year basis,
primarily from the new Dealership locations acquired or opened,
partially offset by lower per store inventories at the Dealerships. On a
year-over-year basis from September 30, 2017, new vehicle inventory
decreased 1.3% to $912.6 million and new vehicle inventory per
dealership decreased 12.2% to $6.7 million. Retail segment inventory was
$453.2 million on September 30, 2018 versus $167.1 million on September
30, 2017 and included $253.9 million of inventory related to the Gander
stores. At September 30, 2018, the Company had $24.4 million of
borrowings under its revolving line of credit as part of its Floor Plan
Facility, $1.2 billion of term loans outstanding under the Senior
Secured Credit Facilities, and $734.0 million of floor plan notes
payable under the Floor Plan Facility.
Earnings Conference Call and Webcast Information
A conference call to discuss the Company’s third quarter fiscal 2018
financial results is scheduled for today, November 6, 2018, at 4:30 p.m.
Eastern Time. Investors and analysts can participate on the conference
call by dialing 800-263-0877 or (646) 828-8143 and using conference ID #
8521808. 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, of the Company and its subsidiaries, that 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. Despite its position as sole managing
member of CWGS, LLC, the Company has a minority economic interest in
CWGS, LLC. As of September 30, 2018, the Company owned 41.8% 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 from the
third quarter of 2018 to the third quarter of 2017.
About Camping World Holdings, Inc.
Camping World Holdings, headquartered in Lincolnshire, Illinois, is the
leading outdoor and camping retailer, offering an extensive assortment
of recreational vehicles for sale, RV and camping gear, RV maintenance
and repair, other outdoor and active sports products, and the industry’s
broadest and deepest range of services, protection plans, products and
resources. Since the Company's founding in 1966, Camping World has grown
to become one of the most well-known destinations for everything RV,
with more than 225 locations in 36 states and a comprehensive e-commerce
platform.
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 our business plans and
goals, including our plans to expand the number of RV sales locations,
including certain Gander Outdoors locations, add RV products, parts, and
services to Gander Outdoors locations, the ability of our model to
deliver long-term growth and sustainability through industry cycles, and
our beliefs regarding our opportunistic position. 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: potential impact of the recently identified material
weaknesses in our internal control over financial reporting; 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, businesses, or product lines or categories, 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; our reliance on seven fulfillment and
distribution centers for our retail, e-commerce and catalog businesses;
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; risks associated with leasing substantial
amounts of space, including 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 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; 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;
disruptions to our information technology systems or breaches of our
network security; feasibility, delays, and difficulties in opening of
Gander Outdoors retail locations; realization of anticipated benefits
and cost savings related to recent acquisitions; potential litigation
relating to products we sell as a result of recent acquisitions,
including firearms and ammunition; and whether we are able to realize
any tax benefits that may arise from our organizational structure and
any redemptions or exchanges of CWGS, LLC common units for cash or stock.
These and other important factors discussed under the caption “Risk
Factors” in our Annual Report on Form 10-K filed for the year ended
