Camping World Holdings, Inc. Reports Record First Quarter Revenue and Second Strongest First Quarter Earnings Since Inception

May 03, 2022

LINCOLNSHIRE, IL--(BUSINESS WIRE)-- Camping World Holdings, Inc. (NYSE: CWH) (the “Company” or “CWH”), America’s Recreation Dealer, today reported results for the first quarter ended March 31, 2022.

Marcus Lemonis, Chairman and CEO of Camping World Holdings, Inc. stated, “I am pleased with how the year has started, particularly in light of general macroeconomic conditions. We know how to navigate when things change up or down. I’ve been reminded of the value of our nimbleness and I am very pleased with how our team pivots and adjusts to maximize profitability.”

First Quarter Operating Highlights

  • Revenue was a record $1.7 billion, an increase of $104.6 million, or 6.7%.
  • Gross profit was $560.2 million, an increase of $39.7 million, or 7.6%, and gross margin was 33.7%, an increase of 29 basis points.
  • Net income of $107.3 million included $8.8 million of pre-tax accelerated intangible asset amortization related to brand transitions and an increase of $5.6 million in pre-tax equity-based compensation expense in 2022 due in part to certain management separations. Additionally, $19.0 million of deferred income tax benefits in 2021 contributed to the net income decrease of $40.1 million, or 27.2%.
  • Diluted earnings per share of Class A common stock was $1.02 in 2022 versus $1.40 in 2021, in large part due to the accelerated amortization, equity-based compensation, and 2021 income tax benefits described above. Adjusted earnings per share - diluted (1) of Class A common stock was $1.15 in 2022 versus $1.40 in 2021.
  • Adjusted EBITDA(1) was $182.1 million, a decrease of $7.2 million, or 3.8%.
  • New and used vehicle inventories were $1.8 billion, an increase of $ 938.3 million. This increase was driven by strategic growth of our used vehicle business, an additional 14 locations, and the easing of new vehicle supply chain constraints in our core categories experienced in much of the prior year.
  • On March 29, 2022, the Company paid our regular quarterly dividend of $0.625 per share of Class A common stock, or $2.50 per share on an annualized basis.

________________________

(1) Adjusted earnings per share – diluted and adjusted EBITDA 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.

Stock Repurchase Program

During the three months ended March 31, 2022, the Company repurchased 2,592,524 shares of Class A common stock under its stock repurchase program for approximately $79.8 million, including commissions paid, at a weighted average price per share of $30.76, which is recorded as treasury stock on the consolidated balance sheets. As of March 31, 2022, the remaining approved amount for repurchases of Class A common stock under the stock repurchase program was approximately $120.2 million and the program expires on December 31, 2025. Between March 31, 2021 and March 31, 2022, total common units in CWGS, LLC, including those held by CWH and the non-controlling interest, decreased 5.4 million to 83.7 million.

Earnings Conference Call and Webcast Information

A conference call to discuss the Company’s first quarter 2022 financial results is scheduled for May 4, 2022, at 7:30 am Central Time. Investors and analysts can participate on the conference call by dialing 1-877-425-9470 (international callers please dial 1-201-389-0878) and using conference ID# 13729203. 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 March 31, 2022 and December 31, 2021, the Company owned 49.8% and 51.2%, respectively, 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 first quarter ended March 31, 2022 to our financial results from the first quarter ended March 31, 2021.

About Camping World Holdings, Inc.

Camping World Holdings, Inc., headquartered in Lincolnshire, IL, (together with its subsidiaries) is America’s largest retailer of RVs and related products and services. Our vision is to build a long-term legacy business that makes RVing fun and easy, and our Camping World and Good Sam brands have been serving RV consumers since 1966. We strive to build long-term value for our customers, employees, and shareholders 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 programs and services uniquely enables us to connect with our customers as stewards of the RV enthusiast community and the RV lifestyle. With over 185 locations in 42 states, Camping World has grown to become prime destinations for everything RV.

For more information, please visit http://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 trends and our business plans and goals, including statements regarding the strength of our business, our long-term plan, potential stock repurchases, future dividend payments and our future financial results. 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 COVID-19 pandemic, which has had, and could have in the future, certain negative impacts on our business; risks related to the cybersecurity incident announced in February 2022; our ability to execute and achieve the expected benefits of our 2019 Strategic Shift; the availability of financing to us and our customers; fuel shortages or high prices for fuel; the success of our manufacturers; general economic conditions in our markets; changes in consumer preferences; competition in our industry; risks related to acquisitions 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; our reliance on six fulfillment and distribution centers; natural disasters, including epidemic outbreaks; risks associated with selling goods manufactured abroad; our dependence on our relationships with third party suppliers and lending institutions; our ability to retain senior executives and attract and retain other qualified employees; risks associated with leasing substantial amounts of space; 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; 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 filed for the year ended December 31, 2021 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.

