UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from _____________ to _______________
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
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As of July 26, 2024, the registrant had
Camping World Holdings, Inc.
Quarterly Report on Form 10-Q
For the Quarterly Period Ended June 30, 2024
TABLE OF CONTENTS
BASIS OF PRESENTATION
As used in this Quarterly Report on Form 10-Q (this “Form 10-Q”), unless the context otherwise requires, references to:
| ● | “we,” “us,” “our,” “CWH,” the “Company,” “Camping World” and similar references refer to Camping World Holdings, Inc., and, unless referenced as “CWH” or otherwise stated, all of its subsidiaries, including CWGS Enterprises, LLC, which we refer to as “CWGS, LLC” and, unless otherwise stated, all of its subsidiaries. |
| ● | "Active Customer" refers to a customer who has transacted with us in any of the eight most recently completed fiscal quarters prior to the date of measurement. Unless otherwise indicated, the date of measurement is June 30, 2024, our most recently completed fiscal quarter. |
| ● | “Annual Report” refers to our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the Securities and Exchange Commission (“SEC”) on February 26, 2024. |
| ● | “Continuing Equity Owners” refers collectively to ML Acquisition, funds controlled by Crestview Partners II GP, L.P. and the Former Profits Unit Holders and each of their permitted transferees that own common units in CWGS, LLC and who may redeem at each of their options their common units for, at our election (determined solely by our independent directors within the meaning of the rules of the New York Stock Exchange who are disinterested), cash or newly-issued shares of our Class A common stock. Direct exchanges of common units in CWGS, LLC by the Continuing Equity Owners with CWH for Class A common stock are included in the reference to “redemptions” in relation to common units in CWGS, LLC. |
| ● | “Crestview” refers to Crestview Advisors, L.L.C., a registered investment adviser to private equity funds, including funds affiliated with Crestview Partners II GP, L.P. |
| ● | “CWGS LLC Agreement” refers to CWGS, LLC’s amended and restated limited liability company agreement, as amended. |
| ● | “Former Profits Unit Holders” refers collectively to Brent L. Moody and Karin L. Bell, who were executive officers through June 30, 2024 (Mr. Moody continues as a member of our Board of Directors); Andris A. Baltins and K. Dillon Schickli, who are members of our Board of Directors, and certain other current and former non-executive employees, former executive officers, and former directors, in each case, who held common units of CWGS, LLC pursuant to CWGS, LLC’s equity incentive plan that was in existence prior to our IPO and received common units of CWGS, LLC in exchange for their profits units in CWGS, LLC. |
| ● | “ML Acquisition” refers to ML Acquisition Company, LLC, a Delaware limited liability company, indirectly controlled by our Chairman and Chief Executive Officer, Marcus A. Lemonis. |
| ● | “ML RV Group” refers to ML RV Group, LLC, a Delaware limited liability company, wholly-owned by our Chairman and Chief Executive Officer, Marcus Lemonis. |
| ● | “RV” refers to recreational vehicles. |
| ● | “Tax Receivable Agreement” refers to the tax receivable agreement that the Company entered into with CWGS, LLC, each of the Continuing Equity Owners and Crestview Partners II GP, L.P. in connection with the Company’s IPO. |
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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements other than statements of historical facts contained in this Form 10-Q may be forward-looking statements. Statements regarding our future results of operations and financial position, business strategy and plans and objectives of management for future operations, including, among others, statements regarding the timeline for and benefits of our restructuring activities; expected new store location openings and closures, including greenfield locations and acquired locations; the impact of COVID-19 on our business; sufficiency of our sources of liquidity and capital and potential need for additional financing; our stock repurchase program; future capital expenditures, including with respect to our expansion of dealerships through acquisition and construction, and debt service obligations; refinancing, retirement or exchange of outstanding debt; expectations regarding industry trends and consumer behavior and growth; expectations regarding the impact of our inventory on our gross margins; industry trends or forecasts predicted by us or third parties; our ability to capture positive industry trends and pursue growth; our product offerings and strategy; inventory management; volatility in sales and potential impact of miscalculating the demand for our products or our product mix; expectations regarding increase of certain expenses in connection with our growth; cost reduction initiatives and expected cost savings; enhancements of wages and benefits of employees; expectations regarding our pending litigation, and our plans related to dividend payments, are forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “anticipate,” “believe,” “can,” “continue,” “could,” “designed,” “estimate,” “expect,” “forecast,” “goal,” “intend,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “target,” “will,” “would” or the negative of these terms or other similar expressions. We have based these forward-looking statements largely on our current expectations and projections about future events and trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives, and financial needs. These forward-looking statements are subject to a number of risks, uncertainties, and assumptions, including, but not limited to, the following:
| ● | general economic conditions in our markets, including inflation and interest rates, and ongoing economic and financial uncertainties; |
| ● | the availability of financing to us and our customers; |
| ● | fuel shortages, or high prices for fuel; |
| ● | the well-being, as well as the continued popularity and reputation for quality, of our manufacturers; |
| ● | trends in the RV industry; |
| ● | changes in consumer preferences or our failure to gauge those preferences; |
| ● | our strategic review of our Good Sam business and any potential resulting transaction; |
| ● | competition in the market for services, protection plans, products and resources targeting the RV lifestyle or RV enthusiast; |
| ● | our expansion into new, unfamiliar markets, businesses, or product lines or categories, as well as delays in opening or acquiring new RV dealership locations; |
| ● | unforeseen expenses, difficulties, and delays frequently encountered in connection with expansion through acquisitions; |
| ● | our failure to maintain the strength and value of our brands; |
2
| ● | our ability to successfully order and manage our inventory to reflect consumer demand in a volatile market and anticipate changing consumer preferences and buying trends; |
| ● | fluctuations in our same store revenue and whether such revenue will be a meaningful indicator of future performance; |
| ● | the cyclical and seasonal nature of our business; |
| ● | disruptions to or breaches of our or our third party providers’ information technology systems, including the February 2022 Cybersecurity Incident; |
| ● | our ability to operate and expand our business and to respond to changing business and economic conditions, which depends on the availability of adequate capital; |
| ● | the restrictive covenants imposed by our Senior Secured Credit Facilities and Floor Plan Facility; |
| ● | risks related to COVID-19 and related impacts on our business; |
| ● | our ability to execute and achieve the expected benefits of our restructuring activities or cost cutting initiatives and costs and impairment charges incurred in connection with these activities or initiatives may be materially higher than expected or anticipated; |
| ● | our reliance on our fulfillment and distribution centers for our retail and e-commerce businesses; |
| ● | the impact of ongoing class action lawsuits against us and certain of our officers and directors, as well as any potential future class action litigation; |
| ● | natural disasters, whether or not caused by climate change, unusual weather conditions, epidemic outbreaks, terrorist acts and political events; |
| ● | our dependence on our relationships with third party providers of services, protection plans, products and resources and a disruption of these relationships or of these providers’ operations; |
| ● | any delays, new or increased tariffs, increased cost or quality control deficiencies in the importation of our products manufactured abroad; |
| ● | whether third party lending institutions and insurance companies will continue to provide financing for RV purchases; |
| ● | our ability to retain senior executives and attract and retain other qualified employees; |
| ● | risks associated with leasing substantial amounts of space, including our inability to maintain the leases for our RV dealership locations or locate alternative sites for our stores in our target markets and on terms that are acceptable to us; |
| ● | our private brand offerings exposing us to various risks; |
| ● | our business being subject to numerous federal, state and local regulations; |
| ● | changes in government policies and legislation; |
| ● | our failure to comply with certain environmental regulations; |
| ● | risks related to climate change and other environmental, social, and governance matters; |
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| ● | risks related to a failure in our e-commerce operations, security breaches and cybersecurity risks; |
| ● | our inability to enforce our intellectual property rights and accusations of our infringement on the intellectual property rights of third parties; |
| ● | our inability to maintain or upgrade our information technology systems or our inability to convert to alternate systems in an efficient and timely manner; |
| ● | risk of product liability claims if people or property are harmed by the products we sell and other litigation risks; |
| ● | risks related to our pending litigation; |
| ● | risks associated with our private brand offerings; |
| ● | possibility of future asset impairment charges for goodwill, intangible assets or other long-lived assets; |
| ● | potential litigation relating to products we sell or sold; |
| ● | Marcus Lemonis, through his beneficial ownership of our shares directly or indirectly held by ML Acquisition Company, LLC and ML RV Group, LLC, has substantial control over us including matters requiring approval by our stockholders; |
| ● | the exemptions from certain corporate governance requirements that we qualify for, and rely on, due to the fact that we are a ‘‘controlled company’’ within the meaning of the New York Stock Exchange, or NYSE, listing requirements; |
| ● | whether we are able to realize any tax benefits that may arise from our organizational structure and any redemptions of CWGS Enterprises, LLC common units for cash or stock; |
| ● | other risks relating to our organizational structure and to ownership of shares of our Class A common stock; and |
| ● | the other factors set forth under ‘‘Risk Factors’’ in Item 1A of Part I of our Annual Report, in Item 1A of Part II of this Form 10-Q, and in our other filings with the SEC. |
These risks may cause our actual results, performance or achievements to differ materially and adversely from those expressed or implied by the forward-looking statements.