December 31, 2017, 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.
Results of Operations
Camping World Holdings, Inc. and Subsidiaries Condensed
Consolidated Statements of Operations (In Thousands Except Per
Share Amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
|
Nine Months Ended September 30,
|
|
|
|
|
2018
|
|
|
|
2017
|
|
|
|
|
2018
|
|
|
|
2017
|
|
|
|
|
(unaudited)
|
|
(unaudited)
|
|
|
(unaudited)
|
|
(unaudited)
|
Revenue:
|
|
|
|
|
|
|
|
|
|
Consumer services and plans
|
$
|
52,044
|
|
|
$
|
46,169
|
|
|
|
$
|
158,600
|
|
|
$
|
144,518
|
|
|
New vehicles
|
|
697,317
|
|
|
|
713,362
|
|
|
|
|
2,084,346
|
|
|
|
1,977,472
|
|
|
Used Vehicles
|
|
197,757
|
|
|
|
187,463
|
|
|
|
|
580,494
|
|
|
|
528,897
|
|
|
Dealership parts, services and other
|
|
71,607
|
|
|
|
66,847
|
|
|
|
|
210,024
|
|
|
|
185,586
|
|
|
Finance and insurance, net
|
|
109,459
|
|
|
|
100,858
|
|
|
|
|
325,368
|
|
|
|
267,207
|
|
|
Retail
|
|
184,543
|
|
|
|
120,903
|
|
|
|
|
460,637
|
|
|
|
292,583
|
|
Total revenue
|
|
1,312,727
|
|
|
|
1,235,602
|
|
|
|
|
3,819,469
|
|
|
|
3,396,263
|
|
|
|
|
|
|
|
|
|
|
|
Costs applicable to revenue (exclusive of depreciation and amortization
shown separately below):
|
|
|
|
|
|
|
|
|
|
Consumer services and plans
|
|
21,499
|
|
|
|
20,085
|
|
|
|
|
65,056
|
|
|
|
61,792
|
|
|
New vehicles
|
|
609,244
|
|
|
|
611,361
|
|
|
|
|
1,810,822
|
|
|
|
1,692,432
|
|
|
Used Vehicles
|
|
152,562
|
|
|
|
140,111
|
|
|
|
|
449,361
|
|
|
|
396,939
|
|
|
Dealership parts, services and other
|
|
36,504
|
|
|
|
34,923
|
|
|
|
|
104,372
|
|
|
|
96,237
|
|
|
Retail
|
|
116,664
|
|
|
|
73,907
|
|
|
|
|
292,664
|
|
|
|
169,139
|
|
Total costs applicable to revenue
|
|
936,473
|
|
|
|
880,387
|
|
|
|
|
2,722,275
|
|
|
|
2,416,539
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit:
|
|
|
|
|
|
|
|
|
|
Consumer services and plans
|
|
30,545
|
|
|
|
26,084
|
|
|
|
|
93,544
|
|
|
|
82,726
|
|
|
New vehicles
|
|
88,073
|
|
|
|
102,001
|
|
|
|
|
273,524
|
|
|
|
285,040
|
|
|
Used Vehicles
|
|
45,195
|
|
|
|
47,352
|
|
|
|
|
131,133
|
|
|
|
131,958
|
|
|
Dealership parts, services and other
|
|
35,103
|
|
|
|
31,924
|
|
|
|
|
105,652
|
|
|
|
89,349
|
|
|
Finance and insurance, net
|
|
109,459
|
|
|
|
100,858
|
|
|
|
|
325,368
|
|
|
|
267,207
|
|
|
Retail
|
|
67,879
|
|
|
|
46,996
|
|
|
|
|
167,973
|
|
|
|
123,444
|
|
Total gross profit
|
|
376,254
|
|
|
|
355,215
|
|
|
|
|
1,097,194
|
|
|
|
979,724
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
Selling, general, and administrative
|
|
278,329
|
|
|
|
236,174
|
|
|
|
|
807,738
|
|
|
|
640,108
|
|
Debt restructure expense
|
|
–
|
|
|
|
–
|
|
|
|
|
380
|
|
|
|
–
|
|
Depreciation and amortization
|
|
13,179
|
|
|
|
8,382
|
|
|
|
|
34,207
|
|
|
|
22,819
|
|
Loss (gain) on sale of assets
|
|
843
|
|
|
|
(5
|
)
|
|
|
|
987
|
|
|
|
(292
|
)
|
Total operating expenses
|
|
292,351
|
|
|
|
244,551
|
|
|
|
|
843,312
|
|
|
|
662,635
|
|
|
|
|
|
|
|
|
|
|
|
Income from operations
|
|
83,903
|
|
|
|
110,664
|
|
|
|
|
253,882
|
|
|
|
317,089
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
Floor plan interest expense
|
|
(7,815
|
)
|
|
|
(7,414
|
)
|
|
|
|
(28,760
|
)
|
|
|
(19,303
|
)
|
Other interest expense, net
|
|
(16,794
|
)
|
|
|
(11,012
|
)
|
|
|
|
(45,740
|
)
|
|
|
(30,973
|
)
|
Loss on debt restructure
|
|
–
|
|
|
|
–
|
|
|
|
|
(1,676
|
)
|
|
|
–
|
|
Tax Receivable Agreement liability adjustment
|
|
–
|
|
|
|
(96
|
)
|
|
|
|
–
|
|
|
|
(79
|
)
|
|
|
|
(24,609
|
)
|
|
|
(18,522
|
)
|
|
|
|
(76,176
|
)
|
|
|
(50,355
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes
|
|
59,294
|
|
|
|
92,142
|
|
|
|
|
177,706
|
|
|
|
266,734
|
|
Income tax expense
|
|
(11,385
|
)
|
|
|
(8,390
|
)
|
|
|
|
(30,706
|
)
|
|
|
(28,266
|
)
|
Net income
|
|
47,909
|
|
|
|
83,752
|
|
|
|
|
147,000
|
|
|
|
238,468
|
|
Less: net income attributable to non-controlling interests
|
|
(33,893
|
)
|
|
|
(64,163
|
)
|
|
|
|
(101,772
|
)
|
|
|
(192,013
|
)
|
Net income attributable to Camping World Holdings, Inc.