In addition, this press release references projected annualized dividend payments. Future declarations of quarterly dividends 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 CWGS Enterprises, LLC, its business prospects and other factors that Camping World’s Board of Directors may deem relevant.

We intend to use our official Facebook, Twitter, and Instagram accounts, each at the handle @CampingWorld, 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 may be deemed material. Accordingly, investors should subscribe to these accounts, 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.

Camping World Holdings, Inc. and Subsidiaries

Consolidated Statements of Operations (unaudited)

(In Thousands Except Per Share Amounts)

 

Three Months Ended

 

March 31,

 

 

2022

 

 

 

2021

 

Revenue:

 

 

 

Good Sam Services and Plans

$

44,559

 

 

$

40,871

 

RV and Outdoor Retail

 

 

 

New vehicles

 

834,959

 

 

 

821,976

 

Used vehicles

 

403,032

 

 

 

294,257

 

Products, service and other

 

214,973

 

 

 

251,270

 

Finance and insurance, net

 

153,378

 

 

 

138,254

 

Good Sam Club

 

11,495

 

 

 

11,153

 

Subtotal

 

1,617,837

 

 

 

1,516,910

 

Total revenue

 

1,662,396

 

 

 

1,557,781

 

Costs applicable to revenue (exclusive of depreciation and amortization shown separately below):

 

 

 

Good Sam Services and Plans

 

16,703

 

 

 

14,424

 

RV and Outdoor Retail

 

 

 

New vehicles

 

644,370

 

 

 

643,680

 

Used vehicles

 

302,825

 

 

 

223,193

 

Products, service and other

 

136,160

 

 

 

154,146

 

Good Sam Club

 

2,136

 

 

 

1,844

 

Subtotal

 

1,085,491

 

 

 

1,022,863

 

Total costs applicable to revenue

 

1,102,194

 

 

 

1,037,287

 

 

 

 

 

Gross profit:

 

 

 

Good Sam Services and Plans

 

27,856

 

 

 

26,447

 

RV and Outdoor Retail

 

 

 

New vehicles

 

190,589

 

 

 

178,296

 

Used vehicles

 

100,207

 

 

 

71,064

 

Products, service and other

 

78,813

 

 

 

97,124

 

Finance and insurance, net

 

153,378

 

 

 

138,254

 

Good Sam Club

 

9,359

 

 

 

9,309

 

Subtotal

 

532,346

 

 

 

494,047

 

Total gross profit

 

560,202

 

 

 

520,494

 

 

 

 

 

Operating expenses:

 

 

 

Selling, general, and administrative

 

385,315

 

 

 

337,034

 

Depreciation and amortization

 

25,535

 

 

 

12,701

 

Long-lived asset impairment

 

 

 

 

546

 

Lease termination

 

178

 

 

 

1,756

 

Loss (gain) on sale or disposal of assets

 

49

 

 

 

(99

)

Total operating expenses

 

411,077

 

 

 

351,938

 

Income from operations

 

149,125

 

 

 

168,556

 

Other expense:

 

 

 

Floor plan interest expense

 

(6,266

)

 

 

(3,390

)

Other interest expense, net

 

(14,301

)

 

 

(12,223

)

Tax Receivable Agreement liability adjustment

 

 

 

 

(3,520

)

Other (expense) income, net

 

(223

)

 

 

45

 

Total other expense

 

(20,790

)

 

 

(19,088

)

Income before income taxes

 

128,335

 

 

 

149,468

 

Income tax expense

 

(21,036

)

 

 

(2,043

)

Net income

 

107,299

 

 

 

147,425

 

Less: net income attributable to non-controlling interests

 

(62,569

)

 

 

(85,103

)

Net income attributable to Camping World Holdings, Inc.

$

44,730

 

 

$

62,322

 

 

 

 

 

Earnings per share of Class A common stock:

 

 

 

Basic

$

1.03

 

 

$

1.43

 

Diluted

$

1.02

 

 

$

1.40

 

Weighted average shares of Class A common stock outstanding:

 

 

 

Basic

 

43,553

 

 

 

43,584

 

Diluted

 

44,215

 

 

 

90,238

 

Camping World Holdings, Inc.

