Camping World Holdings, Inc. (NYSE: CWH) (the “Company”),
America’s largest retailer of recreational vehicles (“RVs”) and
related services and products, today reported results for the
second quarter ended June 30, 2020.
Marcus Lemonis, Chairman and CEO of Camping World Holdings, Inc.
stated, “I am extremely proud of the way our team has evolved their
processes to changing business conditions. Over the past 24 months,
we have made significant investments and enhancements in our
digital capabilities, which has allowed us to quickly pivot and
handle the surge in web traffic, call center volume and lead volume
that we have seen since mid-April for our products and services.
Through our enhanced platform, we have been successful in engaging
new and existing customers in all areas of our business, including
customer service, tech support, RV unit selection and
demonstration, RV service assistance, retail product selection and
installation, and the sale of Good Sam protection plans and
services such as roadside assistance, extended warranties,
insurance and travel assistance. In addition, our team has done an
amazing job at managing our supply chain and replenishing inventory
levels in key products and categories. As a result, we are very
pleased with our year-to-date and quarterly results, and the
prospects for the future.”
Second quarter operating highlights and year-over-year
comparisons:
- Revenue increased 9.0%, or $132.4 million, to $1.607
billion;
- Gross profit increased 19.2% to $488.6 million and gross margin
increased 260 basis points to 30.4%;
- Selling, general and administrative expenses decreased 10.5% to
$271.6 million and selling, general and administrative expenses as
a percentage of gross profit were 56% for the second quarter and
68% for the six-month period ended June 30, 2020;
- Net income increased 210.2% to $163.2 million and net income
margin was 10.2% for the second quarter and 5.7% for the six-month
period ended June 30, 2020;
- Adjusted EBITDA(1) increased 122.5% to $220.7 million and
adjusted EBITDA margin was 13.7% for the second quarter and 9.7%
for the six-month period ended June 30, 2020; and
- Cash and cash equivalents, maintained in our primary cash
accounts, was $227.9 million on June 30, 2020 and we also
maintained an additional $216.9 million of cash in our floorplan
interest offset account on June 30, 2020.
________________ (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.
Earnings Conference Call and Webcast
Information
A conference call to discuss the Company’s second quarter 2020
financial results is scheduled for today, August 5, 2020, at 4:00
p.m. Central Time. Investors and analysts can participate on the
conference call by dialing (800) 289-0438 or (323) 794-2423 and
using conference ID# 2353595. 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. In addition, a live stream of the Company’s
second quarter conference call will be broadcast by Marcus Lemonis
on Facebook and Twitter using Mr. Lemonis’ Facebook and Twitter
accounts and their respective Live streaming features. Mr. Lemonis
also uses his Facebook and Twitter accounts as a means for personal
communications and observations.
Presentation
This press release presents historical results for the periods
presented of 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. Despite
its position as sole managing member of CWGS, LLC, the Company has
a minority economic interest in CWGS, LLC. As of June 30, 2020, the
Company owned 42.3% 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 of the second quarter ended
June 30, 2020 to our financial results from the second quarter
ended June 30, 2019.
About Camping World Holdings,
Inc.
Camping World Holdings, Inc. (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 stockholders by
combining a unique and comprehensive assortment of RV products and
services with a national network of RV dealerships, service centers
and customer support centers along with the industry’s most
extensive online presence and a highly-trained and knowledgeable
team of associates serving our customers, the RV lifestyle, and the
communities in which we operate. We also believe that our Good Sam
organization and family of programs and services uniquely enables
us to connect with our customers as stewards of the RV enthusiast
community and the RV lifestyle.
For more information, please 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 the impact
of COVID-19 on our business, financial results and financial
condition, demand for our products, our liquidity and working
capital, and our beliefs regarding our competitive position and
prospects for the future. 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: risks related to the COVID-19 pandemic and its impact on
our business, financial results and financial condition; 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 revenue; 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 four 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; 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, 2019, as updated in our Quarterly Report on Form
10-Q for the quarter ended June 30, 2020, 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.