|
$
|
14,016
|
|
|
$
|
19,589
|
|
|
|
$
|
45,228
|
|
|
$
|
46,455
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share of Class A common stock:
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
0.38
|
|
|
$
|
0.66
|
|
|
|
$
|
1.22
|
|
|
$
|
1.95
|
|
|
Diluted
|
$
|
0.38
|
|
|
$
|
0.66
|
|
|
|
$
|
1.20
|
|
|
$
|
1.91
|
|
Weighted average shares of Class A common stock outstanding:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
37,018
|
|
|
|
29,522
|
|
|
|
|
36,933
|
|
|
|
23,854
|
|
|
Diluted
|
|
37,055
|
|
|
|
29,522
|
|
|
|
|
88,891
|
|
|
|
85,947
|
|
Results of Operations
Camping World Holdings, Inc. and Subsidiaries Condensed
Consolidated Balance Sheets ($ in Thousands Except Share and
Per Share Amounts)
|
|
|
|
|
|
|
|
|
September 30,
|
|
|
December 31,
|
|
|
2018
|
|
|
2017
|
|
|
(unaudited)
|
|
|
|
Assets
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
125,366
|
|
|
$
|
224,163
|
Contracts in transit
|
|
|
86,733
|
|
|
|
46,227
|
Accounts receivable, net
|
|
|
100,071
|
|
|
|
79,881
|
Inventories
|
|
|
1,495,041
|
|
|
|
1,415,915
|
Prepaid expenses and other assets
|
|
|
36,637
|
|
|
|
32,721
|
Total current assets
|
|
|
1,843,848
|
|
|
|
1,798,907
|
|
|
|
|
|
|
Property and equipment, net
|
|
|
391,579
|
|
|
|
198,022
|
Deferred tax asset, net
|
|
|
145,751
|
|
|
|
155,551
|
Intangibles assets, net
|
|
|
36,410
|
|
|
|
38,707
|
Goodwill
|
|
|
389,087
|
|
|
|
348,387
|
Other assets
|
|
|
20,423
|
|
|
|
21,903
|
Total assets
|
|
$
|
2,827,098
|
|
|
$
|
2,561,477
|
|
|
|
|
|
|
Liabilities and stockholders' equity
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
Accounts payable
|
|
$
|
224,965
|
|
|
$
|
125,616
|
Accrued liabilities
|
|
|
143,792
|
|
|
|
101,929
|
Deferred revenues and gains
|
|
|
92,391
|
|
|
|
77,669
|
Current portion of capital lease obligation
|
|
|
207
|
|
|
|
844
|
Current portion of Tax Receivable Agreement liability
|
|
|
10,404
|
|
|
|
8,093
|
Current portion of long-term debt
|
|
|
11,991
|
|
|
|
9,465
|
Notes payable – floor plan, net
|
|
|
734,038
|
|
|
|
974,043
|
Other current liabilities
|
|
|
31,520
|
|
|
|
22,510
|
Total current liabilities
|
|
|
1,249,308
|
|
|
|
1,320,169
|
|
|
|
|
|
|
Capital lease obligations, net of current portion
|
|
|
–
|
|
|
|
23
|
Right to use liability
|
|
|
10,074
|
|
|
|
10,193
|
Tax Receivable Agreement liability, net of current portion
|
|
|
123,285
|
|
|
|
129,596
|
Revolving line of credit
|
|
|
24,403
|
|
|
|
–
|
Long-term debt, net of current portion
|
|
|
1,149,398
|
|
|
|
907,437
|
Deferred revenues and gains
|
|
|
69,223
|
|
|
|
64,061
|
Other long-term liabilities
|
|
|
62,855
|
|
|
|
39,161
|
Total liabilities
|
|
|
2,688,546
|
|
|
|
2,470,640
|
|
|
|
|
|
|
Commitments and contingencies
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders' equity:
|
|
|
|
|
|
Preferred stock, par value $0.01 per share – 20,000,000 shares
authorized; none issued and outstanding as of September 30, 2018 and
December 31, 2017
|
|
|
–
|
|
|
|
–
|
Class A common stock, par value $0.01 per share – 250,000,000
shares authorized; 37,069,230 issued and 37,056,971 outstanding as
of September 30, 2018 and 36,758,233 issued and 36,749,072,
outstanding as of December 31, 2017
|
|
|
371
|
|
|
|
367
|
Class B common stock, par value $0.0001 per share – 75,000,000
shares authorized; 69,066,445 issued; and 50,706,629 outstanding as
of September 30, 2018 and 50,836,629 outstanding as of December 31,
2017
|
|
|
5
|
|
|
|
5
|
Class C common stock, par value $0.0001 per share – one share
authorized, issued and outstanding as of September 30, 2018 and
December 31, 2017
|
|
|
–
|
|
|
|
–
|
Additional paid-in capital
|
|
|
50,170
|
|
|
|
49,941
|
Retained earnings
|
|
|
35,730
|
|
|
|
6,192
|
Total stockholders' equity attributable to Camping World Holdings,
Inc.