Supplemental Data

 

 

Three Months Ended March 31,

 

Increase

 

 

Percent

 

 

 

2022

 

 

 

2021

 

 

(decrease)

 

 

Change

Unit sales

 

 

 

 

 

 

 

 

 

New vehicles

 

 

19,020

 

 

 

21,433

 

 

 

(2,413

)

 

 

(11.3

%)

Used vehicles

 

 

10,976

 

 

 

10,319

 

 

 

657

 

 

 

6.4

%

Total

 

 

29,996

 

 

 

31,752

 

 

 

(1,756

)

 

 

(5.5

%)

 

 

 

 

 

 

 

 

 

 

Average selling price

 

 

 

 

 

 

 

 

 

New vehicles

 

$

43,899

 

 

$

38,351

 

 

$

5,548

 

 

 

14.5

%

Used vehicles

 

$

36,719

 

 

$

28,516

 

 

$

8,203

 

 

 

28.8

%

 

 

 

 

 

 

 

 

 

 

Same store unit sales(1)

 

 

 

 

 

 

 

 

 

New vehicles

 

 

17,623

 

 

 

21,143

 

 

 

(3,520

)

 

 

(16.6

%)

Used vehicles

 

 

10,249

 

 

 

10,233

 

 

 

16

 

 

 

0.2

%

Total

 

 

27,872

 

 

 

31,376

 

 

 

(3,504

)

 

 

(11.2

%)

 

 

 

 

 

 

 

 

 

 

Same store revenue(1) ($ in 000's)

 

 

 

 

 

 

 

 

 

New vehicles

 

$

777,362

 

 

$

812,450

 

 

$

(35,088

)

 

 

(4.3

%)

Used vehicles

 

 

380,149

 

 

 

292,458

 

 

 

87,691

 

 

 

30.0

%

Products, service and other

 

 

146,523

 

 

 

181,790

 

 

 

(35,267

)

 

 

(19.4

%)

Finance and insurance, net

 

 

143,258

 

 

 

136,713

 

 

 

6,545

 

 

 

4.8

%

Total

 

$

1,447,292

 

 

$

1,423,411

 

 

$

23,881

 

 

 

1.7

%

 

 

 

 

 

 

 

 

 

 

Average gross profit per unit

 

 

 

 

 

 

 

 

 

New vehicles

 

$

10,020

 

 

$

8,319

 

 

$

1,702

 

 

 

20.5

%

Used vehicles

 

$

9,130

 

 

 

6,887

 

 

$

2,243

 

 

 

32.6

%

Finance and insurance, net per vehicle unit

 

$

5,113

 

 

 

4,354

 

 

$

759

 

 

 

17.4

%

Total vehicle front-end yield(2)

 

$

14,808

 

 

 

12,208

 

 

$

2,600

 

 

 

21.3

%

 

 

 

 

 

 

 

 

 

 

Gross margin

 

 

 

 

 

 

 

 

 

Good Sam Services and Plans

 

 

62.5

%

 

 

64.7

%

 

 

(219

)

bps

 

 

New vehicles

 

 

22.8

%

 

 

21.7

%

 

 

114

 

bps

 

 

Used vehicles

 

 

24.9

%

 

 

24.2

%

 

 

71

 

bps

 

 

Products, service and other

 

 

36.7

%

 

 

38.7

%

 

 

(199

)

bps

 

 

Finance and insurance, net

 

 

100.0

%

 

 

100.0

%

 

unch.

bps

 

 

Good Sam Club

 

 

81.4

%

 

 

83.5

%

 

 

(205

)

bps

 

 

Subtotal RV and Outdoor Retail

 

 

32.9

%

 

 

32.6

%

 

 

34

 

bps

 

 

Total gross margin

 

 

33.7

%

 

 

33.4

%

 

 

29

 

bps

 

 

 

 

 

 

 

 

 

 

 

 

Inventories ($ in 000's)

 

 

 

 

 

 

 

 

 

New vehicles

 

$

1,420,136

 

 

$

715,085

 

 

$

705,051

 

 

 

98.6

%

Used vehicles

 

 

423,409

 

 

 

190,176

 

 

 

233,233

 

 

 

122.6

%

Products, parts, accessories and misc.