Camping World Holdings, Inc. and Subsidiaries Consolidated
Statements of Operations (unaudited) (In Thousands Except Per Share
Amounts)
Three Months Ended June 30,
Six Months Ended June 30,
2020
2019
2020
2019
Revenue: Good Sam Services and Plans
$
44,519
$
44,694
$
91,727
$
91,660
RV and Outdoor Retail New vehicles
898,175
778,870
1,395,492
1,308,447
Used vehicles
274,910
245,749
481,575
425,757
Products, service and other
231,172
264,426
403,795
469,302
Finance and insurance, net
147,318
128,225
239,774
220,116
Good Sam Club
10,651
12,383
21,655
23,834
Subtotal
1,562,226
1,429,653
2,542,291
2,447,456
Total revenue
1,606,745
1,474,347
2,634,018
2,539,116
Costs applicable to revenue (exclusive of depreciation and
amortization shown separately below): Good Sam Services and Plans
15,234
18,746
37,093
39,477
RV and Outdoor Retail New vehicles
752,570
681,399
1,179,012
1,144,443
Used vehicles
208,829
192,681
372,622
335,527
Products, service and other
139,341
168,607
249,610
304,711
Good Sam Club
2,133
2,924
4,380
6,641
Subtotal
1,102,873
1,045,611
1,805,624
1,791,322
Total costs applicable to revenue
1,118,107
1,064,357
1,842,717
1,830,799
Gross profit: Good Sam Services and Plans
29,285
25,948
54,634
52,183
RV and Outdoor Retail New vehicles
145,605
97,471
216,480
164,004
Used vehicles
66,081
53,068
108,953
90,230
Products, service and other
91,831
95,819
154,185
164,591
Finance and insurance, net
147,318
128,225
239,774
220,116
Good Sam Club
8,518
9,459
17,275
17,193
Subtotal
459,353
384,042
736,667
656,134
Total gross profit
488,638
409,990
791,301
708,317
Operating expenses: Selling, general, and administrative
271,591
303,366
539,247
571,431
Depreciation and amortization
12,567
13,946
26,645
27,540
Long-lived asset impairment
–
–
6,569
–
Lease termination
868
–
1,452
–
Loss on disposal of assets
272
2,374
783
2,160
Total operating expenses
285,298
319,686
574,696
601,131
Income from operations
203,340
90,304
216,605
107,186
Other income (expense): Floor plan interest expense
(5,098
)
(11,269
)
(13,702
)
(22,879
)
Other interest expense, net
(14,547
)
(18,211
)
(29,205
)
(35,854
)
Tax Receivable Agreement liability adjustment
–
–
–
8,477
Total other income (expense)
(19,645
)
(29,480
)
(42,907
)
(50,256
)
Income before income taxes
183,695
60,824
173,698
56,930
Income tax expense
(20,473
)
(8,201
)
(24,605
)
(31,114
)
Net income
163,222
52,623
149,093
25,816
Less: net income attributable to non-controlling interests
(105,145
)
(34,606
)
(99,176
)
(27,194
)
Net income attributable to Camping World Holdings, Inc.
$
58,077
$
18,017
$
49,917
$
(1,378
)
Earnings per share of Class A common stock: Basic
$
1.54
$
0.48
$
1.33
$
(0.04
)
Diluted
$
1.54
$
0.46
$
1.32
$
(0.04
)
Weighted average shares of Class A common stock outstanding: Basic
37,635
37,239
37,585
37,217
Diluted
89,689
88,925
89,578
37,217
Camping World Holdings, Inc.