|
|
|
86,276
|
|
|
|
56,505
|
Non-controlling interests
|
|
|
52,276
|
|
|
|
34,332
|
Total stockholders' equity
|
|
|
138,552
|
|
|
|
90,837
|
|
|
|
|
|
|
Total liabilities and stockholders' equity
|
|
$
|
2,827,098
|
|
|
$
|
2,561,477
|
Earnings Per Share
|
|
Three Months Ended September 30,
|
|
|
Nine Months Ended September 30,
|
(In thousands except per share amounts)
|
|
|
2018
|
|
|
|
2017
|
|
|
|
|
2018
|
|
|
|
2017
|
|
Numerator:
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
47,909
|
|
|
$
|
83,752
|
|
|
|
$
|
147,000
|
|
|
$
|
238,468
|
|
Less: net income attributable to non-controlling interests
|
|
|
(33,893
|
)
|
|
|
(64,163
|
)
|
|
|
|
(101,772
|
)
|
|
|
(192,013
|
)
|
Net income attributable to Camping World Holdings, Inc. — basic
|
|
|
14,016
|
|
|
|
19,589
|
|
|
|
|
45,228
|
|
|
|
46,455
|
|
Add: reallocation of net income attributable to non-controlling
interests from the assumed dilutive effect of stock options and RSUs
|
|
|
9
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
Add: Reallocation of net income attributable to non-controlling
interests from the assumed exchange of common units of CWGS, LLC for
Class A common stock
|
|
|
—
|
|
|
|
—
|
|
|
|
|
61,751
|
|
|
|
117,482
|
|
Net income attributable to Camping World Holdings, Inc. — diluted
|
|
$
|
14,025
|
|
|
$
|
19,589
|
|
|
|
$
|
106,979
|
|
|
$
|
163,937
|
|
Denominator:
|
|
|
|
|
|
|
|
|
|
Weighted-average shares of Class A common stock outstanding — basic
|
|
|
37,018
|
|
|
|
29,522
|
|
|
|
|
36,933
|
|
|
|
23,854
|
|
Dilutive options to purchase Class A common stock
|
|
|
—
|
|
|
|
—
|
|
|
|
|
104
|
|
|
|
—
|
|
Dilutive restricted stock units
|
|
|
37
|
|
|
|
—
|
|
|
|
|
103
|
|
|
|
—
|
|
Dilutive common units of CWGS, LLC that are convertible into Class A
common stock
|
|
|
—
|
|
|
|
—
|
|
|
|
|
51,751
|
|
|
|
62,093
|
|
Weighted-average shares of Class A common stock outstanding — diluted
|
|
|
37,055
|
|
|
|
29,522
|
|
|
|
|
88,891
|
|
|
|
85,947
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share of Class A common stock — basic
|
|
$
|
0.38
|
|
|
$
|
0.66
|
|
|
|
$
|
1.22
|
|
|
$
|
1.95
|
|
Earnings per share of Class A common stock — diluted
|
|
$
|
0.38
|
|
|
$
|
0.66
|
|
|
|
$
|
1.20
|
|
|
$
|
1.91
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average anti-dilutive securities excluded from the
computation of diluted earnings per share of Class A common stock:
|
|
|
|
|
|
|
|
|
Stock options to purchase Class A common stock
|
|
|
903
|
|
|
|
1,063
|
|
|
|
|
611
|
|
|
|
1,086
|
|
Restricted stock units
|
|
|
1,639
|
|
|
|
362
|
|
|
|
|
851
|
|
|
|
246
|
|
Common units of CWGS, LLC that are convertible into Class A common
stock
|
|
|
51,708
|
|
|
|
58,930
|
|
|
|
|
—
|
|
|
|
—
|
|
Same Store Sales and Gross Profit Per Vehicle Sold Including Finance
and Insurance
We use certain operating metrics such as same store sales and gross
profit per vehicle sold including finance and insurance. Same store
sales 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. Gross profit per vehicle sold
including finance and insurance is calculated as the sum of new vehicle
gross profit, used vehicle gross profit and finance and insurance gross
profit divided by total new and used vehicles unit sales.
Non-GAAP Financial Measures
To supplement our 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,
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 (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.