 

 

308,855

 

 

 

284,203

 

 

 

24,652

 

 

 

8.7

%

Total RV and Outdoor Retail inventories

 

$

2,152,400

 

 

$

1,189,464

 

 

$

962,936

 

 

 

81.0

%

 

 

 

 

 

 

 

 

 

 

Vehicle inventory per location ($ in 000's)

 

 

 

 

 

 

 

 

 

New vehicle inventory per dealer location

 

$

7,934

 

 

$

4,334

 

 

$

3,600

 

 

 

83.1

%

Used vehicle inventory per dealer location

 

$

2,365

 

 

 

1,153

 

 

$

1,213

 

 

 

105.2

%

 

 

 

 

 

 

 

 

 

 

Vehicle inventory turnover(3)

 

 

 

 

 

 

 

 

 

New vehicle inventory turnover

 

 

2.5

 

 

 

3.8

 

 

 

(1.3

)

 

 

(33.6

%)

Used vehicle inventory turnover

 

 

3.4

 

 

 

5.2

 

 

 

(1.8

)

 

 

(35.3

%)

 

 

 

 

 

 

 

 

 

 

Retail locations

 

 

 

 

 

 

 

 

 

RV dealerships

 

 

179

 

 

 

165

 

 

 

14

 

 

 

8.5

%

RV service & retail centers

 

 

10

 

 

 

10

 

 

 

 

 

 

0.0

%

Subtotal

 

 

189

 

 

 

175

 

 

 

14

 

 

 

8.0

%

Other retail stores

 

 

1

 

 

 

1

 

 

 

 

 

 

0.0

%

Total

 

 

190

 

 

 

176

 

 

 

14

 

 

 

8.0

%

 

 

 

 

 

 

 

 

 

 

Other data

 

 

 

 

 

 

 

 

 

Active Customers(4)

 

 

5,464,510

 

 

 

5,488,280

 

 

 

(23,770

)

 

 

(0.4

%)

Good Sam Club members

 

 

2,101,399

 

 

 

2,120,143

 

 

 

(18,744

)

 

 

(0.9

%)

Service bays (5)

 

 

2,538

 

 

 

2,463

 

 

 

75

 

 

 

3.0

%

Finance and insurance gross profit as a % of total vehicle revenue

 

 

12.4

%

 

 

12.4

%

 

 

0

 

bps

 

n/a

 

Same store locations

 

 

170

 

 

 

n/a

 

 

 

n/a

 

 

 

n/a

 

(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 revenue.

(3) Inventory turnover 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) A service bay is a fully constructed bay dedicated to service, installation, and collision offerings.

Camping World Holdings, Inc. and Subsidiaries

Consolidated Balance Sheets (unaudited)

($ in Thousands Except Per Share Amounts)

 

 

March 31,

 

December 31,

 

 

 

2022

 

 

 

2021

 

Assets

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

139,480

 

 

$

267,332

 

Contracts in transit

 

 

135,513

 

 

 

57,741

 

Accounts receivable, net

 

 

116,593

 

 

 

101,644

 

Inventories

 

 

2,152,400

 

 

 

1,792,865

 

Prepaid expenses and other assets

 

 

57,763

 

 

 

64,295

 

Total current assets

 

 

2,601,749

 

 

 

2,283,877

 

Property and equipment, net

 

 

636,500

 

 

 

599,324

 

Operating lease assets

 

 

748,893

 

 

 

750,876

 

Deferred tax assets, net

 

 

185,616

 

 

 

199,321

 

Intangible assets, net

 

 

21,450

 

 

 

30,970

 

Goodwill

 

 

506,954

 

 

 

483,634

 

Other assets

 

 

26,373

 

 

 

24,927

 

Total assets

 

$

4,727,535

 

 

$

4,372,929

 

Liabilities and stockholders' equity

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable

 

$

221,990

 

 

$

136,757

 

Accrued liabilities

 

 

224,995

 

 

 

189,595

 

Deferred revenues

 

 

92,747

 

 

 

95,467

 

Current portion of operating lease liabilities

 

 

63,490

 

 

 

62,217

 

Current portion of finance lease liabilities

 

 

10,393

 

 

 

4,964

 

Current portion of Tax Receivable Agreement liability

 

 

11,322

 

 

 

11,322

 

Current portion of long-term debt

 

 

15,825

 

 

 

15,822

 

Notes payable – floor plan, net

 

 

1,237,208

 

 

 

1,011,345

 

Other current liabilities

 

 

78,369

 

 

 

70,834

 

Total current liabilities

 

 

1,956,339

 

 

 

1,598,323

 

Operating lease liabilities, net of current portion

 

 

770,778

 

 

 

774,889

 

Finance lease liabilities, net of current portion

 

 