Supplemental Data
Three Months Ended June
30,
Increase
Percent
2020
2019
(decrease)
Change
Unit sales
New vehicles
27,168
22,906
4,262
18.6
%
Used vehicles
11,618
10,809
809
7.5
%
Total
38,786
33,715
5,071
15.0
%
Average selling price
New vehicles
$
33,060
$
34,003
$
(943
)
(2.8
%)
Used vehicles
$
23,662
$
22,736
$
927
4.1
%
Same store unit sales
New vehicles
24,628
21,413
3,215
15.0
%
Used vehicles
10,610
10,365
245
2.4
%
Total
35,238
31,778
3,460
10.9
%
Same store revenue ($ in 000's)
New vehicles
$
818,865
$
736,661
$
82,204
11.2
%
Used vehicles
255,201
238,822
16,379
6.9
%
Products, service and other
151,406
147,713
3,693
2.5
%
Finance and insurance, net
135,844
122,264
13,580
11.1
%
Total
$
1,361,316
$
1,245,460
$
115,856
9.3
%
Average gross profit per unit
New vehicles
$
5,359
$
4,255
$
1,104
25.9
%
Used vehicle
$
5,688
$
4,910
$
778
15.9
%
Finance and insurance, net per vehicle unit
$
3,798
$
3,803
$
(5
)
(0.1
%)
Total vehicle front-end yield(1)
$
9,256
$
8,268
$
988
11.9
%
Gross margin
Good Sam Services and Plans
65.8
%
58.1
%
772
bps
New vehicles
16.2
%
12.5
%
370
bps
Used vehicles
24.0
%
21.6
%
244
bps
Products, service and other
39.7
%
36.2
%
349
bps
Finance and insurance, net
100.0
%
100.0
%
unch.
bps
Good Sam Club
80.0
%
76.4
%
359
bps
Subtotal RV and Outdoor Retail
29.4
%
26.9
%
254
bps
Total gross margin
30.4
%
27.8
%
260
bps
Inventories ($ in 000's)
New vehicles
$
711,164
$
1,000,977
$
(289,813
)
(29.0
%)
Used vehicles
126,687
121,744
4,943
4.1
%
Products, parts, accessories and misc.
214,357
424,756
(210,399
)
(49.5
%)
Total RV and Outdoor Retail inventories
$
1,052,208
$
1,547,477
$
(495,269
)
(32.0
%)
Vehicle inventory per location ($ in
000's)
New vehicle inventory per dealer location
$
4,679
$
6,629
$
(1,950
)
(29.4
%)
Used vehicle inventory per dealer location
$
833
$
806
$
27
3.4
%
Vehicle inventory turnover(2)
New vehicle inventory turnover
2.3
2.1
0.2
9.6
%
Used vehicle inventory turnover
4.7
5.0
(0.3
)
(5.2
%)
Retail locations
RV dealerships
152
151
1
0.7
%
RV service & retail centers
10
14
(4
)
(28.6
%)
Subtotal
162
165
(3
)
(1.8
%)
Other retail stores
2
62
(60
)
(96.8
%)
Total
164
227
(63
)
(27.8
%)
Other data
Active customers(3)
5,220,367
5,251,874
(31,507
)
(0.6
%)
Good Sam Club members
2,067,253
2,177,743
(110,490
)
(5.1
%)
Finance and insurance gross profit as a % of total vehicle revenue
12.6
%
12.5
%
4
n/a
Same store locations
143
n/a
n/a
n/a
(1)
Front end yield is calculated as gross
profit from new vehicles, used vehicles and finance and insurance
(net), divided by combined new and used retail units sold.
(2)
Inventory turnover calculated as vehicle
costs applicable to revenue divided by average vehicle
inventory.
(3)
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.