These non-GAAP measures are also frequently used by analysts, investors
and other interested parties to evaluate companies in the Company’s
industry. 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, and 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 measures. In evaluating these non-GAAP measures, you
should be aware that in the future the Company may incur expenses that
are the same as or similar to some of those adjusted in this
presentation. 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 before other interest expense, net
(excluding floor plan interest expense), provision for income tax
expense and depreciation and amortization. We define “Adjusted EBITDA”
as EBITDA further 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, loss and expense
on debt restructure, loss (gain) on sale of assets, equity-based
compensation, Tax Receivable Agreement liability adjustment, transaction
expenses related to acquisitions, Gander Outdoors pre-opening costs, 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 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 tables reconcile EBITDA, Adjusted EBITDA, and Adjusted
EBITDA Margin to the most directly comparable GAAP financial performance
measure, which are net income, net income and net income margin,
respectively:
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
September 30,
|
|
September 30,
|
($ in thousands)
|
|
2018
|
|
|
|
2017
|
|
|
|
2018
|
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
Net income
|
$
|
47,909
|
|
|
$
|
83,752
|
|
|
$
|
147,000
|
|
|
$
|
238,468
|
|
Other interest expense, net
|
|
16,794
|
|
|
|
11,012
|
|
|
|
45,740
|
|
|
|
30,973
|
|
Depreciation and amortization
|
|
13,179
|
|
|
|
8,382
|
|
|
|
34,207
|
|
|
|
22,819
|
|
Income tax expense
|
|
11,385
|
|
|
|
8,390
|
|
|
|
30,706
|
|
|
|
28,266
|
|
EBITDA
|
|
89,267
|
|
|
|
111,536
|
|
|
|
257,653
|
|
|
|
320,526
|
|
|
|
|
|
|
|
|
|
Loss and expense on debt restructure (a)
|
|
—
|
|
|
|
—
|
|
|
|
2,056
|
|
|
|
—
|
|
Loss (gain) on sale of assets (b)
|
|
843
|
|
|
|
(5
|
)
|
|
|
987
|
|
|
|
(292
|
)
|
Equity-based compensation (c)
|
|
4,188
|
|
|
|
1,204
|
|
|
|
10,535
|
|
|
|
2,792
|
|
Tax Receivable Agreement liability adjustment (d)
|
|
—
|
|
|
|
96
|
|
|
|
—
|
|
|
|
79
|
|
Acquisitions- transaction expense (e)
|
|
—
|
|
|
|
453
|
|
|
|
—
|
|
|
|
2,553
|
|
Gander Outdoors pre-opening costs (f)
|
|
5,765
|
|
|
|
7,318
|
|
|
|
40,771
|
|
|
|
8,669
|
|
Adjusted EBITDA
|
$
|
100,063
|
|
|
$
|
120,602
|
|
|
$
|
312,002
|
|
|
$
|
334,327
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Year Ended
|
|
September 30,
|
|
September 30,
|
(as percentage of total revenue)
|
|
2018
|
|
|
|
2017
|
|
|
|
2018
|
|
|
|
2017
|
|
EBITDA margin:
|
|
|
|
|
|
|
|
Net income margin
|
|
3.6
|
%
|
|
|
6.8
|
%
|
|
|
3.8
|
%
|
|
|
7.0
|
%
|
Other interest expense, net
|
|
1.3
|
%
|
|
|
0.9
|
%
|
|
|
1.2
|
%
|
|
|
0.9
|
%
|
Depreciation and amortization
|
|
1.0
|
%
|
|
|
0.7
|
%
|
|
|
0.9
|
%
|
|
|
0.7
|
%
|
Income tax expense
|
|
0.9
|
%
|
|
|
0.7
|
%
|
|
|
0.8
|
%
|
|
|
0.8
|
%
|
Subtotal EBITDA margin
|
|
6.8
|
%
|
|
|
9.0
|
%
|
|
|
6.7
|
%
|
|
|
9.4
|
%
|
|
|
|
|
|
|
|
|
Loss and expense on debt restructure (a)
|
|
—
|
|
|
|
–
|
|
|
|
0.1
|
%
|
|
|
–
|
|
Loss (gain) on sale of assets (b)
|
|
0.1
|
%
|
|
|
0.0
|
%
|
|
|
0.0
|
%
|
|
|
(0.0
|
%)
|
Equity-based compensation (c)
|
|
0.3
|
%
|
|
|
0.1
|
%
|
|
|
0.3
|
%
|
|
|
0.1
|
%
|
Tax Receivable Agreement liability adjustment (d)
|
|
—
|
|
|
|
0.0
|
%
|
|
|
–
|
|
|
|
0.0
|
%
|
Acquisitions- transaction expense (e)
|
|
—
|
|
|
|
0.0
|
%
|
|
|
–
|
|
|
|
0.1
|
%
|
Gander Outdoors pre-opening costs (f)
|
|
0.4
|
%
|
|
|
0.6
|
%
|
|
|
1.1
|
%
|
|
|
0.3
|
%
|
Adjusted EBITDA margin
|
|
7.6
|
%
|
|
|
9.8
|
%
|
|
|
8.2
|
%
|
|
|
9.8
|
%
|
(a)
|
|
Represents the loss and expense incurred on debt restructure and
financing expense incurred from the Third Amendment to the Credit
Agreement in 2018.
