Camping World Holdings, Inc. - Quarter Report: 2022 September (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____________ to _______________

Commission file number: 001-37908

CAMPING WORLD HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

Delaware	81-1737145
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

250 Parkway Drive, Suite 270

Lincolnshire, IL 60069

(Address of registrant’s principal executive offices) (Zip Code)

Telephone: (847) 808-3000

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Class A Common Stock,

$0.01 par value per share

CWH

New York Stock Exchange

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. Yes ⌧ No ◻

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). Yes ⌧ No ◻

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ⌧	Accelerated filer ◻
Non-accelerated filer ◻	Smaller reporting company ☐
	Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ⌧

As of October 28, 2022, the registrant had 42,132,228 shares of Class A common stock, 41,466,964 shares of Class B common stock and one share of Class C common stock outstanding.

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Camping World Holdings, Inc.

Quarterly Report on Form 10-Q

For the Quarterly Period Ended September 30, 2022

TABLE OF CONTENTS


		Page


PART I. FINANCIAL INFORMATION

Item 1	Financial Statements (unaudited)	5
	Unaudited Condensed Consolidated Balance Sheets – September 30, 2022 and December 31, 2021	5
	Unaudited Condensed Consolidated Statements of Operations – Three and Nine Months Ended September 30, 2022 and 2021	6
	Unaudited Condensed Consolidated Statements of Stockholders’ Equity – Three and Nine Months Ended September 30, 2022 and 2021	7
	Unaudited Condensed Consolidated Statements of Cash Flows – Nine Months Ended September 30, 2022 and 2021	9
	Notes to Unaudited Condensed Consolidated Financial Statements	11
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	35
Item 3	Quantitative and Qualitative Disclosures About Market Risk	63
Item 4	Controls and Procedures	64

PART II. OTHER INFORMATION

Item 1	Legal Proceedings	64
Item 1A	Risk Factors	64
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	65
Item 3	Defaults Upon Senior Securities	65
Item 4	Mine Safety Disclosures	65
Item 5	Other Information	65
Item 6	Exhibits	67

Signatures		69

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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 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.

●

“Annual Report” refers to our Annual Report on Form 10-K for the year ended December 31, 2021 filed with the Securities and Exchange Commission (“SEC”) on February 24, 2022.

●

“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 continue to own common units in CWGS, LLC after the initial public offering (“IPO”) of our stock and the related reorganization transactions (each as discussed in Note 1 — Summary of Significant Accounting Policies to our condensed consolidated financial statements included in Part I, Item 1 of this Form 10-Q) 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, Karin L. Bell, and Tamara R. Ward, who are named executive officers; Andris A. Baltins and K. Dillon Schickli, who are members of our board of directors, and certain other current and former executive and non-executive employees and former directors, in each case, who held existing common units in CWGS, LLC pursuant to CWGS, LLC’s equity incentive plan that was in existence prior to our IPO and who received common units of CWGS, LLC in exchange for their profits units in connection with our IPO.

●

“ML Acquisition” refers to ML Acquisition Company, LLC, a Delaware limited liability company, indirectly owned by each of Stephen Adams and our Chairman and Chief Executive Officer, Marcus A. Lemonis.

●

“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. 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; the impact of the novel coronavirus (“COVID-19”) pandemic on our business, results of operations and financial position; the expected impact of the February 2022 Cybersecurity Incident (as defined below); the expected impact of inflation; business strategy and plans and objectives of management for future operations; the timeline for and benefits of our 2019 Strategic Shift (as defined below); expected new retail location openings and closures, including greenfield locations and acquired locations; our sources of liquidity and capital and any potential need for additional financing or refinancing, retirement or exchange of outstanding debt; our stock repurchase program; future capital expenditures and debt service obligations; expectations regarding industry trends and consumer behavior and growth; our ability to capture positive industry trends and pursue growth; 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 ‘‘may,’’ ‘‘will,’’ ‘‘should,’’ ‘‘expects,’’ ‘‘plans,’’ ‘‘anticipates,’’ ‘‘could,’’ ‘‘intends,’’ ‘‘targets,’’ ‘‘projects,’’ ‘‘contemplates,’’ ‘‘believes,’’ ‘‘estimates,’’ ‘‘predicts,’’ ‘‘potential’’ or ‘‘continue’’ 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:

●

risks related to the COVID-19 pandemic and related impacts on our business;

●

our ability to execute and achieve the expected benefits of our 2019 Strategic Shift and costs and impairment charges incurred in connection with the 2019 Strategic Shift may be materially higher than expected or anticipated;

●

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;

●

general economic conditions in our markets, including inflation, and ongoing economic and financial uncertainties;

●

changes in consumer preferences or our failure to gauge those preferences;

●

competition in the market for services, protection plans, products and resources targeting the RV lifestyle or RV enthusiast;

●

our expansion into new, unfamiliar markets, businesses, or product lines or categories, as well as delays in opening or acquiring new retail locations;

●

unforeseen expenses, difficulties, and delays frequently encountered in connection with expansion through acquisitions;

●

our failure to maintain the strength and value of our brands;

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●

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;

●

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;

●

our reliance on six fulfillment and distribution centers for our retail, RV furniture distribution, 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 retail locations or locate alternative sites for our stores in our target markets and on terms that are acceptable to us;

●

our business being subject to numerous federal, state and local regulations;

●

changes in government policies and legislation;

●

our failure to comply with certain environmental regulations;

●

climate change legislation or regulations restricting emission of ‘‘greenhouse gases’’

●

a failure in our e-commerce operations, security breaches and cybersecurity risks;

●

our inability to enforce our intellectual property rights and accusations of our infringement on the intellectual property rights of third parties;

●

our inability to maintain or upgrade our information technology systems or our inability to convert to alternate systems in an efficient and timely manner;

●

disruptions to or breaches of our or our third party providers’ information technology systems, including the February 2022 Cybersecurity Incident;

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●

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, including firearms and ammunitions;

●

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 Share and Per Share Amounts)


	September 30,		December 31,
	2022		2021
Assets
Current assets:
Cash and cash equivalents	$	148,235	$	267,332
Contracts in transit		87,487		57,741
Accounts receivable, net		117,428		101,644
Inventories		1,900,127		1,792,865
Prepaid expenses and other assets		46,869		64,295
Total current assets		2,300,146		2,283,877
Property and equipment, net		728,208		599,324
Operating lease assets		719,656		750,876
Deferred tax assets, net		178,808		199,321
Intangible assets, net		21,819		30,970
Goodwill		533,217		483,634
Other assets		29,532		24,927
Total assets	$	4,511,386	$	4,372,929
Liabilities and stockholders' equity
Current liabilities:
Accounts payable	$	187,613	$	136,757
Accrued liabilities		252,644		189,595
Deferred revenues		101,917		95,467
Current portion of operating lease liabilities		61,001		62,217
Current portion of finance lease liabilities		10,397		4,964
Current portion of Tax Receivable Agreement liability		11,686		11,322
Current portion of long-term debt		15,827		15,822
Notes payable – floor plan, net		899,568		1,011,345
Other current liabilities		83,959		70,834
Total current liabilities		1,624,612		1,598,323
Operating lease liabilities, net of current portion		743,914		774,889
Finance lease liabilities, net of current portion		95,496		74,752
Tax Receivable Agreement liability, net of current portion		159,790		171,073
Revolving line of credit		20,885		20,885
Long-term debt, net of current portion		1,368,380		1,377,751
Deferred revenues		73,294		69,024
Other long-term liabilities		87,517		52,338
Total liabilities		4,173,888		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 September 30, 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 42,129,078 outstanding as of September 30, 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 September 30, 2022 and December 31, 2021; and 41,466,964 outstanding as of September 30, 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 September 30, 2022 and December 31, 2021		—		—
Additional paid-in capital		117,151		98,113
Treasury stock, at cost; 5,442,009 and 3,390,131 shares as of September 30, 2022 and December 31, 2021, respectively		(190,658)		(130,006)
Retained earnings		280,772		189,471
Total stockholders' equity attributable to Camping World Holdings, Inc.		207,745		158,057
Non-controlling interests		129,753		75,837
Total stockholders' equity		337,498		233,894
Total liabilities and stockholders' equity	$	4,511,386	$	4,372,929

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements

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Camping World Holdings, Inc. and Subsidiaries

Unaudited Condensed Consolidated Statements of Operations

(In Thousands Except Per Share Amounts)