Camping World Holdings, Inc. Supplemental Data
Six Months Ended June
30,
Increase
Percent
2020
2019
(decrease)
Change
Unit sales New vehicles
41,376
37,922
3,454
9.1
%
Used vehicles
20,300
18,986
1,314
6.9
%
Total
61,676
56,908
4,768
8.4
%
Average selling price New
vehicles
$
33,727
$
34,504
$
(777
)
(2.3
%)
Used vehicles
$
23,723
$
22,425
$
1,298
5.8
%
Same store unit sales
New vehicles
37,382
35,681
1,701
4.8
%
Used vehicles
18,521
18,303
218
1.2
%
Total
55,903
53,984
1,919
3.6
%
Same store revenue ($ in
000's) New vehicles
$
1,269,206
$
1,245,892
$
23,314
1.9
%
Used vehicles
447,863
414,978
32,885
7.9
%
Products, service and other
263,955
261,088
2,867
1.1
%
Finance and insurance, net
220,224
211,166
9,058
4.3
%
Total
$
2,201,248
$
2,133,124
$
68,124
3.2
%
Average gross profit per
unit New vehicles
$
5,232
$
4,325
$
907
21.0
%
Used vehicle
$
5,367
$
4,752
$
615
12.9
%
Finance and insurance, net per vehicle unit
$
3,888
$
3,868
$
20
0.5
%
Total vehicle front-end yield(1)
$
9,164
$
8,335
$
829
9.9
%
Gross margin Good Sam
Services and Plans
59.6
%
56.9
%
263
bps New vehicles
15.5
%
12.5
%
298
bps Used vehicles
22.6
%
21.2
%
143
bps Products, service and other
38.2
%
35.1
%
311
bps Finance and insurance, net
100.0
%
100.0
%
unch.
bps Good Sam Club
79.8
%
72.1
%
764
bps Subtotal RV and Outdoor Retail
29.0
%
26.8
%
217
bps Total gross margin
30.0
%
27.9
%
215
bps
Inventories ($ in
000's) New vehicles
$
711,164
$
1,000,977
$
(289,813
)
(29.0
%)
Used vehicles
126,687
121,744
4,943
4.1
%
Products, parts, accessories and misc.
214,357
424,756
(210,399
)
(49.5
%)
Total RV and Outdoor Retail inventories
$
1,052,208
$
1,547,477
$
(495,269
)
(32.0
%)
Vehicle inventory per location ($
in 000's) New vehicle inventory per dealer location
$
4,679
$
6,629
$
(1,950
)
(29.4
%)
Used vehicle inventory per dealer location
$
833
$
806
$
27
3.4
%
Vehicle inventory
turnover(2) New vehicle inventory turnover
2.3
2.1
0.2
9.6
%
Used vehicle inventory turnover
4.7
5.0
(0.3
)
(5.2
%)
Retail locations RV
dealerships
152
151
1
0.7
%
RV service & retail centers
10
14
(4
)
(28.6
%)
Subtotal
162
165
(3
)
(1.8
%)
Other retail stores
2
62
(60
)
(96.8
%)
Total
164
227
(63
)
(27.8
%)
Other data Active
customers(3)
5,220,367
5,251,874
(31,507
)
(0.6
%)
Good Sam Club members
2,067,253
2,177,743
(110,490
)
(5.1
%)
Finance and insurance gross profit as a % of total vehicle revenue
12.8
%
12.7
%
8
bps
n/a
Same store locations
143
n/a
n/a
n/a
(1)
Front end yield is calculated as gross
profit from new vehicles, used vehicles and finance and insurance
(net), divided by combined new and used retail units sold.
(2)
Inventory turnover calculated as vehicle
costs applicable to revenue divided by average vehicle
inventory.
(3)
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.