|
|
|
|
(b)
|
|
Represents an adjustment to eliminate the losses and gains on sales
of various assets.
|
|
|
|
(c)
|
|
Represents non-cash equity-based compensation expense relating to
employees and directors of the Company.
|
|
|
|
(d)
|
|
Represents an adjustment to eliminate the loss on remeasurement of
the Tax Receivable Agreement primarily due to changes in our
effective income tax rate.
|
|
|
|
(e)
|
|
Represent transaction expenses, primarily legal costs, associated
with acquisitions into new or complementary markets, including the
Gander Mountain Acquisition.
|
|
|
|
(f)
|
|
Represents pre-opening store costs associated with the Gander
Outdoors store openings, which is comprised of 1) Gander
Outdoors-specific corporate and retail overhead, 2) distribution
center expenses, and 3) store-level startup expenses. The Company
incurred and expects to continue to incur significant costs related
to the initial rollout of Gander Outdoors locations, which is
expected to be substantially complete by December 31, 2018. Based on
the nature of the acquisition through a bankruptcy auction and the
large quantity of retail locations opened and to be opened in a very
compressed timeframe, the Company does not deem the pre-opening
store costs for the initial rollout of Gander Outdoors locations to
be normal, recurring charges. The Company does not intend to adjust
for pre-opening store costs other than for the initial rollout of
Gander Outdoors.
|
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 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, loss (gain) and expense on debt
restructure, loss (gain) on sale of assets, equity-based compensation,
Tax Receivable Agreement liability adjustment, transaction expenses
related to acquisitions, Gander Outdoors pre-opening costs, other
unusual or one-time items, the income tax expense 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
attributable to non-controlling interests from stock options and
restricted stock units, if dilutive, or the assumed exchange, 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 exchange 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.
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, which is net income
attributable to Camping World Holdings, Inc., in the case of the
Adjusted Net Income non-GAAP financial measures, and weighted-average
shares of Class A common stock outstanding – basic, in the case of the
Adjusted Earnings Per Share non-GAAP financial measures:
|
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
(In thousands except per share amounts)
|
|
|
2018
|
|
|
|
2017
|
|
|
|
2018
|
|
|
|
2017
|
|
Numerator:
|
|
|
|
|
|
|
|
|
Net income attributable to Camping World Holdings, Inc.
|
|
$
|
14,016
|
|
|
$
|
19,589
|
|
|
$
|
45,228
|
|
|
$
|
46,455
|
|
Adjustments related to basic calculation:
|
|
|
|
|
|
|
|
|
|
Loss and expense on debt restructure (a)
|
|
|
—
|
|
|
|
—
|
|
|
|
2,056
|
|
|
|
—
|
|
|
Loss (gain) on sale of assets (b)
|
|
|
843
|
|
|
|
(5
|
)
|
|
|
987
|
|
|
|
(292
|
)
|
|
Equity-based compensation (c)
|
|
|
4,188
|
|
|
|
1,204
|
|
|
|
10,535
|
|
|
|
2,792
|
|
|
Tax Receivable Agreement liability adjustment (d)
|
|
|
—
|
|
|
|
96
|
|
|
|
—
|
|
|
|
79
|
|
|
Acquisitions - transaction expense (e)
|
|
|
—
|
|
|
|
453
|
|
|
|
—
|
|
|
|
2,553
|
|
|
Gander Outdoors pre-opening costs (f)
|
|
|
5,765
|
|
|
|
7,318
|
|
|
|
40,771
|
|
|
|
8,669
|
|
|
Income tax expense (g)
|
|
|
(344
|
)
|
|
|
(140
|
)
|
|
|
(1,111
|
)
|
|
|
(311
|
)
|
|
Adjustment to net income attributable to non-controlling interests
resulting from the above adjustments (h)
|
|
|
(6,291
|
)
|
|
|
(5,974
|
)
|
|
|
(31,725
|
)
|
|
|
(9,461
|
)
|
|
Adjusted net income attributable to Camping World Holdings, Inc. –
basic
|
|
|
18,177
|
|
|
|
22,541
|
|
|
|
66,741
|
|
|
|
50,484
|
|
Adjustments related to diluted calculation:
|
|
|
|
|
|
|
|
|
|
Reallocation of net income attributable to non-controlling interests
from the dilutive effect of stock options and restricted stock units
(i)
|
|
|
17
|
|
|
|
274
|
|
|
|
241
|
|
|
|
—
|
|
|
Income tax on reallocation of net income attributable to
non-controlling interests from the dilutive effect of stock options
and restricted stock units (j)
|
|
|
(6
|
)
|
|
|
(98
|
)
|
|
|
(82
|
)
|
|
|
—
|
|
|
Reallocation of net income attributable to non-controlling interests