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2022		2021		2022		2021
Revenue:
Good Sam Services and Plans	$	50,352	$	46,581	$	144,504	$	134,354
RV and Outdoor Retail
New vehicles		834,112		864,303		2,746,323		2,745,057
Used vehicles		525,988		519,550		1,484,978		1,273,944
Products, service and other		268,940		305,882		761,914		862,706
Finance and insurance, net		165,136		167,779		513,921		483,718
Good Sam Club		11,154		12,479		35,070		36,383
Subtotal		1,805,330		1,869,993		5,542,206		5,401,808
Total revenue		1,855,682		1,916,574		5,686,710		5,536,162
Costs applicable to revenue (exclusive of depreciation and amortization shown separately below):
Good Sam Services and Plans		18,871		21,637		54,532		53,241
RV and Outdoor Retail
New vehicles		675,119		612,418		2,171,660		2,014,206
Used vehicles		398,882		376,852		1,115,876		934,874
Products, service and other		167,298		212,444		467,680		556,542
Good Sam Club		1,824		1,847		6,279		5,586
Subtotal		1,243,123		1,203,561		3,761,495		3,511,208
Total costs applicable to revenue		1,261,994		1,225,198		3,816,027		3,564,449
Operating expenses:
Selling, general, and administrative		419,102		424,385		1,245,540		1,193,668
Debt restructure expense		—		24		—		9,055
Depreciation and amortization		18,207		23,552		61,369		49,297
Long-lived asset impairment		887		316		3,505		1,398
Lease termination		—		329		1,122		2,085
(Gain) loss on sale or disposal of assets		(40)		96		390		7
Total operating expenses		438,156		448,702		1,311,926		1,255,510
Income from operations		155,532		242,674		558,757		716,203
Other expense:
Floor plan interest expense		(9,484)		(3,125)		(24,483)		(9,886)
Other interest expense, net		(20,526)		(11,250)		(49,762)		(35,262)
Loss on debt restructure		—		—		—		(1,390)
Tax Receivable Agreement liability adjustment		—		—		—		(3,520)
Other expense, net		(177)		(122)		(472)		(77)
Total other expense		(30,187)		(14,497)		(74,717)		(50,135)
Income before income taxes		125,345		228,177		484,040		666,068
Income tax expense		(22,397)		(38,869)		(75,808)		(83,259)
Net income		102,948		189,308		408,232		582,809
Less: net income attributable to non-controlling interests		(61,822)		(109,605)		(238,065)		(331,596)
Net income attributable to Camping World Holdings, Inc.	$	41,126	$	79,703	$	170,167	$	251,213

Earnings per share of Class A common stock:
Basic	$	0.98	$	1.75	$	4.01	$	5.57
Diluted	$	0.97	$	1.72	$	3.99	$	5.49
Weighted average shares of Class A common stock outstanding:
Basic		41,985		45,628		42,419		45,072
Diluted		42,505		47,022		42,947		46,433

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements

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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, 2021	47,521	$	475	41,466	$	4	—	$	—	$	98,113	(3,390)	$	(130,006)	$	189,471	$	75,837	$	233,894
Equity-based compensation	—		—	—		—	—		—		4,572	—		—		—		5,735		10,307
Exercise of stock options	—		—	—		—	—		—		(166)	11		397		—		—		231
Non-controlling interest adjustment for capital contribution of proceeds from the exercise of stock options	—		—	—		—	—		—		(111)	—		—		—		111		—
Vesting of restricted stock units	—		—	—		—	—		—		(4,067)	130		4,749		—		(682)		—
Repurchases of Class A common stock for withholding taxes on vested RSUs	—		—	—		—	—		—		243	(41)		(1,481)		—		—		(1,238)
Repurchases of Class A common stock to treasury stock	—		—	—		—	—		—		28,398	(2,593)		(79,757)		—		(37,774)		(89,133)
Redemption of LLC common units for Class A common stock	50		1	—		—	—		—		416	—		—		—		(45)		372
Distributions to holders of LLC common units	—		—	—		—	—		—		—	—		—		—		(24,836)		(24,836)
Dividends⁽¹⁾	—		—	—		—	—		—		—	—		—		(26,427)		—		(26,427)
Establishment of liabilities under the Tax Receivable Agreement and related changes to deferred tax assets associated with that liability	—		—	—		—	—		—		(299)	—		—		—		—		(299)
Non-controlling interest adjustment	—		—	—		—	—		—		(1,028)	—		—		—		1,028		—
Net income	—		—	—		—	—		—		—	—		—		44,730		62,569		107,299
Balance at March 31, 2022	47,571	$	476	41,466	$	4	—	$	—	$	126,071	(5,883)	$	(206,098)	$	207,774	$	81,943	$	210,170
Equity-based compensation	—		—	—		—	—		—		4,467	—		—		—		4,500		8,967
Exercise of stock options	—		—	—		—	—		—		(25)	2		66		—		—		41
Non-controlling interest adjustment for capital contribution of proceeds from the exercise of stock options	—		—	—		—	—		—		(18)	—		—		—		18		—
Vesting of restricted stock units	—		—	—		—	—		—		(3,562)	108		3,798		—		(236)		—
Repurchases of Class A common stock for withholding taxes on vested RSUs	—		—	—		—	—		—		48	(9)		(327)		—		—		(279)
Distributions to holders of LLC common units	—		—	—		—	—		—		—	—		—		—		(90,842)		(90,842)
Dividends⁽¹⁾	—		—	—		—	—		—		—	—		—		(26,111)		—		(26,111)
Non-controlling interest adjustment	—		—	—		—	—		—		527	—		—		—		(527)		—
Net income	—		—	—		—	—		—		—	—		—		84,311		113,674		197,985
Balance at June 30, 2022	47,571	$	476	41,466	$	4	—	$	—	$	127,508	(5,782)	$	(202,561)	$	265,974	$	108,530	$	299,931
Equity-based compensation	—		—	—		—	—		—		3,394	—		—		—		3,398		6,792
Exercise of stock options	—		—	—		—	—		—		(26)	2		71		—		—		45
Non-controlling interest adjustment for capital contribution of proceeds from the exercise of stock options	—		—	—		—	—		—		(20)	—		—		—		20		—
Vesting of restricted stock units	—		—	—		—	—		—		(14,713)	503		17,618		—		(2,905)		—
Repurchases of Class A common stock for withholding taxes on vested RSUs	—		—	—		—	—		—		829	(165)		(5,786)		—		—		(4,957)
Distributions to holders of LLC common units	—		—	—		—	—		—		—	—		—		—		(40,933)		(40,933)
Dividends⁽¹⁾	—		—	—		—	—		—		—	—		—		(26,328)		—		(26,328)
Non-controlling interest adjustment	—		—	—		—	—		—		179	—		—		—		(179)		—
Net income	—		—	—		—	—		—		—	—		—		41,126		61,822		102,948
Balance at September 30, 2022	47,571	$	476	41,466	$	4	—	$	—	$	117,151	(5,442)	$	(190,658)	$	280,772	$	129,753	$	337,498

(1)The Company declared dividends per share of Class A common stock of $0.625 for each of the three months ended March 31, 2022, June 30, 2022 and September 30, 2022, respectively.

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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 (Deficit)		Interest		Total
Balance at December 31, 2020	42,799	$	428	45,999	$	5	—		—	$	63,342	(572)		(15,187)	$	(21,814)	$	(36,005)	$	(9,231)
Equity-based compensation	—		—	—		—	—		—		2,988	—		—		—		3,121		6,109
Exercise of stock options	—		—	—		—	—		—		(417)	91		2,407		—		—		1,990
Non-controlling interest adjustment for capital contribution of proceeds from the exercise of stock options	—		—	—		—	—		—		(1,012)	—		—		—		1,012		—
Vesting of restricted stock units	—		—	—		—	—		—		(1,220)	49		1,318		—		(98)		—
Repurchases of Class A common stock for withholding taxes on vested RSUs	—		—	—		—	—		—		(25)	(7)		(189)		—		—		(214)
Redemption of LLC common units for Class A common stock	3,029		30	(2,848)		(1)	—		—		22,926	—		—		—		2,336		25,291
Distributions to holders of LLC common units	—		—	—		—	—		—		—	—		—		—		(16,926)		(16,926)
Dividends⁽²⁾	—		—	—		—	—		—		—	—		—		(10,353)		—		(10,353)
Establishment of liabilities under the Tax Receivable Agreement and related changes to deferred tax assets associated with that liability	—		—	—		—	—		—		(19,441)	—		—		—		—		(19,441)
Non-controlling interest adjustment	—		—	—		—	—		—		2,068	—		—		—		(2,068)		—
Net income	—		—	—		—	—		—		—	—		—		62,322		85,103		147,425
Balance at March 31, 2021	45,828	$	458	43,151	$	4	—	$	—	$	69,209	(439)	$	(11,651)	$	30,155	$	36,475	$	124,650
Equity-based compensation	—		—	—		—	—		—		3,123	—		—		—		2,924		6,047
Exercise of stock options	—		—	—		—	—		—		(135)	25		674		—		—		539
Non-controlling interest adjustment for capital contribution of proceeds from the exercise of stock options	—		—	—		—	—		—		(257)	—		—		—		257		—
Vesting of restricted stock units	—		—	—		—	—		—		(1,645)	64		1,707		—		(62)		—
Repurchases of Class A common stock for withholding taxes on vested RSUs	—		—	—		—	—		—		(31)	(2)		(43)		—		—		(74)
Repurchases of Class A common stock to treasury stock	—		—	—		—	—		—		22,127	(1,150)		(45,470)		—		(22,127)		(45,470)
Redemption of LLC common units for Class A common stock	1,152		12	(1,144)		—	—		—		11,785	—		—		—		(376)		11,421
Distributions to holders of LLC common units	—		—	—		—	—		—		—	—		—		—		(106,921)		(106,921)
Dividends⁽²⁾	—		—	—		—	—		—		—	—		—		(11,560)		—		(11,560)
Establishment of liabilities under the Tax Receivable Agreement and related changes to deferred tax assets associated with that liability	—		—	—		—	—		—		(9,233)	—		—		—		—		(9,233)
Non-controlling interest adjustment	—		—	—		—	—		—		(1,434)	—		—		—		1,434		—
Net income	—		—	—		—	—		—		—	—		—		109,188		136,888		246,076
Balance at June 30, 2021	46,980	$	470	42,007	$	4	—	$	—	$	93,509	(1,502)	$	(54,783)	$	127,783	$	48,492	$	215,475
Equity-based compensation	—		—	—		—	—		—		3,574	—		—		—		3,339		6,913
Exercise of stock options	—		—	—		—	—		—		(860)	58		2,107		—		—		1,247
Non-controlling interest adjustment for capital contribution of proceeds from the exercise of stock options	—		—	—		—	—		—		(592)	—		—		—		592		—
Vesting of restricted stock units	—		—	—		—	—		—		(16,376)	544		19,892		—		(3,516)		—
Repurchases of Class A common stock for withholding taxes on vested RSUs	—		—	—		—	—		—		(411)	(177)		(6,467)		—		—		(6,878)
Repurchases of Class A common stock to treasury stock	—		—	—		—	—		—		19,623	(1,060)		(41,354)		—		(19,623)		(41,354)
Distributions to holders of LLC common units	—		—	—		—	—		—		—	—		—		—		(55,878)		(55,878)
Dividends⁽²⁾	—		—	—		—	—		—		—	—		—		(22,933)		—		(22,933)
Non-controlling interest adjustment	—		—	—		—	—		—		(1,143)	—		—		—		1,143		—
Net income	—		—	—		—	—		—		—	—		—		79,703		109,605		189,308
Balance at September 30, 2021	46,980	$	470	42,007	$	4	—	$	—	$	97,324	(2,137)	$	(80,605)	$	184,553	$	84,154	$	285,900

(2)

The Company declared dividends per share of Class A common stock of $0.23, $0.25 and $0.50 for the three months ended March 31, 2021, June 30, 2021 and September 30, respectively.