72,192

 

 

 

74,752

 

Tax Receivable Agreement liability, net of current portion

 

 

171,476

 

 

 

171,073

 

Revolving line of credit

 

 

20,885

 

 

 

20,885

 

Long-term debt, net of current portion

 

 

1,374,592

 

 

 

1,377,751

 

Deferred revenues

 

 

69,902

 

 

 

69,024

 

Other long-term liabilities

 

 

81,201

 

 

 

52,338

 

Total liabilities

 

 

4,517,365

 

 

 

4,139,035

 

Commitments and contingencies

 

 

 

 

Stockholders' equity:

 

 

 

 

Preferred stock, par value $0.01 per share – 20,000,000 shares authorized; none issued and outstanding as of March 31, 2022 and December 31, 2021

 

 

 

 

 

 

Class A common stock, par value $0.01 per share – 250,000,000 shares authorized; 47,855,259 issued and 41,688,339 outstanding as of March 31, 2022 and 47,805,259 issued and 44,130,956 outstanding as of December 31, 2021

 

 

476

 

 

 

475

 

Class B common stock, par value $0.0001 per share – 75,000,000 shares authorized; 69,066,445 issued as of March 31, 2022 and December 31, 2021; and 41,466,964 outstanding as of March 31, 2022 and December 31, 2021

 

 

4

 

 

 

4

 

Class C common stock, par value $0.0001 per share – one share authorized, issued and outstanding as of March 31, 2022 and December 31, 2021

 

 

 

 

 

 

Additional paid-in capital

 

 

126,071

 

 

 

98,113

 

Treasury stock, at cost; 5,882,748 and 3,390,131 shares as of March 31, 2022 and December 31, 2021, respectively

 

 

(206,098

)

 

 

(130,006

)

Retained earnings

 

 

207,774

 

 

 

189,471

 

Total stockholders' equity attributable to Camping World Holdings, Inc.

 

 

128,227

 

 

 

158,057

 

Non-controlling interests

 

 

81,943

 

 

 

75,837

 

Total stockholders' equity

 

 

210,170

 

 

 

233,894

 

Total liabilities and stockholders' equity

 

$

4,727,535

 

 

$

4,372,929

 

Earnings Per Share

Basic earnings per share of Class A common stock is computed by dividing net income attributable to Camping World Holdings, Inc. by the weighted-average number of shares of Class A common stock outstanding during the period. Diluted earnings per share of Class A common stock is computed by dividing net income 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 per share of Class A common stock (unaudited):

 

 

Three Months Ended March 31,

(In thousands except per share amounts)

 

 

2022

 

 

 

2021

 

Numerator:

 

 

 

 

Net income

 

$

107,299

 

 

$

147,425

 

Less: net income attributable to non-controlling interests

 

 

(62,569

)

 

 

(85,103

)

Net income attributable to Camping World Holdings, Inc. — basic

 

$

44,730

 

 

$

62,322

 

Add: reallocation of net income attributable to non-controlling interests from the assumed dilutive effect of stock options and RSUs

 

 

332

 

 

 

 

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

 

 

 

 

 

63,980

 

Net income attributable to Camping World Holdings, Inc. — diluted

 

$

45,062

 

 

$

126,302

 

Denominator:

 

 

 

 

Weighted-average shares of Class A common stock outstanding — basic

 

 

43,553

 

 

 

43,584

 

Dilutive options to purchase Class A common stock

 

 

88

 

 

 

165

 

Dilutive restricted stock units

 

 

574

 

 

 

955

 

Dilutive common units of CWGS, LLC that are convertible into Class A common stock

 

 

 

 

 

45,534

 

Weighted-average shares of Class A common stock outstanding — diluted

 

 

44,215

 

 

 

90,238

 

 

 

 

 

 

Earnings per share of Class A common stock — basic

 

$

1.03

 

 

$

1.43

 

Earnings per share of Class A common stock — diluted

 

$

1.02

 

 

$

1.40

 

 

 

 

 

 

Weighted-average anti-dilutive securities excluded from the computation of diluted earnings per share of Class A common stock:

 

 

 

 

Restricted stock units

 

 

1,632

 

 

 

1

 

Common units of CWGS, LLC that are convertible into Class A common stock

 

 

42,045

 

 

 

 

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 (“TTM”) Adjusted EBITDA, 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 Financial 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 Financial Measures. In evaluating these Non-GAAP Financial 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 noncash 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, 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 related to the 2019 Strategic Shift, 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 table reconciles EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin, and TTM Adjusted EBITDA to the most directly comparable GAAP financial performance measures, which are net income, net income, net income margin, and net income, respectively (unaudited):