from the dilutive exchange of common units in CWGS, LLC (i)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
201,474
|
|
|
Income tax on reallocation of net income attributable to
non-controlling interests from the dilutive exchange of common units
in CWGS, LLC (j)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(75,316
|
)
|
|
Adjusted net income attributable to Camping World Holdings, Inc. –
diluted
|
|
$
|
18,188
|
|
|
$
|
22,717
|
|
|
$
|
66,900
|
|
|
$
|
176,642
|
|
Denominator:
|
|
|
|
|
|
|
|
|
Weighted-average Class A common shares outstanding - diluted
|
|
|
37,018
|
|
|
|
29,522
|
|
|
|
36,933
|
|
|
|
23,854
|
|
Adjustments related to diluted calculation:
|
|
|
|
|
|
|
|
|
|
Dilutive exchange of common units in CWGS, LLC for shares of Class A
common stock (k)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
62,093
|
|
|
Dilutive options to purchase Class A common stock (k)
|
|
|
—
|
|
|
|
219
|
|
|
|
104
|
|
|
|
140
|
|
|
Dilutive restricted stock units (k)
|
|
|
37
|
|
|
|
128
|
|
|
|
103
|
|
|
|
82
|
|
|
Adjusted weighted average Class A common shares outstanding – diluted
|
|
|
37,055
|
|
|
|
29,869
|
|
|
|
37,140
|
|
|
|
86,169
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted earnings per share - basic
|
|
$
|
0.49
|
|
|
$
|
0.76
|
|
|
$
|
1.81
|
|
|
$
|
2.12
|
|
Adjusted earnings per share - diluted
|
|
|
0.49
|
|
|
|
0.76
|
|
|
|
1.80
|
|
|
|
2.05
|
|
|
|
|
|
|
|
|
|
|
|
Anti-dilutive amounts (l):
|
|
|
|
|
|
|
|
|
Numerator:
|
|
|
|
|
|
|
|
|
Reallocation of net income attributable to non-controlling interests
from the anti-dilutive exchange of common units in CWGS, LLC (i)
|
|
$
|
40,167
|
|
|
$
|
69,863
|
|
|
$
|
133,256
|
|
|
$
|
-
|
|
Income tax on reallocation of net income attributable to
non-controlling interests from the anti-dilutive exchange of common
units in CWGS, LLC (j)
|
|
$
|
(13,121
|
)
|
|
$
|
(25,069
|
)
|
|
$
|
(41,488
|
)
|
|
$
|
-
|
|
Assumed income tax benefit (expense) of combining C-corporations
with full valuation allowances with the income of other consolidated
entities after the anti-dilutive exchange of common units in CWGS,
LLC (m)
|
|
$
|
5,623
|
|
|
$
|
-
|
|
|
$
|
14,753
|
|
|
$
|
-
|
|
Denominator:
|
|
|
|
|
|
|
|
|
Anti-dilutive exchange of common units in CWGS, LLC for shares of
Class A common stock (k)
|
|
|
51,708
|
|
|
|
58,930
|
|
|
|
51,751
|
|
|
|
-
|
|
(a)
|
|
|
Represents the loss and expense incurred on debt restructure and
financing expense incurred from the Third Amendment to the Credit
Agreement in 2018.
|
|
|
|
|
(b)
|
|
|
Represents an adjustment to eliminate the losses and gains on sales
of various assets.
|
|
|
|
|
(c)
|
|
|
Represents non-cash equity-based compensation expense relating to
employees and directors of the Company.
|
|
|
|
|
(d)
|
|
|
Represents an adjustment to eliminate the loss on remeasurement of
the Tax Receivable Agreement primarily due to changes in our
effective income tax rate.
|
|
|
|
|
(e)
|
|
|
Represents transaction expenses, primarily legal costs, associated
with acquisitions into new or complementary markets, including the
Gander Mountain Acquisition.
|
|
|
|
|
(f)
|
|
|
Represents pre-opening store costs associated with the Gander
Outdoors store openings, which is comprised of 1) Gander
Outdoors-specific corporate and retail overhead, 2) distribution
center expenses, and 3) store-level startup expenses. As discussed
in Note 11 – Acquisitions to our consolidated financial statements
included in Part I, Item 1 of this Form 10 Q, the Company incurred
and expects to incur significant costs related to the initial
rollout of Gander Outdoors locations, which is expected to be
substantially complete by December 31, 2018. Based on the nature of
the acquisition through a bankruptcy auction and the large quantity
of retail locations to be opened in a very compressed timeframe, the
Company does not deem the pre-opening store costs for the initial
rollout of Gander Outdoors locations to be normal, recurring
charges. The Company does not intend to adjust for pre-opening store
costs other than for the initial rollout of Gander Outdoors.
|
|
|
|
|
(g)
|
|
|
Represents the income tax expense effect of the above adjustments,
the majority of which are related to entities with full valuation
allowances for which no tax benefit can be currently recognized.