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements

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Camping World Holdings, Inc. and Subsidiaries

Unaudited Condensed Consolidated Statements of Cash Flows

(In Thousands)


	Nine Months Ended September 30,
	2022		2021
Operating activities
Net income	$	408,232	$	582,809

Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		61,369		49,297
Equity-based compensation		27,434		19,069
Loss on lease termination		1,122		2,085
Loss on debt restructure		—		1,390
Long-lived asset impairment		3,505		1,398
Loss on sale or disposal of assets		390		7
Provision for losses on accounts receivable		168		767
Non-cash lease expense		44,757		45,175
Accretion of original debt issuance discount		1,650		930
Non-cash interest		1,470		2,053
Deferred income taxes		10,245		(9,463)
Tax Receivable Agreement liability adjustment		—		3,520
Change in assets and liabilities, net of acquisitions:
Receivables and contracts in transit		(45,766)		(87,667)
Inventories		(77,388)		(198,310)
Prepaid expenses and other assets		16,876		14,821
Accounts payable and other accrued expenses		112,167		164,617
Payment pursuant to Tax Receivable Agreement		(11,322)		(8,089)
Deferred revenue		10,719		23,672
Operating lease liabilities		(47,388)		(47,895)
Other, net		5,679		11,690
Net cash provided by operating activities		523,919		571,876

Investing activities
Purchases of property and equipment		(118,445)		(88,560)
Proceeds from sale of property and equipment		1,105		2,253
Purchase of real property		(41,696)		(61,056)
Proceeds from the sale of real property		6,809		1,360
Purchases of businesses, net of cash acquired		(83,227)		(99,749)
Purchase of other investments		(3,000)		(7,983)
Purchases of intangible assets		(851)		(2,580)
Net cash used in investing activities	$	(239,305)	$	(256,315)

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Camping World Holdings, Inc. and Subsidiaries

Unaudited Condensed Consolidated Statements of Cash Flows

(In Thousands)


	Nine Months Ended September 30,
	2022		2021
Financing activities
Proceeds from long-term debt	$	—	$	124,893
Payments on long-term debt		(11,869)		(174,148)
Net (payments) proceeds on notes payable – floor plan, net		(99,802)		19,199
Proceeds from landlord funded construction on finance leases		6,028		—
Payments on finance leases		(4,541)		(2,169)
Proceeds from sale-leaseback arrangement		27,951		—
Payments on sale-leaseback arrangement		(87)		—
Payment of debt issuance costs		—		(1,827)
Dividends on Class A common stock		(78,866)		(44,846)
Proceeds from exercise of stock options		317		3,775
RSU shares withheld for tax		(6,474)		(7,166)
Repurchases of Class A common stock to treasury stock		(79,757)		(86,824)
Distributions to holders of LLC common units		(156,611)		(179,725)
Net cash used in financing activities		(403,711)		(348,838)

Decrease in cash and cash equivalents		(119,097)		(33,277)
Cash and cash equivalents at beginning of the period		267,332		166,072
Cash and cash equivalents at end of the period	$	148,235	$	132,795

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements

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Camping World Holdings, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

September 30, 2022

1. Summary of Significant Accounting Policies

Principles of Consolidation and Basis of Presentation

The condensed consolidated financial statements include the accounts of Camping World Holdings, Inc. and its subsidiaries, and are presented in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and pursuant to the rules and regulations of the SEC. Accordingly, these interim financial statements do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) necessary for fair presentation of the results of operations, financial position and cash flows for the periods presented have been reflected. All intercompany accounts and transactions of the Company and its subsidiaries have been eliminated in consolidation.

The condensed consolidated financial statements as of and for the three and nine months ended September 30, 2022 are unaudited. The condensed consolidated balance sheet as of December 31, 2021 has been derived from the audited financial statements at that date but does not include all of the disclosures required by GAAP. These interim condensed consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC on February 24, 2022. Operating results for interim periods are not necessarily indicative of the results that may be expected for the full year.

CWH was formed on March 8, 2016 as a Delaware corporation for the purpose of facilitating an IPO and other related transactions in order to carry on the business of CWGS, LLC. CWGS, LLC was formed in March 2011 when it received, through contribution from its then parent company, all of the membership interests of Affinity Group Holding, LLC and FreedomRoads Holding Company, LLC (“FreedomRoads”). The IPO and related reorganization transactions that occurred on October 6, 2016 resulted in CWH becoming the sole managing member of CWGS, LLC, with CWH having sole voting power in and control of the management of CWGS, LLC (see Note 14 — Stockholders’ Equity). CWH’s position as sole managing member of CWGS, LLC includes periods where CWH held a minority economic interest in CWGS, LLC. As of September 30, 2022 and December 31, 2021, CWH owned 50.1% 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 condensed consolidated financial statements.

The Company does not have any components of other comprehensive income recorded within its condensed consolidated financial statements, and, therefore, does not separately present a statement of comprehensive income in its condensed consolidated financial statements.

COVID-19

Within a few months of the initial significant outbreaks of COVID-19 in the U.S., the Company experienced elevated demand for recreational vehicles (“RV”) and many of its related products and services. The Company believes that consumers view RVs as a safer alternative to many other travel and recreational activities, in addition to an opportunity to enjoy the outdoors after many consumers spent much of their time at home during portions of the pandemic. The Company believes this led to an introduction of many new customers to the RV lifestyle and a greater appreciation of outdoor activities. For much of the COVID-19 pandemic, demand and interest in new and used vehicles outpaced vehicle supply. Beginning in September 2021, the Company was able to procure more new vehicles from its suppliers than were sold and new towables inventory levels, in particular, normalized in early 2022.

During the height of the pandemic, and related government orders directing non-essential business closures or reductions, the majority of the Company’s retail locations continued to operate as essential businesses. The Company has implemented preparedness plans consistent with government directives to keep

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its employees and customers safe. As case counts have risen and receded over the course of the pandemic, the Company has adjusted remote work and office schedules accordingly.

Historically, most of the Company’s consumer shows and events take place during the first quarter. As a consequence of COVID-19, the Company held one in-person consumer show in 2021, compared to 37 in-person consumer shows held prior to the pandemic in 2019, and plans to hold fewer than five in-person consumer shows in 2022. Moving forward, the Company has shifted its consumer show strategy to focus on shows that support its own Camping World dealerships as opposed to hosting other competing dealerships. The Company expects to annually host fewer than five ticketed in-person consumer shows under the Good Sam brand in future years.

Cybersecurity Incident

The Company relies on the integrity, security and successful functioning of its information technology systems and network infrastructure (collectively, “IT Systems”) across its operations. In February 2022, the Company announced that it had experienced a cybersecurity incident that resulted in the encryption of certain IT Systems and theft of certain data and information (the “Cybersecurity Incident”). The Cybersecurity Incident resulted in the Company’s temporary inability to access certain of its IT Systems, caused by the disabling of some of its IT Systems by the threat actor and the Company temporarily taking certain other IT Systems offline as a precautionary measure. The Company engaged leading outside forensics and cybersecurity experts, launched containment and remediation efforts and a forensic investigation. The forensic investigation is now complete and the Company has restored and is taking measures to enhance its IT Systems. The Company has identified that personal information of approximately 30,000 individuals was acquired without authorization, including, depending on the individual, dates of birth, Social Security numbers, and driver’s license numbers. The Company is in the process of complying with notification obligations in accordance with relevant law and is continuing to coordinate with law enforcement.

The Company has incurred costs related to investigation, containment, and remediation and expects to continue to incur incremental costs for the investigation and remediation of the Cybersecurity Incident, including legal and other professional fees, and investments to enhance the security of its IT Systems. Other actual and potential consequences include, but are not limited to, negative publicity, reputational damage, lost trust with customers, regulatory enforcement action, and litigation that could result in financial judgments or the payment of settlement amounts and disputes with insurance carriers concerning coverage. The Company does not expect that the Cybersecurity Incident will cause future disruptions to its business or that the Cybersecurity Incident will have a material impact on its business, results of operations or financial condition.