Camping World Holdings, Inc. and Subsidiaries Consolidated
Balance Sheets (unaudited) ($ in Thousands Except Per Share
Amounts)
June 30,
December 31,
2020
2019
Assets Current assets: Cash and cash equivalents
$
227,902
$
147,521
Contracts in transit
171,437
44,947
Accounts receivable, net
84,493
81,847
Inventories
1,052,222
1,358,539
Prepaid expenses and other assets
55,974
57,827
Total current assets
1,592,028
1,690,681
Property and equipment, net
325,053
314,374
Operating lease assets
789,539
807,537
Deferred tax asset, net
126,097
129,710
Intangibles assets, net
28,101
29,707
Goodwill
387,049
386,941
Other assets
16,684
17,290
Total assets
$
3,264,551
$
3,376,240
Liabilities and stockholders' deficit Current liabilities:
Accounts payable
$
232,989
$
106,959
Accrued liabilities
184,751
130,316
Deferred revenues
84,286
87,093
Current portion of operating lease liabilities
60,315
58,613
Current portion of Tax Receivable Agreement liability
6,909
6,563
Current portion of long-term debt
15,828
14,085
Notes payable – floor plan, net
470,871
848,027
Other current liabilities
61,391
44,298
Total current liabilities
1,117,340
1,295,954
Operating lease obligations, net of current portion
823,929
843,312
Tax Receivable Agreement liability, net of current portion
101,702
108,228
Revolving line of credit
20,885
40,885
Long-term debt, net of current portion
1,165,227
1,153,551
Deferred revenues
61,928
58,079
Other long-term liabilities
43,479
35,467
Total liabilities
3,334,490
3,535,476
Commitments and contingencies Stockholders' deficit: Preferred
stock, par value $0.01 per share – 20,000,000 shares authorized;
none issued and outstanding as of June 30, 2020 and December 31,
2019
–
–
Class A common stock, par value $0.01 per share – 250,000,000
shares authorized; 38,018,386 issued and 37,773,109 outstanding as
of June 30, 2020 and 37,701,584 issued and 37,488,989 outstanding
as of December 31, 2019
378
375
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 June 30, 2020 and December 31, 2019
5
5
Class C common stock, par value $0.0001 per share – one share
authorized, issued and outstanding as of June 30, 2020 and December
31, 2019
–
–
Additional paid-in capital
52,747
50,152
Retained deficit
(44,754
)
(83,134
)
Total stockholders' equity (deficit) attributable to Camping World
Holdings, Inc.
8,376
(32,602
)
Non-controlling interests
(78,315
)
(126,634
)
Total stockholders' deficit
(69,939
)
(159,236
)
Total liabilities and stockholders' deficit
$
3,264,551
$
3,376,240
Earnings Per Share
Basic earnings per share of Class A common stock is computed by
dividing net income (loss) available 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 (loss)
available 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
June 30,
Six Months Ended
June 30,
(In thousands except per share amounts)
2020
2019
2020
2019
Numerator: Net income
$
163,222
$
52,623
$
149,093
$
25,816
Less: net income attributable to non-controlling interests
(105,145
)
(34,606
)
(99,176
)
(27,194
)
Net income (loss) attributable to Camping World Holdings, Inc. —
basic and diluted
$
58,077
$
18,017
$
49,917
$
(1,378
)
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
79,603
22,565
68,383
—
Net income (loss) attributable to Camping World Holdings, Inc. -
diluted
$
137,680
$
40,582
$
118,300
$
(1,378
)
Denominator: Weighted-average shares of Class A common stock
outstanding — basic and diluted
37,635
37,239
37,585
37,217
Dilutive restricted stock units
434
17
359
—
Dilutive common units of CWGS, LLC that are convertible into Class
A common stock
51,620
51,669
51,634
—
Weighted-average shares of Class A common stock outstanding —