Any forward-looking statements made herein speak only as of the date of this Form 10-Q, and you should not rely on forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that the future effects, results, performance, or achievements reflected in the forward-looking statements will be achieved or occur. We undertake no obligation to update any of these forward-looking statements for any reason after the date of this Form 10-Q or to conform these statements to actual results or revised expectations.
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Part I – FINANCIAL INFORMATION
Item 1. Financial Statements
Camping World Holdings, Inc. and Subsidiaries
Unaudited Condensed Consolidated Balance Sheets
(In Thousands Except Per Share Amounts)
June 30, | December 31, | June 30, | |||||||
| 2024 | 2023 |
| 2023 | |||||
Assets | |||||||||
Current assets: | |||||||||
Cash and cash equivalents | $ | | $ | | $ | | |||
Contracts in transit | | | | ||||||
Accounts receivable, net | | | | ||||||
Inventories | | | | ||||||
Prepaid expenses and other assets | | | | ||||||
Assets held for sale | | | | ||||||
Total current assets | | | | ||||||
Property and equipment, net | | | | ||||||
Operating lease assets | | | | ||||||
Deferred tax assets, net | | | | ||||||
Intangible assets, net | | | | ||||||
Goodwill | | | | ||||||
Other assets | | | | ||||||
Total assets | $ | | $ | | $ | | |||
Liabilities and stockholders' equity | |||||||||
Current liabilities: | |||||||||
Accounts payable | $ | | $ | | $ | | |||
Accrued liabilities | | | | ||||||
Deferred revenues | | | | ||||||
Current portion of operating lease liabilities | | | | ||||||
Current portion of finance lease liabilities | | | | ||||||
Current portion of Tax Receivable Agreement liability | | | | ||||||
Current portion of long-term debt | | | | ||||||
Notes payable – floor plan, net | | | | ||||||
Other current liabilities | | | | ||||||
Liabilities related to assets held for sale | | | | ||||||
Total current liabilities | | | | ||||||
Operating lease liabilities, net of current portion | | | | ||||||
Finance lease liabilities, net of current portion | | | | ||||||
Tax Receivable Agreement liability, net of current portion | | | | ||||||
Revolving line of credit | | | | ||||||
Long-term debt, net of current portion | | | | ||||||
Deferred revenues | | | | ||||||
Other long-term liabilities | | | | ||||||
Total liabilities | | | | ||||||
Commitments and contingencies | |||||||||
Stockholders' equity: | |||||||||
Preferred stock, par value $ | | | | ||||||
Class A common stock, par value $ | | | | ||||||
Class B common stock, par value $ | | | | ||||||
Class C common stock, par value $ | | | | ||||||
Additional paid-in capital | | | | ||||||
Treasury stock, at cost; | ( | ( | ( | ||||||
Retained earnings | | | | ||||||
Total stockholders' equity attributable to Camping World Holdings, Inc. | | | | ||||||
Non-controlling interests | | | | ||||||
Total stockholders' equity | | | | ||||||
Total liabilities and stockholders' equity | $ | | $ | | $ | | |||
See accompanying Notes to Unaudited Condensed Consolidated Financial Statements
5
Camping World Holdings, Inc. and Subsidiaries
Unaudited Condensed Consolidated Statements of Operations
(In Thousands Except Per Share Amounts)
Three Months Ended | Six Months Ended | |||||||||||
June 30, | June 30, | |||||||||||
2024 |
| 2023 |
| 2024 |
| 2023 | ||||||
Revenue: | ||||||||||||