Description of the Business

Camping World Holdings, Inc., together with its subsidiaries, is America’s largest retailer of RVs and related products and services. As noted above, CWGS, LLC is a holding company and operates through its subsidiaries. The Company has the following two reportable segments: (i) Good Sam Services and Plans and (ii) RV and Outdoor Retail. See Note 18 – Segments Information to the condensed consolidated financial statements for further information about the Company’s segments. Within the Good Sam Services and Plans segment, the Company primarily derives revenue from the sale of the following offerings: emergency roadside assistance plans; commissions on property and casualty insurance programs; travel assist programs; extended vehicle service contracts; vehicle financing and refinancing assistance; consumer shows and events; and consumer publications and directories. Within the RV and Outdoor Retail segment, the Company primarily derives revenue from the sale of new and used RVs; commissions on the finance and insurance contracts related to the sale of RVs; the sale of RV service and collision work; the sale of RV parts, accessories, and supplies; the sale of outdoor products, equipment, gear and supplies; business to business distribution of RV furniture; and the sale of Good Sam Club memberships and co-branded credit cards. The Company operates a national network of RV dealerships and service centers as well as a comprehensive e-commerce platform primarily under the Camping World brand, and markets its products and services primarily to RV and outdoor enthusiasts.

In 2019, the Company made a strategic decision to refocus its business around its core RV competencies, and on September 3, 2019, the board of directors approved a strategic plan to shift the business

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away from locations that did not have the ability or where it was not feasible to sell and/or service RVs (the “2019 Strategic Shift”) (see Note 4 – Restructuring and Long-lived Asset Impairment).

Seasonality

The Company has experienced, and expects to continue to experience, variability in revenue, net income, and cash flows as a result of annual seasonality in its business. Because RVs are used primarily by vacationers and campers, demand for services, protection plans, products, and resources generally declines during the winter season, while sales and profits are generally highest during the spring and summer months. In addition, unusually severe weather conditions in some geographic areas may impact demand.

The Company generates a disproportionately higher amount of its annual revenue in its second and third fiscal quarters, which include the spring and summer months. The Company incurs additional expenses in the second and third fiscal quarters due to higher purchase volumes, increased staffing in its retail locations and program costs. If, for any reason, the Company miscalculates the demand for its products or its product mix during the second and third fiscal quarters, its sales in these quarters could decline, resulting in higher labor costs as a percentage of gross profit, lower margins and excess inventory, which could cause the Company’s annual results of operations to suffer and its stock price to decline.

Additionally, selling, general, and administrative (“SG&A”) expenses as a percentage of gross profit tend to be higher in the first and fourth quarters due to the timing of acquisitions and the seasonality of the Company’s business. The Company prefers to acquire new retail locations in the first and fourth quarters of each year in order to provide time for the location to be remodeled and to ramp up operations ahead of the spring and summer months. The timing of the Company’s acquisitions in the first and fourth quarters, coupled with generally lower revenue in these quarters has historically resulted in SG&A expenses as a percentage of gross profit being higher in these quarters.

Due to the Company’s seasonality, the possible adverse impact from other risks associated with its business, including atypical weather, consumer spending levels and general business conditions, is potentially greater if any such risks occur during the Company’s peak sales seasons.

Reclassifications of Prior Period Amounts

Certain prior-period amounts have been reclassified to conform to the current period presentation. Specifically, for the three and nine months ended September 30, 2021, the equity-based compensation and non-controlling interest adjustment line items in the accompanying condensed consolidated statements of stockholders' equity have been reclassified to present the equity-based compensation allocated to the non-controlling interest in the non-controlling interest column with an offsetting reclassification to the non-controlling interest adjustment line item.

Use of Estimates

The preparation of these condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results may differ from those estimates. In preparing these financial statements, management has made its best estimates and judgments of certain amounts included in the financial statements, giving due consideration to materiality. The Company bases its estimates and judgments on historical experience and other assumptions that management believes are reasonable. However, application of these accounting policies involves the exercise of judgment and use of assumptions as to future uncertainties, including those uncertainties arising from COVID-19, and, as a result, actual results could differ materially from these estimates. The Company periodically evaluates estimates and assumptions used in the preparation of the financial statements and makes changes on a prospective basis when adjustments are necessary. Significant estimates made in the accompanying condensed consolidated financial statements include certain assumptions related to accounts receivable, inventory, goodwill, intangible assets, long lived assets, long-lived asset impairments, program cancellation reserves, chargebacks, accruals related to estimated tax liabilities, product return reserves, and other liabilities.

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Recently Adopted Accounting Pronouncements

In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (“ASU 2021-08”). This standard requires contract assets and contract liabilities, such as certain receivables and deferred revenue, acquired in a business combination to be recognized and measured by the acquirer on the acquisition date in accordance with Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers. Generally, this new guidance will result in the acquirer recognizing contract assets and contract liabilities at the same amounts recorded by the acquiree instead of recording those balances at fair value. This standard should be applied prospectively to acquisitions occurring after the effective date. The standard will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022, with early adoption permitted. The Company early adopted ASU 2021-08 as of January 1, 2022 and the adoption did not materially impact its consolidated financial statements.

Recently Issued Accounting Pronouncements

In June 2022, the FASB issued ASU 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions (“ASU 2022-03”). This standard clarifies the guidance in ASC 820 on the fair value measurement of an equity security that is subject to a contractual sale restriction that prohibits the sale of an equity security, and requires specific disclosures related to such an equity security. The standard should be applied prospectively. The standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2023, with early adoption permitted. The Company does not expect that the adoption of the provisions of this ASU will have a material impact on its consolidated financial statements.

In September 2022, the FASB issued ASU 2022-04, Liabilities―Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations (“ASU 2022-04”). This standard requires a buyer in a supplier finance program to disclose qualitative and quantitative information about the program to allow users to understand the program’s nature, activity during the period, changes from period to period and potential magnitude. Most of the disclosures are required only in annual reporting periods, except for the amount of obligation outstanding to be disclosed at each interim reporting period. The standard should be applied retrospectively to each period in which a balance sheet is presented, except for the amendment on rollforward information, which should be applied prospectively. The standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022, except for the disclosure of rollforward information, which is effective for fiscal years beginning after December 15, 2023, with early adoption permitted. As this standard relates to additional disclosure requirements, the Company does not expect that the adoption of the provisions of this ASU will have a material impact on its consolidated financial statements.

2. Revenue

Contract Assets

As of September 30, 2022 and December 31, 2021, a contract asset of $19.5 million and $16.2 million, respectively, relating to RV service revenues was included in accounts receivable in the accompanying condensed consolidated balance sheets.

Deferred Revenues

As of September 30, 2022, the Company has unsatisfied performance obligations primarily relating to plans for its roadside assistance, Good Sam Club memberships, Coast to Coast memberships, the annual campground guide, and magazine publication revenue streams. The total unsatisfied performance obligations

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for these revenue streams at September 30, 2022 and the periods during which the Company expects to recognize the amounts as revenue are presented as follows (in thousands):


	As of
	September 30, 2022
2022	$	39,780
2023		72,047
2024		30,055
2025		15,858
2026		8,964
Thereafter		8,507
Total	$	175,211

3. Inventories and Floor Plan Payables

Inventories consisted of the following (in thousands):


	September 30,		December 31,
	2022		2021
Good Sam services and plans	$	351	$	—
New RVs		1,180,364		1,108,836
Used RVs		425,824		406,398
Products, parts, accessories and other		293,588		277,631
	$	1,900,127	$	1,792,865

Substantially all of the Company’s new RV inventory and certain of its used RV inventory, included in the RV and Outdoor Retail segment, is financed by a floor plan credit agreement with a syndication of banks. As of September 30, 2022, no used RV inventory was financed by the floor plan credit agreement. The borrowings under the floor plan credit agreement are collateralized by substantially all of the assets of FreedomRoads, LLC (“FR”), a wholly-owned subsidiary of FreedomRoads, which operates the RV dealerships. The floor plan borrowings are tied to specific vehicles and principal is due upon the sale of the related vehicle or upon reaching certain aging criteria.

As of September 30, 2022 and December 31, 2021, FR maintained floor plan financing through the Eighth Amended and Restated Credit Agreement (“Floor Plan Facility”). The Floor Plan Facility at September 30, 2022 allowed FR to borrow (a) up to $1.70 billion under a floor plan facility, (b) up to $30.0 million under a letter of credit facility and (c) up to a maximum amount outstanding of $70.0 million under the revolving line of credit. The Floor Plan Facility also includes an accordion feature allowing FR, at its option, to request to increase the aggregate amount of the floor plan notes payable in $50 million increments up to a maximum amount of $200 million. The lenders under the Floor Plan Facility are not under any obligation to provide commitments in respect of any such increase. The maturity date of the Floor Plan Facility is September 30, 2026.

As of September 30, 2022 and December 31, 2021, the applicable interest rate for the floor plan notes payable under the Floor Plan Facility was 4.30% and 1.96%, respectively. Under the Floor Plan Facility, at the Company’s option, the floor plan notes payable, and borrowings for letters of credit, in each case, bear interest at a rate per annum equal to (a) the floating Bloomberg Short-Term Bank Yield Index rate (“BSBY”) plus the applicable rate of 1.90% to 2.50% determined based on FR’s consolidated current ratio, or, (b) the base rate (as described below) plus the applicable rate of 0.40% to 1.00% determined based on FR’s consolidated current ratio.

As of September 30, 2022 and December 31, 2021 the applicable interest rate for revolving line of credit borrowings under the Floor Plan Facility was 4.65% and 2.31%, respectively. Under the Floor Plan Facility, revolving line of credit borrowings bear interest at a rate per annum equal to, at the Company’s option, either: (a) a floating BSBY rate, plus 2.25%, in the case of floating BSBY rate loans, or (b) a base rate determined by reference to the greatest of: (i) the federal funds rate plus 0.50%, (ii) the prime rate published by Bank of America, N.A. and (iii) the floating BSBY rate plus 1.75%, plus 0.75%, in the case of base rate loans. Additionally, under the Floor Plan Facility, the revolving line of credit borrowings are limited by a borrowing base calculation, which did not limit the borrowing capacity at September 30, 2022 and December 31, 2021.