 

 

 

 

 

 

 

Three Months Ended March 31,

($ in thousands)

 

2022

 

2021

EBITDA and Adjusted EBITDA:

 

 

 

 

Net income

 

$

107,299

 

$

147,425

 

Other interest expense, net

 

 

14,301

 

 

12,223

 

Depreciation and amortization

 

 

25,535

 

 

12,701

 

Income tax expense

 

 

21,036

 

 

2,043

 

Subtotal EBITDA

 

 

168,171

 

 

174,392

 

Long-lived asset impairment (a)

 

 

 

 

546

 

Lease termination (b)

 

 

178

 

 

1,756

 

Loss (gain) on sale or disposal of assets, net (c)

 

 

49

 

 

(99

)

Equity-based compensation (d)

 

 

11,674

 

 

6,109

 

Tax Receivable Agreement liability adjustment (e)

 

 

 

 

3,520

 

Restructuring costs (f)

 

 

2,023

 

 

3,067

 

Adjusted EBITDA

 

$

182,095

 

$

189,291

 

 

 

 

 

 

 

 

Three Months Ended March 31,

(as percentage of total revenue)

 

2022

 

2021

Adjusted EBITDA margin:

 

 

 

 

Net income margin

 

6.5%

 

9.5%

Other interest expense, net

 

0.9%

 

0.8%

Depreciation and amortization

 

1.5%

 

0.8%

Income tax expense

 

1.3%

 

0.1%

Subtotal EBITDA margin

 

10.1%

 

11.2%

Long-lived asset impairment (a)

 

 

0.0%

Lease termination (b)

 

0.0%

 

0.1%

Loss (gain) on sale or disposal of assets, net (c)

 

0.0%

 

(0.0%)

Equity-based compensation (d)

 

0.7%

 

0.4%

Tax Receivable Agreement liability adjustment (e)

 

 

0.2%

Restructuring costs (f)

 

0.1%

 

0.2%

Adjusted EBITDA margin

 

11.0%

 

12.2%

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

TTM Ended

 

March 31,

 

December 31,

 

September 30,

 

June 30,

 

March 31,

($ in thousands)

2022

 

 

2021

 

 

2021

 

2021

 

 

2022

 

Adjusted EBITDA:

 

 

 

 

 

 

 

 

 

Net income

$

107,299

 

$

59,266

 

 

$

189,308

 

$

246,076

 

$

601,949

 

Other interest expense, net

 

14,301

 

 

11,650

 

 

 

11,250

 

 

11,789

 

 

48,990

 

Depreciation and amortization

 

25,535

 

 

17,121

 

 

 

23,552

 

 

13,044

 

 

79,252

 

Income tax expense

 

21,036

 

 

8,865

 

 

 

38,869

 

 

42,347

 

 

111,117

 

Subtotal EBITDA

 

168,171

 

 

96,902

 

 

 

262,979

 

 

313,256

 

 

841,308

 

Long-lived asset impairment (a)

 

 

 

1,646

 

 

 

316

 

 

536

 

 

2,498

 

Lease termination (b)

 

178

 

 

126

 

 

 

329

 

 

 

 

633

 

Loss (gain) on sale or disposal of assets, net (c)

 

49

 

 

(583

)

 

 

96

 

 

10

 

 

(428

)

Equity-based compensation (d)

 

11,674

 

 

28,867

 

 

 

6,913

 

 

6,047

 

 

53,501

 

Tax Receivable Agreement liability adjustment (e)

 

 

 

(707

)

 

 

 

 

 

 

(707

)

Restructuring costs (f)

 

2,023

 

 

2,262

 

 

 

17,362

 

 

3,010

 

 

24,657

 

Loss and expense on debt restructure (g)

 

 

 

3,023

 

 

 

24

 

 

10,421

 

 

13,468

 

Adjusted EBITDA

$

182,095

 

$

131,536

 

 

$

288,019

 

$

333,280

 

$

934,930

 

(a)

Represents long-lived asset impairment charges related to the RV and Outdoor Retail segment, which relate to locations affected by the 2019 Strategic Shift.

(b)

Represents the loss on the termination of operating leases, relating primarily to the 2019 Strategic Shift, resulting from lease termination fees and the derecognition of the operating lease assets and liabilities.

(c)

Represents an adjustment to eliminate the losses and gains 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 loss (gain) on remeasurement of the Tax Receivable Agreement primarily due to changes in our blended statutory income tax rate.