Good Sam Services and Plans | $ | | $ | | $ | | $ | | ||||
RV and Outdoor Retail | ||||||||||||
New vehicles | | | | | ||||||||
Used vehicles | | | | | ||||||||
Products, service and other | | | | | ||||||||
Finance and insurance, net | | | | | ||||||||
Good Sam Club | | | | | ||||||||
Subtotal | | | | | ||||||||
Total revenue | | | | | ||||||||
Costs applicable to revenue (exclusive of depreciation and amortization shown separately below): | ||||||||||||
Good Sam Services and Plans | | | | | ||||||||
RV and Outdoor Retail | ||||||||||||
New vehicles | | | | | ||||||||
Used vehicles | | | | | ||||||||
Products, service and other | | | | | ||||||||
Good Sam Club | | | | | ||||||||
Subtotal | | | | | ||||||||
Total costs applicable to revenue | | | | | ||||||||
Operating expenses: | ||||||||||||
Selling, general, and administrative | | | | | ||||||||
Depreciation and amortization | | | | | ||||||||
Long-lived asset impairment | | | | | ||||||||
Lease termination | | | | — | ||||||||
Loss (gain) on sale or disposal of assets | | ( | | ( | ||||||||
Total operating expenses | | | | | ||||||||
Income from operations | | | | | ||||||||
Other expense: | ||||||||||||
Floor plan interest expense | ( | ( | ( | ( | ||||||||
Other interest expense, net | ( | ( | ( | ( | ||||||||
Other expense, net | ( | ( | ( | ( | ||||||||
Total other expense | ( | ( | ( | ( | ||||||||
Income (loss) before income taxes | | | ( | | ||||||||
Income tax (expense) benefit | ( | ( | | ( | ||||||||
Net income (loss) | | | ( | | ||||||||
Less: net income (loss) attributable to non-controlling interests | ( | ( | | ( | ||||||||
Net income (loss) attributable to Camping World Holdings, Inc. | $ | | $ | | $ | ( | $ | | ||||
Earnings (loss) per share of Class A common stock: | ||||||||||||
Basic | $ | | $ | | $ | ( | $ | | ||||
Diluted | $ | | $ | | $ | ( | $ | | ||||
Weighted average shares of Class A common stock outstanding: | ||||||||||||
Basic | | | | | ||||||||
Diluted | | | | | ||||||||
See accompanying Notes to Unaudited Condensed Consolidated Financial Statements
6
Camping World Holdings, Inc. and Subsidiaries
Unaudited Condensed Consolidated Statements of Stockholders' Equity
(In Thousands)
Additional | Non- | |||||||||||||||||||||||||||||||
Class A Common Stock | Class B Common Stock | Class C Common Stock | Paid-In | Treasury Stock | Retained | Controlling | ||||||||||||||||||||||||||
| Shares |
| Amounts |
| Shares |
| Amounts |
| Shares |
| Amounts |
| Capital |
| Shares |
| Amounts |
| Earnings |
| Interest |
| Total | |||||||||
Balance at December 31, 2023 | | $ | | | $ | | | $ | | $ | | ( | $ | ( | $ | | $ | | $ | | ||||||||||||
Equity-based compensation | | | | | | | | | | | | | ||||||||||||||||||||
Exercise of stock options | | | | | | | ( | | | | | | ||||||||||||||||||||
Non-controlling interest adjustment for capital contribution of proceeds from the exercise of stock options | | | | | | | ( | | | | | | ||||||||||||||||||||
Vesting of restricted stock units | | | | | | | ( | | | | ( | | ||||||||||||||||||||
Repurchases of Class A common stock for withholding taxes on vested RSUs | | | | | | | | ( | ( | | | ( | ||||||||||||||||||||
Distributions to holders of LLC common units | | | | | | | | | | | ( | ( | ||||||||||||||||||||
Dividends(1) | | | | | | | | | | ( | | ( | ||||||||||||||||||||
Non-controlling interest adjustment | | | | | | | ( | | | | | | ||||||||||||||||||||
Net loss | | |||||||||||||||||||||||||||||||