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The Floor Plan Facility includes a flooring line aggregate interest reduction (“FLAIR”) offset account that allows the Company to transfer cash as an offset to the payables under the Floor Plan Facility. These transfers reduce the amount of liability outstanding under the floor plan borrowings that would otherwise accrue interest, while retaining the ability to withdraw amounts from the FLAIR offset account subject to the financial covenants under the Floor Plan Facility. As a result of using the FLAIR offset account, the Company experiences a reduction in floor plan interest expense in its consolidated statements of operations. As of September 30, 2022 and December 31, 2021, FR had $218.6 million and $92.1 million, respectively, in the FLAIR offset account. The maximum FLAIR percentage of outstanding floor plan borrowings is 35% under the Floor Plan Facility. The FLAIR offset account does not reduce the outstanding amount of loans under the Floor Plan Facility for purposes of determining the unencumbered borrowing capacity under the Floor Plan Facility.

Management has determined that the credit agreements governing the Floor Plan Facility include subjective acceleration clauses, which could impact debt classification. Management believes that no events have occurred at September 30, 2022 that would trigger a subjective acceleration clause. Additionally, the credit agreements governing the Floor Plan Facility contain certain financial covenants. FR was in compliance with all debt covenants at September 30, 2022 and December 31, 2021.

The following table details the outstanding amounts and available borrowings under the Floor Plan Facility as of September 30, 2022 and December 31, 2021 (in thousands):


	September 30,		December 31,
	2022		2021
Floor Plan Facility
Notes payable - floor plan:
Total commitment	$	1,700,000	$	1,700,000
Less: borrowings, net		(899,568)		(1,011,345)
Less: flooring line aggregate interest reduction account		(218,575)		(92,108)
Additional borrowing capacity		581,857		596,547
Less: short-term payable for sold inventory⁽¹⁾		(40,011)		(28,036)
Less: purchase commitments		(37,671)		(34,612)
Unencumbered borrowing capacity	$	504,175	$	533,899

Revolving line of credit:	$	70,000	$	70,000
Less: borrowings		(20,885)		(20,885)
Additional borrowing capacity	$	49,115	$	49,115

Letters of credit:
Total commitment	$	30,000	$	30,000
Less: outstanding letters of credit		(11,371)		(11,500)
Additional letters of credit capacity	$	18,629	$	18,500

(1)

The short-term payable represents the amount due for sold inventory. A payment for any floor plan units sold is due within three to ten business days of sale. Due to the short term nature of these payables, the Company reclassifies the amounts from notes payable‒floor plan, net to accounts payable in the Condensed Consolidated Balance Sheets.

4. Restructuring and Long-Lived Asset Impairment

Restructuring

On September 3, 2019, the board of directors of CWH approved a plan to strategically shift its business away from locations where the Company does not have the ability or where it is not feasible to sell and/or service RVs at a sufficient capacity (the “Outdoor Lifestyle Locations”). Of the Outdoor Lifestyle Locations in the RV and Outdoor Retail segment operating at September 3, 2019, the Company has closed or divested 39 Outdoor Lifestyle Locations, two distribution centers, and 20 specialty retail locations relating to the 2019 Strategic Shift. As of December 31, 2020, the Company had completed the store closures and divestitures relating to the 2019 Strategic Shift. As part of the 2019 Strategic Shift, the Company evaluated the impact on

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its supporting infrastructure and operations, which included rationalizing inventory levels and composition, closing certain distribution centers, and realigning other resources. The Company had a reduction of headcount and labor costs for those locations that were closed or divested, and the Company incurred material charges associated with the activities contemplated under the 2019 Strategic Shift.

During the year ended December 31, 2021, the Company completed its analysis of its retail product offerings that are not RV related. The information available at the inception of the 2019 Strategic Shift relating to these product categories was incomplete based on the relative immaturity of the locations offering these products and was further delayed by the impact of COVID-19 on consumer buying behavior (see Note 1 — Summary of Significant Accounting Policies — COVID-19).

As of December 31, 2021, the Company had effectively finalized its 2019 Strategic Shift as it relates to closing locations, one-time termination benefits, and incremental reserve charges. The remaining potential ongoing charges under the 2019 Strategic Shift relate to lease termination costs and other associated costs relating to the leases of previously closed locations under the 2019 Strategic Shift. The process of identifying subtenants and negotiating lease terminations has been delayed in part due to the COVID-19 pandemic and is expected to continue. The timing of these negotiations will vary as both subleases and terminations are contingent on landlord approvals.

The Company currently estimates the total restructuring costs associated with the 2019 Strategic Shift to be in the range of $116.2 million to $132.6 million. The breakdown of the estimated restructuring costs are as follows:

●

one-time employee termination benefits relating to retail store or distribution center closures/divestitures of $1.2 million, all of which were incurred through December 31, 2020;

●

lease termination costs of $20.0 million to $34.0 million, of which $15.4 million has been incurred through September 30, 2022;

●

incremental inventory reserve charges of $57.4 million, all of which were incurred through December 31, 2021; and

●

other associated costs of $37.6 million to $40.0 million, of which $37.4 million has been incurred through September 30, 2022.

Through September 30, 2022, the Company has incurred $37.4 million of such other associated costs primarily representing labor, lease, and other operating expenses incurred during the post-close wind-down period for the locations related to the 2019 Strategic Shift. The additional amount of $0.2 million to $2.6 million represents similar costs that may be incurred through the year ending December 31, 2022 for locations that continue in a wind-down period, primarily comprised of lease costs accounted for under ASC 842, Leases, prior to lease termination. The Company intends to negotiate terminations of these leases where prudent and pursue sublease arrangements for the remaining leases. Lease costs may continue to be incurred after December 31, 2022 on these leases if the Company is unable to terminate the leases under acceptable terms or offset the lease costs through sublease arrangements. The foregoing lease termination cost estimate represents the expected cash payments to terminate certain leases but does not include the gain or loss from derecognition of the related operating lease assets and liabilities, which is dependent on the particular leases that will be terminated.

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The following table details the costs incurred during the three and nine months ended September 30, 2022 and 2021 associated with the 2019 Strategic Shift (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Restructuring costs:
Lease termination costs⁽¹⁾	$	—	$	—	$	1,122	$	1,431
Incremental inventory reserve charges⁽²⁾		—		15,017		—		15,017
Other associated costs⁽³⁾		1,671		2,345		5,548		8,422
Total restructuring costs	$	1,671	$	17,362	$	6,670	$	24,870

(1)	These costs were included in lease termination charges in the condensed consolidated statements of operations. This reflects termination fees paid, net of any gain from derecognition of the related operating lease assets and liabilities.

(2)	These costs were included in costs applicable to revenue – products, service and other in the condensed consolidated statements of operations.

(3)

Other associated costs primarily represent labor, lease, and other operating expenses incurred during the post-close wind-down period for the locations related to the 2019 Strategic Shift and were included in selling, general, and administrative expenses in the condensed consolidated statements of operations.

The following table details changes in the restructuring accrual associated with the 2019 Strategic Shift (in thousands):


	One-time		Lease		Other
	Termination		Termination		Associated
	Benefits		Costs⁽¹⁾		Costs		Total
Balance at June 30, 2019	$	—	$	—	$	—	$	—
Charged to expense		1,008		1,350		4,321		6,679
Paid or otherwise settled		(286)		(1,350)		(4,036)		(5,672)
Balance at December 31, 2019		722		—		285		1,007
Charged to expense		231		10,532		16,835		27,598
Paid or otherwise settled		(953)		(10,532)		(16,346)		(27,831)
Balance at December 31, 2020		—		—		774		774
Charged to expense		—		1,650		10,684		12,334
Paid or otherwise settled		—		(1,650)		(10,532)		(12,182)
Balance as of December 31, 2021		—		—		926		926
Charged to expense		—		2,023		5,548		7,571
Paid or otherwise settled		—		(2,023)		(5,639)		(7,662)
Balance at September 30, 2022	$	—	$	—	$	835	$	835

(1)

Lease termination costs exclude the $1.3 million, $6.1 million, $0.2 million and $0.9 million of gains from the derecognition of the operating lease assets and liabilities relating to the terminated leases as part of the 2019 Strategic Shift for the six months ended December 31, 2019, for the years ended December 31, 2020 and 2021, and for the nine months ended September 30, 2022, respectively.

The Company evaluated the requirements of ASC No. 205-20, Presentation of Financial Statements – Discontinued Operations relative to the 2019 Strategic Shift and determined that discontinued operations treatment is not applicable. Accordingly, the results of operations of the locations impacted by the 2019 Strategic Shift are reported as part of continuing operations in the accompanying condensed consolidated financial statements.

Long-Lived Asset Impairment

During the three and nine months ended September 30, 2022, the Company had indicators of impairment of the long-lived assets for certain locations based on the Company’s review of location performance in the normal course of business. During the three and nine months ended September 30, 2021, the Company had indicators of impairment of the long-lived assets for certain of its closed locations relating to the 2019 Strategic Shift. As a result of updating certain assumptions in the long-lived asset impairment analysis for these locations, the Company determined that the fair value of certain long-lived assets were below their carrying value and were impaired. The long-lived asset impairment charge was calculated as the amount that

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the carrying value of these locations exceeded the estimated fair value, except that individual assets cannot be impaired below their individual fair values when that fair value can be determined without undue cost and effort.