(f)

Represents restructuring costs relating to our 2019 Strategic Shift. These restructuring costs include one-time employee termination benefits relating to retail store or distribution center closures/divestitures, incremental inventory reserve charges, and other associated costs. These costs exclude lease termination costs, which are presented separately above (see (b) above).

(g)

Represents the loss and expense incurred on debt restructure and financing expense, which is comprised of $0.4 million in extinguishment of the original issue discount and $1.0 million in extinguishment of capitalized finance costs related to the previous term loan facility, and $12.1 million in legal and other expenses related to the new term loan facility in 2021.

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, 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 related to the 2019 Strategic Shift, 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; earnings per share of Class A common stock – basic, in the case of Adjusted Earnings Per Share – Basic; and earnings per share of Class A common stock – diluted, in the case of the Adjusted Earnings Per Share – Diluted:

 

 

 

 

 

 

 

 

Three Months Ended March 31,

 

(In thousands except per share amounts)

 

 

2022

 

 

 

2021

 

 

Numerator:

 

 

 

 

 

Net income attributable to Camping World Holdings, Inc.

 

$

44,730

 

 

$

62,322

 

 

Adjustments related to basic calculation:

 

 

 

 

 

Long-lived asset impairment (a):

 

 

 

 

 

Gross adjustment

 

 

 

 

 

546

 

 

Income tax expense for above adjustment (b)

 

 

 

 

 

 

 

Lease termination (c):

 

 

 

 

 

Gross adjustment

 

 

178

 

 

 

1,756

 

 

Income tax expense for above adjustment (b)

 

 

 

 

 

(39

)

 

Loss (gain) on sale or disposal of assets (d):

 

 

 

 

 

Gross adjustment

 

 

49

 

 

 

(99

)

 

Income tax expense for above adjustment (b)

 

 

 

 

 

(1

)

 

Equity-based compensation (e):

 

 

 

 

 

Gross adjustment

 

 

11,674

 

 

 

6,109

 

 

Income tax expense for above adjustment (b)

 

 

(1,337

)

 

 

(654

)

 

Tax Receivable Agreement liability adjustment (f):

 

 

 

 

 

Gross adjustment

 

 

 

 

 

3,520

 

 

Income tax expense for above adjustment (b)

 

 

 

 

 

(898

)

 

Restructuring costs (g)

 

 

 

 

 

Gross adjustment

 

 

2,023

 

 

 

3,067

 

 

Income tax expense for above adjustment (b)

 

 

 

 

 

(13

)

 

Adjustment to net income attributable to non-controlling interests resulting from the above adjustments (h)

 

 

(6,827

)

 

 

(5,809

)

 

Adjusted net income attributable to Camping World Holdings, Inc. – basic

 

 

50,490

 

 

 

69,807

 

 

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)

 

 

533

 

 

 

 

 

Income tax on reallocation of net income attributable to non-controlling interests from the dilutive effect of stock options and restricted stock units (j)

 

 

(158

)

 

 

 

 

Reallocation of net income attributable to non-controlling interests from the dilutive exchange of common units in CWGS, LLC (i)

 

 

 

 

 

90,912

 

 

Income tax on reallocation of net income attributable to non-controlling interests from the dilutive exchange of common units in CWGS, LLC (j)

 

 

 

 

 

(21,852

)

 

Assumed income tax expense of combining C-corporations with full or partial valuation allowances with the income of other consolidated entities after the dilutive exchange of common units in CWGS, LLC (k)

 

 

 

 

 

(12,919

)

 

Adjusted net income attributable to Camping World Holdings, Inc. – diluted

 

$

50,865

 

 

$

125,948

 

 

Denominator:

 

 

 

 

 

Weighted-average Class A common shares outstanding – basic

 

 

43,553

 

 

 

43,584

 

 

Adjustments related to diluted calculation:

 

 

 

 

 

Dilutive exchange of common units in CWGS, LLC for shares of Class A common stock (l)

 

 

 

 

 

45,534

 

 

Dilutive options to purchase Class A common stock (l)

 

 

88

 

 

 

165

 

 

Dilutive restricted stock units (l)

 

 

574

 

 

 

955

 

 

Adjusted weighted average Class A common shares outstanding – diluted

 

 

44,215

 

 

 

90,238

 

 

 

 

 

 

 

 

Adjusted earnings per share - basic

 

$

1.16

 

 

$

1.60

 

 

Adjusted earnings per share - diluted

 