This assumption uses effective tax rates of 25.3% and 38.5% for the
adjustments for 2018 and 2017, respectively.
|
|
|
|
|
(h)
|
|
|
Represents the adjustment to net income attributable to
non-controlling interests resulting from the above adjustments that
impact the net income of CWGS, LLC. This adjustment uses the
non-controlling interest’s weighted average ownership of CWGS, LLC
of 58.3% and 66.6% for the three months ended September 30, 2018 and
2017, respectively, and 58.4% and 72.2% for the nine months ended
September 30, 2018 and 2017, respectively.
|
|
|
|
|
(i)
|
|
|
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.
|
|
|
|
|
(j)
|
|
|
Represents the income tax expense effect of the above adjustment for
reallocation of net income attributable to non-controlling
interests. This assumption uses effective tax rates of 25.3% and
38.5% for the adjustments for 2018 and 2017, respectively.
|
|
|
|
|
(k)
|
|
|
Represents the impact to the denominator for stock options,
restricted stock units, and/or common units of CWGS, LLC.
|
|
|
|
|
(l)
|
|
|
The below amounts have not been considered in our adjusted earnings
per share – diluted amounts as the effect of these items are
anti-dilutive.
|
|
|
|
|
(m)
|
|
|
Represents adjustments to reflect the income tax benefit of losses
of consolidated C-corporations that under the Company’s current
equity structure cannot be used against the income of other
consolidated subsidiaries of CWGS, LLC. Subsequent to the exchange
of all common units in CWGS, LLC, the Company believes certain
actions could be taken such that the C-corporations’ losses could
offset income of other consolidated subsidiaries. The adjustment
reflects the income tax benefit assuming effective tax rates of
25.3% during 2018, for the losses experienced by the consolidated
C-corporations for which valuation allowances have been recorded. No
assumed release of valuation allowance established for previous
periods are included in these amounts. Prior to 2018, the Company
did not consider the losses of these C-corporations with valuation
allowances to be significant and the Company did not retroactively
adjust 2017 for these amounts, which were $1.8 million and $2.7
million for the three and nine months ended September 30, 2017.
|
|
|
|
|
Prior to the current period, we had calculated adjusted earnings per
share on a fully exchanged basis regardless of whether the common units
in CWGS, LLC were dilutive. That calculation will no longer be
presented, however, we have provided anti-dilutive amounts in the table
above, when applicable.
Uses and Limitations of Non-GAAP Financial Measures
Management and our board of directors use the Non-GAAP financial
measures:
-
as a measurement of operating performance because they assist us in
comparing the operating performance of our business on a consistent
basis, as they 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.
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
EBITDA to measure our compliance with covenants such as consolidated
leverage ratio. The Non-GAAP financial measures have limitations as
analytical tools, and should not be considered in isolation, or as an
alternative to, or a substitute for net income or other financial
statement data presented in our unaudited condensed consolidated
financial statements included in this press release as indicators of
financial performance. Some of the limitations are:
-
such measures do not reflect our cash expenditures, or future
requirements for capital expenditures or contractual commitments;
-
such measures do not reflect changes in, or cash requirements for, our
working capital needs;
-
some of such measures do not reflect the interest expense, or the cash
requirements necessary to service interest or principal payments on
our debt;
-
some of such measures do not reflect our tax expense or the cash
requirements to pay our taxes;
-
although depreciation and amortization are non-cash charges, the
assets being depreciated and amortized will often have to be replaced
in the future and such measures do not reflect any cash requirements
for such replacements; and
-
other companies in our industry may calculate such measures
differently than we do, limiting their usefulness as comparative
measures.
Due to these limitations, the Non-GAAP financial measures should not be
considered as measures of discretionary cash available to us to invest
in the growth of our business. We compensate for these limitations by
relying primarily on our GAAP results and using these Non-GAAP financial
measures only supplementally. As noted in the tables above, certain of
the Non-GAAP financial measures include adjustments for reallocation of
net income attributable to non-controlling interests, loss and expense
on debt restructure, loss (gain) on sale of assets, equity-based
compensation, Tax Receivable Agreement liability adjustment, transaction
expenses related to acquisitions into new or complementary markets,
Gander Outdoors pre-opening costs, other unusual or one-time items, and
the income tax expense effect described above, as applicable. 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 paragraph, and in
the reconciliation tables above, help management with a measure of our
core operating performance over time by removing items that are not
related to day to day operations.
View source version on businesswire.com:
https://www.businesswire.com/news/home/20181106005953/en/
Investors:
John Rouleau
John.Rouleau@CampingWorld.com
or
Media
Outlets:
Karen Porter
PR-CWGS@CampingWorld.com
Source: Camping World Holdings, Inc.