The following table details long-lived asset impairment charges by type of long-lived asset (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Long-lived asset impairment charges:
Leasehold improvements	$	—	$	—	$	2,557	$	—
Furniture and equipment		—		—		61		—
Operating lease right-of-use assets		887		316		887		1,398
Total long-lived asset impairment charges		887		316		3,505		1,398
Less: portion unrelated to 2019 Strategic Shift		—		—		(2,618)		—
2019 Strategic Shift long-lived asset impairment charges	$	887	$	316	$	887	$	1,398

5. Goodwill and Intangible Assets

Goodwill

The following is a summary of changes in the Company’s goodwill by segment for the nine months ended September 30, 2022 (in thousands):


	Good Sam
	Services and		RV and
	Plans		Outdoor Retail		Consolidated
Balance as of December 31, 2021 (excluding impairment charges)	$	70,713	$	654,758	$	725,471
Accumulated impairment charges		(46,884)		(194,953)		(241,837)
Balance as of December 31, 2021		23,829		459,805		483,634
Acquisitions		405		49,178		49,583
Balance as of September 30, 2022	$	24,234	$	508,983	$	533,217

For the nine months ended September 30, 2022 and 2021, the Company determined that there were no triggering events for an interim goodwill impairment test of its reporting units.

Intangible Assets

Finite-lived intangible assets and related accumulated amortization consisted of the following at September 30, 2022 and December 31, 2021 (in thousands):


	September 30, 2022
	Cost or		Accumulated
	Fair Value		Amortization		Net
Good Sam Services and Plans:
Membership, customer lists and other	$	9,640		(8,901)	$	739
Trademarks and trade names		2,132		(59)		2,073
Websites		3,050		(573)		2,477
RV and Outdoor Retail:
Customer lists and domain names		5,626		(2,735)		2,891
Supplier lists		1,696		(678)		1,018
Trademarks and trade names		29,564		(19,335)		10,229
Websites		7,486		(5,094)		2,392
	$	59,194	$	(37,375)	$	21,819

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	December 31, 2021
	Cost or		Accumulated
	Fair Value		Amortization		Net
Good Sam Services and Plans:
Membership, customer lists and other	$	9,140	$	(8,748)	$	392
Websites		2,500		(253)		2,247
RV and Outdoor Retail:
Customer lists and domain names		5,626		(2,298)		3,328
Supplier lists		1,696		(424)		1,272
Trademarks and trade names		29,564		(9,465)		20,099
Websites		7,185		(3,553)		3,632
	$	55,711	$	(24,741)	$	30,970

During the first quarter of 2022, the Company recorded $8.8 million of incremental accelerated amortization from the adjustment of the useful lives of certain trademark and trade name intangible assets relating to brands not traditionally associated with RVs that the Company is phasing out.

6. Long-Term Debt

Outstanding long-term debt consisted of the following (in thousands):


	September 30,		December 31,
	2022		2021
Term Loan Facility ⁽¹⁾	$	1,359,230	$	1,367,277
Real Estate Facilities ⁽²⁾		21,666		22,896
Other Long-Term Debt		3,311		3,400
Subtotal		1,384,207		1,393,573
Less: current portion		(15,827)		(15,822)
Total	$	1,368,380	$	1,377,751

(1)	Net of $15.2 million and $16.8 million of original issue discount at September 30, 2022 and December 31, 2021, respectively, and $6.1 million and $6.9 million of finance costs at September 30, 2022 and December 31, 2021, respectively.

(2)	Net of $0.2 million of finance costs at each of September 30, 2022 and December 31, 2021.

Senior Secured Credit Facilities

As of September 30, 2022 and December 31, 2021, CWGS Group, LLC (the “Borrower”), a wholly-owned subsidiary of CWGS, LLC, was party to a credit agreement (the “Credit Agreement”) for a senior secured credit facility (the “Senior Secured Credit Facilities”). The Senior Secured Credit Facilities consist of a $1.4 billion term loan facility (the “Term Loan Facility”) and a $65.0 million revolving credit facility (the “Revolving Credit Facility”).

The funds available under the Revolving Credit Facility may be utilized for borrowings or letters of credit; however, a maximum of $25.0 million may be allocated to such letters of credit. The Revolving Credit Facility matures in June 2026 and the Term Loan Facility matures in June 2028. The Term Loan Facility requires mandatory principal payments in equal quarterly installments of $3.5 million. Additionally, the Company is required to prepay the term loan borrowings in an aggregate amount up to 50% of excess cash flow, as defined in the Credit Agreement, for such fiscal year depending on the Total Leverage Ratio (as defined by the Credit Agreement) beginning with the year ended December 31, 2022. The Company does not expect that an additional excess cash flow payment will be required relating to 2022.

Under the Senior Secured Credit Facilities, the Company has the ability to request to increase the amount of term loans or revolving loans in an aggregate amount not to exceed the greater of (a) a “fixed” amount set at $725.0 million and (b) 100% of consolidated EBITDA for the most recent four consecutive fiscal quarters on a pro forma basis (as defined in the Credit Agreement). The lenders under the Senior Secured Credit Facilities are not under any obligation to provide commitments in respect of any such increase.

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As of September 30, 2022 and December 31, 2021, the average interest rate on the Term Loan Facility was 5.34% and 3.25%, respectively. The following table details the outstanding amounts and available borrowings under the Senior Secured Credit Facilities as of (in thousands):


	September 30,		December 31,
	2022		2021
Senior Secured Credit Facilities:
Term Loan Facility:
Principal amount of borrowings	$	1,400,000	$	1,400,000
Less: cumulative principal payments		(19,515)		(9,004)
Less: unamortized original issue discount		(15,177)		(16,826)
Less: unamortized finance costs		(6,078)		(6,893)
		1,359,230		1,367,277
Less: current portion		(14,015)		(14,015)
Long-term debt, net of current portion	$	1,345,215	$	1,353,262
Revolving Credit Facility:
Total commitment	$	65,000	$	65,000
Less: outstanding letters of credit		(4,930)		(4,930)
Additional borrowing capacity	$	60,070	$	60,070

The Senior Secured Credit Facilities are fully and unconditionally guaranteed, jointly and severally, on a senior secured basis by each of the Company’s existing and future domestic restricted subsidiaries with the exception of FreedomRoads Intermediate Holdco, LLC, the direct parent of FR, and FR, and its subsidiaries. The Credit Agreement contains certain restrictive covenants pertaining to, but not limited to, mergers, changes in the nature of the business, acquisitions, additional indebtedness, sales of assets, investments, and the payment of dividends subject to certain limitations and minimum operating covenants. Additionally, management has determined that the Senior Secured Credit Facilities include subjective acceleration clauses, which could impact debt classification. Management believes that no events have occurred at September 30, 2022 that would trigger a subjective acceleration clause.

The Credit Agreement requires the Borrower and its subsidiaries to comply on a quarterly basis with a maximum Total Net Leverage Ratio (as defined in the Credit Agreement), which covenant is in effect only if, as of the end of each calendar quarter, the aggregate amount of borrowings under the revolving credit facility (including swingline loans), letters of credit and unreimbursed letter of credit disbursements outstanding at such time is greater than 35% of the total commitment on the Revolving Credit Facility (excluding (i) up to $15.0 million attributable to any outstanding undrawn letters of credit and (ii) any cash collateralized or backstopped letters of credit), as defined in the Credit Agreement. As of September 30, 2022, the Company was not subject to this covenant as borrowings under the Revolving Credit Facility did not exceed the 35% threshold. The Company was in compliance with all applicable debt covenants at September 30, 2022 and December 31, 2021.

Real Estate Facilities

In November 2018, September 2021 and December 2021, Camping World Property, Inc. (the ‘‘Real Estate Borrower’’), an indirect wholly-owned subsidiary of CWGS, LLC, and CIBC Bank USA (“Lender”), entered into loan and security agreements for real estate credit facilities (as amended from time to time, the “First Real Estate Facility”, the “Second Real Estate Facility”, and the “Third Real Estate Facility”, respectively, and collectively the “Real Estate Facilities”) with aggregate maximum principal capacities of $21.5 million, $9.0 million, and $10.1 million for the First Real Estate Facility, Second Real Estate Facility, and Third Real Estate Facility, respectively.

Borrowings under the Real Estate Facilities are guaranteed by CWGS Group, LLC, a wholly-owned subsidiary of CWGS, LLC. The Real Estate Facilities may be used to finance the acquisition of real estate assets. The Real Estate Facilities are secured by a first priority security interest on the real estate assets acquired with the proceeds of the Real Estate Facilities (“Real Estate Facility Properties”). The First Real Estate Facility, Second Real Estate Facility, and Third Real Estate Facility mature in October 2023, September 2026, and December 2026, respectively.

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As of September 30, 2022, the First Real Estate Facility, Second Real Estate Facility, and the Third Real Estate Facility had outstanding principal balances of $4.0 million and $8.1 million, and $9.7 million, respectively, net of unamortized finance costs, and a weighted average interest rate of 4.84%. As of September 30, 2022, the Company had no available capacity under the Real Estate Facilities, since repaid amounts cannot be reborrowed under the Real Estate Facilities.

Management has determined that the credit agreements governing the Real Estate Facilities include subjective acceleration clauses, which could impact debt classification. Management believes that no events have occurred at September 30, 2022 that would trigger a subjective acceleration clause. Additionally, the Real Estate Facilities are subject to certain cross default provisions, a debt service coverage ratio, and other customary covenants. The Company was in compliance with all debt covenants at September 30, 2022 and December 31, 2021.