diluted
89,689
88,925
89,578
37,217
Earnings (loss) per share of Class A common stock — basic
$
1.54
$
0.48
$
1.33
$
(0.04
)
Earnings (loss) per share of Class A common stock — diluted
$
1.54
$
0.46
$
1.32
$
(0.04
)
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
715
804
726
831
Restricted stock units
620
1,351
658
1,427
Common units of CWGS, LLC that are convertible into Class A common
stock
—
—
—
51,671
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 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
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, loss
(gain) on disposal of assets, 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, and
Adjusted EBITDA Margin to the most directly comparable GAAP
financial performance measures, which are net income and net income
as a percentage of revenue, respectively (unaudited):
Three Months Ended
Six Months Ended
June 30,
June 30,
($ in thousands)
2020
2019
2020
2019
EBITDA: Net income
$
163,222
$
52,623
$
149,093
$
25,816
Other interest expense, net
14,547
18,211
29,205
35,854
Depreciation and amortization
12,567
13,946
26,645
27,540
Income tax expense
20,473
8,201
24,605
31,114
Subtotal EBITDA
210,809
92,981
229,548
120,324
Long-lived asset impairment (a)
-
-
6,569
-
Lease termination (b)
868
-
1,452
-
Loss on disposal of assets, net (c)
272
2,374
783
2,160
Equity-based compensation (d)
4,182
3,863
7,494
6,579
Tax Receivable Agreement liability adjustment (e)
-
-
-
(8,477
)
Restructuring costs (f)
4,591
-
10,873
-
Adjusted EBITDA
$
220,722
$
99,218
$
256,719
$
120,586
Three Months Ended
Six Months Ended
June 30,
June 30,
(as percentage of total revenue)
2020
2019
2020
2019
EBITDA margin: Net income margin
10.2
%
3.6
%
5.7
%
1.0
%
Other interest expense, net
0.9
%
1.2
%
1.1
%
1.4
%
Depreciation and amortization
0.8
%
0.9
%
1.0
%
1.1
%
Income tax expense
1.3
%
0.6
%
0.9
%
1.2
%
Subtotal EBITDA margin
13.1
%
6.3
%
8.7
%
4.7
%
Long-lived asset impairment (a)
—
—
0.2
%
—
Lease termination (b)
0.1
%
—
0.1
%
—
Loss on disposal of assets, net (c)
0.0
%
0.2
%
0.0
%
0.1
%
Equity-based compensation (d)
0.3
%
0.3
%
0.3
%
0.3
%
Tax Receivable Agreement liability adjustment (e)
—
—
—
(0.3
%)
Restructuring costs (f)
0.3
%
—
0.4
%
—
Adjusted EBITDA margin
13.7
%
6.7
%
9.7
%
4.7
%
(a)
Represents long-lived asset impairment charges related to the RV
and Outdoor Retail segment, which primarily 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, net of lease
termination fees.
(c)
Represents an adjustment to eliminate the losses and gains on
disposal and sales of various assets.
(d)
Represents non-cash equity-based compensation expense relating
to employees and directors of the Company.
(e)
Represents an adjustment to eliminate the loss on remeasurement
of the Tax Receivable Agreement primarily due to changes in our
effective income tax rate and the transfer of certain assets from
GSS Enterprises LLC (“GSS”) to Camping World, Inc (“CW”).
(f)
Represents restructuring costs relating to our 2019 Strategic
Shift. These restructuring costs include one-time employee
termination benefits, incremental inventory reserve charges, and
other associated costs. These costs do not include lease
termination costs, which are presented separately above.
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, loss on
disposal of assets, 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, 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
Six Months Ended
June 30,
June 30,
(In thousands except per share amounts)
2020
2019
2020
2019
Numerator: Net income (loss) attributable to Camping World
Holdings, Inc.