$

1.15

 

 

$

1.40

 

 

 

 

 

 

 

 

Anti-dilutive amounts (m):

 

 

 

 

 

Numerator:

 

 

 

 

 

Reallocation of net income attributable to non-controlling interests from the anti-dilutive exchange of common units in CWGS, LLC (i)

 

$

68,863

 

 

$

 

 

Income tax on reallocation of net income attributable to non-controlling interests from the anti-dilutive exchange of common units in CWGS, LLC (j)

 

$

(20,392

)

 

$

 

 

Assumed income tax benefit of combining C-corporations with full or partial valuation allowances with the income of other consolidated entities after the anti-dilutive exchange of common units in CWGS, LLC (k)

 

$

6,348

 

 

$

 

 

Denominator:

 

 

 

 

 

Anti-dilutive exchange of common units in CWGS, LLC for shares of Class A common stock (l)

 

 

42,045

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of per share amounts:

 

 

 

 

 

Earnings per share of Class A common stock - basic

 

$

1.03

 

 

$

1.43

 

 

Non-GAAP Adjustments (n)

 

 

0.13

 

 

 

0.17

 

 

Adjusted earnings per share - basic

 

$

1.16

 

 

$

1.60

 

 

 

 

 

 

 

 

Earnings per share of Class A common stock - diluted

 

$

1.02

 

 

$

1.40

 

 

Non-GAAP Adjustments (n)

 

 

0.13

 

 

 

0.17

 

 

Dilutive exchange of common units in CWGS, LLC for shares of Class A common stock (o)

 

 

 

 

 

(0.17

)

 

Adjusted earnings per share - diluted

 

$

1.15

 

 

$

1.40

 

 

(a)

Represents long-lived asset impairment charges related to the RV and Outdoor Retail segment, which relate to locations affected by the 2019 Strategic Shift.

(b)

Represents the current and deferred income tax expense or benefit effect of the above adjustments, many of which are related to entities with full valuation allowances for which no tax benefit can be currently recognized. This assumption uses an effective tax rate of 25.4% and 25.5% for the adjustments for the 2022 and 2021 periods, respectively, which represents the estimated tax rate that would apply had the above adjustments been included in the determination of our non-GAAP metric.

(c)

Represents the loss on termination of operating leases, relating primarily to the 2019 Strategic Shift, resulting from the 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.

(e)

Represents non-cash equity-based compensation expense relating to employees, directors, and consultants of the Company.

(f)

Represents an adjustment to eliminate the loss on remeasurement of the Tax Receivable Agreement primarily due to changes in our blended statutory income tax rate.

(g)

Represents restructuring costs relating to our 2019 Strategic Shift. These restructuring costs include other associated costs. These costs exclude lease termination costs, which are presented separately above (see (c) above).

(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 49.1% and 51.1% for the three months ended March 31, 2022 and 2021, 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 an effective tax rate of 25.4% and 25.5% for the adjustments for 2022 and 2021 periods, respectively.

(k)

Typically 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. However, for the three months ended March 31, 2021, this adjustment included the reversal of the $14.9 million release of valuation allowance for Camping World, Inc. 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 rate of 25.4% and 25.5% during the 2022 and 2021 periods, respectively, 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 were included in these amounts and the $14.9 million release of valuation allowance during the three months ended March 31, 2021 was considered to be reversed and excluded from adjusted net income attributable to Camping World Holdings, Inc. – diluted for purposes of this calculation.

(l)

Represents the impact to the denominator for stock options, restricted stock units, and/or common units of CWGS, LLC.

(m)

The below amounts have not been considered in our adjusted earnings per share – diluted amounts as the effect of these items are anti-dilutive.

(n)

Represents the per share impact of the Non-GAAP adjustments to net income detailed above (see (a) through (h) above).

(o)

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 exchange of common units in CWGS, LLC for all periods, even when those common units would be anti-dilutive. The relevant numerator and denominator adjustments have been provided under “Anti-dilutive amounts” in the table above (see (m) above).

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 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 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 consolidated financial statements included elsewhere 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 loss and expense on debt restructure, long-lived asset impairment, lease termination costs, gains and losses on sale or disposal of assets, net, equity-based compensation, Tax Receivable Agreement liability, restructuring costs related to the 2019 Strategic Shift, 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.

Investors:
InvestorRelations@campingworld.com
(866) 895-5330

Media Outlets:
Karen Porter
PR-CWGS@CampingWorld.com

Source: Camping World Holdings, Inc.

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