On October 27, 2022, subsidiaries of FRHP Lincolnshire, LLC (“FRHP”), an indirect wholly-owned subsidiary of CWGS, LLC, entered into a credit agreement with a syndication of banks for a real estate credit facility (the “2022 Real Estate Facility”) with aggregate maximum principal capacity of $250.0 million with an option that allows FRHP to request an additional $100.0 million of principal capacity. The lenders under the 2022 Real Estate Facility are not under any obligation to provide commitments in respect of any such increase. The 2022 Real Estate Facility bears interest at FRHP’s option of either (as defined in the credit agreement for the 2022 Real Estate Facility): (a) the Secured Overnight Financing Rate (“SOFR”) plus the applicable rate of 2.30% or (b) the highest of (i) the Federal Funds Rate plus 1.80%, (ii) the Prime Rate plus 1.30%, or (iii) SOFR plus 2.30%. The 2022 Real Estate Facility has an unused commitment fee of 0.20% of the aggregate unused principal amount and it matures in October 2027. Additionally, the 2022 Real Estate Facility is subject to a debt service coverage ratio covenant (as defined in the credit agreement for the 2022 Real Estate Facility) and management has determined that the 2022 Real Estate Facility includes subjective acceleration clauses, which could impact debt classification. All obligations under the 2022 Real Estate Facility and the guarantees of those obligations, are secured, subject to certain exceptions, by the mortgaged real property assets. No amounts were borrowed as of the closing of the 2022 Real Estate Facility and the Company expects to borrow between $100.0 million and $150.0 under the 2022 Real Estate Facility during the fourth quarter of 2022.

Other Long-Term Debt

In December 2021, FRHP Lincolnshire, LLC, an indirect wholly-owned subsidiary of CWGS, LLC, assumed a mortgage as part of a real estate acquisition. This mortgage is secured by the acquired property and is guaranteed by CWGS Group, LLC, a wholly-owned subsidiary of CWGS, LLC. As of September 30, 2022, the outstanding principal balance of the mortgage was $3.3 million with an interest rate of 3.50%. The mortgage matures in December 2026.

7. Lease Obligations

The following presents certain information related to the costs for leases where the Company is the lessee (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Operating lease cost	$	27,824	$	29,116	$	84,401	$	87,249
Finance lease cost:
Amortization of finance lease assets		3,165		1,776		8,830		3,717
Interest on finance lease liabilities		1,441		575		3,580		1,638
Short-term lease cost		392		478		1,410		1,437
Variable lease cost		5,878		5,749		17,674		17,582
Sublease income		(432)		(467)		(1,131)		(1,401)
Net lease costs	$	38,268	$	37,227	$	114,764	$	110,222

As of September 30, 2022 and December 31, 2021, finance lease assets of $91.2 million and $75.7 million, respectively, were included in property and equipment, net in the accompanying condensed consolidated balance sheets.

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The following presents supplemental cash flow information related to leases (in thousands):


	Nine Months Ended September 30,
	2022		2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	85,175	$	87,812
Operating cash flows for finance leases		3,508		1,588
Financing cash flows for finance leases		4,541		2,188
Lease assets obtained in exchange for lease liabilities:
New, remeasured and terminated operating leases		14,433		55,330
New, remeasured and terminated finance leases		24,440		15,362

Sale-Leaseback Arrangement Recorded as Financing Transaction

On February 8, 2022, FRHP Lincolnshire, LLC sold three properties for a total sale price of $28.0 million. Concurrent with the sale of these properties, the Company entered into three separate twenty-year lease agreements, whereby the Company will lease back the properties from the acquiring company. Under each lease agreement, FR has four consecutive options to extend the lease term for additional periods of five years for each option. This transaction is accounted for as a financing transaction. The Company recorded a liability for the amount received, will continue to depreciate the non-land portion of the assets, and has imputed an interest rate so that the net carrying amount of the financial liability and remaining non-land assets will be zero at the end of the initial lease terms. The financial liability is included in other long-term liabilities in the condensed consolidated balance sheet as of September 30, 2022.

8. Fair Value Measurements

Accounting guidance for fair value measurements establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.

There have been no transfers of assets or liabilities between the fair value measurement levels and there were no material re-measurements to fair value during 2022 and 2021 of assets and liabilities that are not measured at fair value on a recurring basis.

The following table presents the reported carrying value and fair value information for the Company’s debt instruments. The fair values shown below for the Term Loan Facility, as applicable, are based on quoted prices in the inactive market for identical assets (Level 2), and the fair values shown below for the Floor Plan Facility, the Revolving Line of Credit, and the Real Estate Facilities are estimated by discounting the future contractual cash flows at the current market interest rate that is available based on similar financial instruments.


	Fair Value	September 30, 2022				December 31, 2021
($ in thousands)	Measurement	Carrying Value		Fair Value		Carrying Value		Fair Value
Term Loan Facility	Level 2	$	1,359,230	$	1,394,290	$	1,367,277	$	1,382,372
Floor Plan Facility Revolving Line of Credit	Level 2		20,885		18,191		20,885		20,885
Real Estate Facilities	Level 2		21,666		20,153		22,896		22,981
Other Long-Term Debt	Level 2		3,311		2,926		3,400		3,400

9. Commitments and Contingencies

Litigation

Hunnewell Complaint

On March 5, 2019, a shareholder derivative suit styled Hunnewell v. Camping World Holdings, Inc., et al., was filed in the Court of Chancery of the State of Delaware, alleging breaches of fiduciary duty for alleged

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failure to implement effective disclosure controls and internal controls over financial reporting and to properly oversee certain acquisitions and for alleged insider trading (the “Hunnewell Complaint”).

On April 17, 2019, a shareholder derivative suit styled Lincolnshire Police Pension Fund v. Camping World Holdings, Inc., et al., was filed in the Court of Chancery of the State of Delaware, alleging breaches of fiduciary duty for alleged failure to implement effective disclosure controls and internal controls over financial reporting and to properly oversee certain acquisitions and for alleged insider trading and unjust enrichment for compensation received during that time (the “LPPF Complaint”). The LPPF Complaint names the Company as nominal defendant, and names certain of the Company’s officers and directors, among others, as defendants and seeks compensatory damages, extraordinary equitable and/or injunctive relief, restitution and disgorgement, attorneys’ fees and costs, and any other and further relief the court deems just and proper. On May 30, 2019, the Court granted the parties’ joint motion to consolidate the Hunnewell and LPPF Complaints (as well as any future filed actions relating to the subject matter). On January 31, 2022, the Court granted in full Defendants’ motion to dismiss the Plaintiffs’ Amended Complaint with prejudice. On February 14, 2022, Plaintiff filed a notice of appeal, appealing the Court’s order dismissing the Amended Complaint. Plaintiffs’ appeal was fully briefed and oral arguments were held on September 21, 2022. On October 13, 2022, the Supreme Court of the State of Delaware affirmed the Court’s order dismissing the Amended Complaint, resolving this matter.

Janssen and Sandler Complaints

On August 6, 2019, two shareholder derivative suits, styled Janssen v. Camping World Holdings, Inc., et al., and Sandler v. Camping World Holdings, Inc. et al., were filed in the U.S. District Court for the District of Delaware. Both actions name the Company as a nominal defendant, and name certain of the Company’s officers and directors, Crestview Partners II GP, L.P. and Crestview Advisors, L.L.C. as defendants, and allege: (i) violations of Section 14(a) of the Securities Exchange Act for issuing proxy statements that allegedly omitted material information and allegedly included materially false and misleading financial statements; (ii) violations of Section 10(b) and 20(a) of the Securities Exchange Act of 1934, seeking contribution for causing the Company to issue allegedly false and misleading statements and/or allegedly omit material information in public statements and/or the Company’s filings concerning the Company’s financial performance, the effectiveness of internal controls to ensure accurate financial reporting, and the success and profitability of the integration and rollout of Gander Outdoors (now Gander RV) stores; (iii) breaches of fiduciary duty, unjust enrichment, abuse of control, and gross mismanagement for allegedly causing or allowing the Company to disseminate to Camping World shareholders materially misleading and inaccurate information through the Company’s SEC filings; and (iv) breach of fiduciary duties for alleged insider selling and misappropriation of information (together, the “Janssen and Sandler Complaints”). The Janssen and Sandler Complaints seek restitutionary and/or compensatory damages, injunctive relief, disgorgement of all profits, benefits, and other compensation obtained by certain of the Company’s officers and directors, attorneys’ fees and costs, and any other and further relief the court deems just and proper. The case is stayed while the parties confer regarding the schedule for further proceedings in the action.

Weissmann Complaint

On June 22, 2021, CWH filed a one-count complaint captioned FreedomRoads Holding Company, LLC v. Steve Weissmann in the Circuit Court of Cook County, Illinois against Steve Weissmann (“Weissmann”) for breach of contractual obligation under note guarantee (the “Note”) (the “Weissmann Complaint”). On October 8, 2021, Weissmann brought a counterclaim against FreedomRoads and Third-Party Defendants Marcus Lemonis, NBCUniversal Media, LLC, the Consumer National Broadcasting Company, Camping World, Inc., and Machete Productions (“Machete”) (the “Weissmann Counterclaim”), in which he alleges claims in connection with the Note and his appearance on the reality television show The Profit. Weissmann alleges the following causes of action against FreedomRoads and all third-party defendants, including Camping World, Inc.: (i) fraud; (ii) fraud in the inducement; (iii) fraudulent concealment; (iv) breach of fiduciary duty; (v) defamation; (vi) defamation per se; (vii) false light; (viii) intentional infliction of emotional distress; (ix) negligence; (v) unjust enrichment; and (vi) RICO § 1962. Weissmann seeks costs and damages in an amount to be proven at trial but no less than the amount in the Note (approximately $2.5 million); in connection with his RICO claim, Weissmann asserts he is entitled to damages in the amount of three times the Note. On February 18, 2022, NBCUniversal, CNBC, and Machete filed a motion to compel arbitration (the “NBC Arbitration

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Motion”). On May 5, 2022, an agreed order was filed staying the litigation in favor of arbitration. On May 31, 2022, CWH filed an arbitration demand against Weissmann for collection on the Note. Weissmann filed his response and counterclaims, and third-party claims against FreedomRoads Holding Company, LLC, Camping World, Inc., Marcus Lemonis, NBCUniversal, and Machete on July 7, 2022. On or about July 21, 2022, CWH and the other respondents filed their responses and affirmative defenses.