$
58,077
$
18,017
$
49,917
$
(1,378
)
Adjustments related to basic calculation: Long-lived asset
impairment (a): Gross adjustment
—
—
6,569
—
Income tax expense for above adjustment (b)
—
—
(13
)
—
Lease termination (c): Gross adjustment
868
—
1,452
—
Income tax expense for above adjustment (b)
(23
)
—
(23
)
—
Loss on disposal of assets and other expense, net (d): Gross
adjustment
272
2,374
783
2,160
Income tax (expense) benefit for above adjustment (b)
(2
)
(3
)
(3
)
6
Equity-based compensation (e): Gross adjustment
4,182
3,863
7,494
6,579
Income tax expense for above adjustment (b)
(383
)
(348
)
(685
)
(569
)
Tax Receivable Agreement liability adjustment (f): Gross adjustment
—
—
—
(8,477
)
Income tax benefit for above adjustment (b)
—
—
—
2,143
Restructuring costs (g): Gross adjustment
4,591
—
10,873
—
Income tax expense for above adjustment (b)
(23
)
—
(58
)
—
Adjustment to net income attributable to non-controlling interests
resulting from the above adjustments (h)
(5,733
)
(3,624
)
(15,727
)
(5,077
)
Adjusted net income (loss) attributable to Camping World Holdings,
Inc. – basic
61,826
20,279
60,579
(4,613
)
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)
—
7
550
—
Income tax on reallocation of net income attributable to
non-controlling interests from the dilutive effect of stock options
and restricted stock units (j)
—
(2
)
(145
)
—
Reallocation of net income attributable to non-controlling
interests from the dilutive exchange of common units in CWGS, LLC
(i)
110,878
—
—
—
Income tax on reallocation of net income attributable to
non-controlling interests from the dilutive exchange of common
units in CWGS, LLC (j)
(26,132
)
—
—
—
Assumed income tax expense of combining C-corporations with full
valuation allowances with the income of other consolidated entities
after the dilutive exchange of common units in CWGS, LLC (k)
(1,708
)
—
—
—
Adjusted net (loss) income attributable to Camping World Holdings,
Inc. – basic and diluted
$
144,864
$
20,284
$
60,984
$
(4,613
)
Denominator: Weighted-average Class A common shares
outstanding – basic
37,635
37,239
37,585
37,217
Adjustments related to diluted calculation: Dilutive exchange of
common units in CWGS, LLC for shares of Class A common stock (l)
51,620
—
—
—
Dilutive restricted stock units (l)
434
17
359
—
Adjusted weighted average Class A common shares outstanding –
diluted
89,689
37,256
37,944
37,217
Adjusted earnings (loss) per share - basic
$
1.64
$
0.54
$
1.61
$
(0.12
)
Adjusted earnings (loss) per share - diluted
$
1.62
$
0.54
$
1.61
$
(0.12
)
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)
—
$
38,223
$
114,353
$
32,271
Income tax on reallocation of net income attributable to
non-controlling interests from the anti-dilutive exchange of common
units in CWGS, LLC (j)
—
$
(12,524
)
$
(31,720
)
$
(17,089
)
Assumed income tax benefit 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 (k)
—
$
5,457
$
6,435
$
16,024
Denominator: Anti-dilutive exchange of common units in CWGS,
LLC for shares of Class A common stock (l)
—
51,669
51,634
51,671
Anti-dilutive restricted stock units (l)
—
—
—
12
(a)
Represents long-lived asset impairment charges related to the RV
and Outdoor Retail segment, which primarily 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 25.0% and 25.3% for the adjustments for 2020 and 2019,
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 termination of operating leases relating
primarily to the 2019 Strategic Shift, net of lease termination
costs.
(d)
Represents an adjustment to eliminate the gains and losses on
sales of various assets, and losses on the disposal or sale of real
estate at closed RV and Outdoor Retail locations.
(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
effective income tax rate and the transfer of certain assets from
GSS to CW.
(g)
Represents restructuring costs relating to our 2019 Strategic
Shift. These restructuring costs include one-time employee
termination benefits, incremental inventory reserve charges, and
other associated costs. These costs do not include lease
termination costs, which are presented separately 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 57.8% and 58.1% for the three months ended June 30, 2020 and
2019, respectively, and 57.9% and 58.1% for the six months ended
June 30, 2020, 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 25.0% and
25.3% for the adjustments for 2020 and 2019, respectively.
(k)
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 rate of
25.0% and 25.3% during 2020 and 2019, 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 are included in these
amounts.
(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.
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
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 long-lived asset impairment, lease
termination costs, loss on disposal of assets, equity-based
compensation, Tax Receivable Agreement liability adjustment,
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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200805005905/en/
Investors: John Rouleau John.Rouleau@CampingWorld.com
Media Outlets: Karen Porter PR-CWGS@CampingWorld.com
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