Tumbleweed Complaint

On November 10, 2021, Tumbleweed Tiny House Company, Inc. filed a complaint against FreedomRoads, Marcus Lemonis, NBCUniversal Media, LLC, and Machete Productions in which Tumbleweed alleges claims in connection with the Note and its appearance on the reality television show The Profit (the “Tumbleweed Complaint”). Tumbleweed alleges the following claims against the defendants, including FreedomRoads and CWH: (i) fraud; (ii) false promise; (iii) breach of fiduciary duty (and aiding and abetting the same); (iv) breach of contract; (v) breach of oral contract; (vi) tortious interference with prospective economic advantage; (vii) fraud in the inducement; (viii) negligent misrepresentation; (ix) fraudulent concealment; (x) conspiracy; (xi) unlawful business practices; (xii) defamation; and (xiii) declaratory judgment. On April 21, 2022, the Court granted a motion to compel arbitration filed by NBCUniversal and joined by all defendants, including FreedomRoads, CWH, and Marcus Lemonis, compelling Tumbleweed’s claims to arbitration. Tumbleweed served its arbitration demand on FreedomRoads, Camping World, Inc., and Marcus Lemonis on May 17, 2022. CWH and Marcus Lemonis filed responses and affirmative defenses on May 31, 2022. On July 20, 2022, pursuant to the JAMS streamlined arbitration rules, the Tumbleweed Complaint was consolidated together with the Weissmann Complaint. The parties have exchanged initial discovery, but the Arbitrator has not yet set a schedule in the case.

Precise Complaint

On May 3, 2022, Lynn E. Feldman, Esquire, in her capacity as the Chapter 7 Trustee for the Estate of Precise Graphix, LLC filed a complaint against NBCUniversal Media, LLC, Machete Corporation, and Camping World, Inc. in which Trustee Feldman alleges claims on behalf of Precise Graphix in connection with its appearance on The Profit and subsequent commercial relationship with CWH (the “Precise Complaint”). Trustee Feldman alleges the following claims against defendants, including CWH: (i) Fraud; (ii) False Promise; (iii) Breach of Fiduciary Duty; (iv) Breach of Contract; (v) Breach of Oral Contract; (vi) Fraud in the Inducement; (vii) Fraud in the Inducement; (viii) Negligent Misrepresentation; (ix) Fraudulent Concealment; (x) Conspiracy; (xi) Unlawful Business Practices in Violation of California Business and Professions Code §17200; (xii) Aiding and Abetting Breach of Fiduciary Duty; and (xiii) Declaratory Judgment. Precise did not serve the Precise Complaint on CWH. On July 3, 2022, Precise Graphix filed its arbitration demand against CWH, NBCUniversal, and Machete alleging substantially similar claims as the Precise Complaint. On or about July 19, 2022, CWH and the other respondents filed their responses and affirmative defenses. The parties have exchanged initial discovery, but the Arbitrator has not yet set a schedule in the case.

General

While the outcome of litigation cannot be predicted with certainty, and some of these lawsuits, claims or proceedings may be determined adversely to the Company, management does not believe that the disposition of any such pending matters is likely to have a material adverse effect on the Company’s financial statements. The Company does not have sufficient information to estimate a possible loss or range of possible loss for the matters discussed above. No assurance can be made that these or similar suits will not result in a material financial exposure in excess of insurance coverage, which could have a material adverse effect upon the Company’s financial condition and results of operations.

From time to time, the Company is involved in other litigation arising in the normal course of business operations.

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Financial Assurances

In the normal course of business, the Company obtains standby letters of credit and surety bonds from financial institutions and other third parties. These instruments guarantee the Company’s own future performance and provide third parties with financial and performance assurance in the event that the Company does not perform. These instruments support a wide variety of the Company’s business activities. As of September 30, 2022 and December 31, 2021, outstanding standby letters of credit issued through our Floor Plan Facility were $11.4 million and $11.5 million, respectively, and outstanding standby letters of credit issued through the Senior Secured Credit Facilities were $4.9 million and $4.9 million, respectively (see Note 4 — Inventories and Floor Plan Payables and Note 9 — Long-Term Debt). As of September 30, 2022 and December 31, 2021, outstanding surety bonds were $20.7 million and $19.1 million, respectively. The underlying liabilities insured by these instruments are reflected on the Company’s accompanying consolidated balance sheets, where applicable. Therefore, no additional liability is reflected for the letters of credit and surety bonds themselves.

10. Statement of Cash Flows

Supplemental disclosures of cash flow information for the following periods (in thousands) were as follows:



	Nine Months Ended September 30,
	2022		2021
Cash paid during the period for:
Interest	$	69,007	$	44,287
Income taxes		40,925		88,339
Non-cash investing activities:
Leasehold improvements paid by lessor		—		91
Vehicles transferred to property and equipment from inventory		945		829
Capital expenditures in accounts payable and accrued liabilities		12,834		10,347
Non-cash financing activities:
Par value of Class A common stock issued for redemption of common units in CWGS, LLC		1		42
Cost of treasury stock issued for vested restricted stock units		26,165		22,917

11. Acquisitions

During the nine months ended September 30, 2022 and 2021, subsidiaries of the Company acquired the assets of multiple RV dealerships, as well as an outdoor publication during the nine months ended September 30, 2022, that constituted businesses under accounting rules. The Company used cash to complete the acquisitions. The Company considers acquisitions of independent dealerships to be a fast and capital efficient alternative to opening new retail locations to expand its business and grow its customer base. Additionally, the Company considers the acquisition of the outdoor publication as a furtherance of its strategy to target a younger demographic of RV enthusiasts. The acquired businesses were recorded at their estimated fair values under the acquisition method of accounting. The balance of the purchase prices in excess of the fair values of net assets acquired were recorded as goodwill.

During the nine months ended September 30, 2022, the RV and Outdoor Retail segment acquired the assets of various RV dealerships comprised of five locations for an aggregate purchase price of approximately $79.8 million. Additionally, during the nine months ended September 30, 2022, the Company purchased real estate property for $41.7 million, of which $19.7 million related to the sellers of the acquired businesses. Also, during the nine months ended September 30, 2022, the Good Sam Services and Plans segment acquired the assets of the outdoor publication for $3.4 million.

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During the nine months ended September 30, 2021, the RV and Outdoor Retail segment acquired the assets of various RV dealerships comprised of twelve locations for an aggregate purchase price of approximately $99.7 million. Additionally, during the nine months ended September 30, 2021, the Company purchased real estate property for $61.1 million, of which $31.4 million related to the sellers of the acquired businesses.

The estimated fair values of the assets acquired and liabilities assumed for the acquisitions discussed above consist of the following, net of measurement period adjustments relating to acquisitions from the respective previous year:


	Nine Months Ended September 30,
($ in thousands)	2022		2021
Tangible assets (liabilities) acquired (assumed):
Accounts receivable, net	$	(68)	$	615
Inventories, net		30,828		27,386
Prepaid expenses and other assets		48		126
Property and equipment, net		206		1,348
Operating lease assets		739		1,222
Customer deposits		(77)		(1,437)
Accrued liabilities		75		1,281
Current portion of operating lease liabilities		(235)		(195)
Operating lease liabilities, net of current portion		(504)		(1,027)
Total tangible net assets acquired		31,012		29,319
Total intangible assets acquired		2,632		—
Goodwill		49,583		70,430
Cash paid for acquisitions, net of cash acquired		83,227		99,749
Inventory purchases financed via floor plan		(19,971)		(19,537)
Cash payment net of floor plan financing	$	63,256	$	80,212

The fair values above for the nine months ended September 30, 2022 are preliminary as they are subject to measurement period adjustments for up to one year from the date of acquisition as new information is obtained about facts and circumstances that existed as of the acquisition date relating to the valuation of the acquired assets, primarily the acquired inventories. For the nine months ended September 30, 2022, the fair values above include measurement period adjustments for valuation of acquired inventories, accounts receivable, accrued liabilities, and other current liabilities relating to dealership acquisitions during the year ended December 31, 2021. For the nine months ended September 30, 2021, the fair values above include measurement period adjustments for valuation of acquired inventories, property and equipment, and accrued liabilities relating to dealership acquisitions during the year ended December 31, 2020.The primary items that generated the goodwill are the value of the expected synergies between the acquired businesses and the Company and the acquired assembled workforce, neither of which qualify for recognition as a separately identified intangible asset. For the nine months ended September 30, 2022 and 2021, acquired goodwill of $49.6 million and $70.4 million, respectively, is expected to be deductible for tax purposes. Included in the condensed consolidated financial statements for the nine months ended September 30, 2022 were $39.4 million of revenue, and $1.4 million of pre-tax income, respectively from the acquisitions as of their applicable acquisition dates. Included in the condensed consolidated financial statements for the nine months ended September 30, 2021 were $100.6 million of revenue, and $10.8 million of pre-tax income, respectively of the acquired dealerships from the applicable acquisition dates. Pro forma information on these acquisitions has not been included, because the Company has deemed them to not be individually or cumulatively material.

In October 2022, the RV and Outdoor Retail segment acquired the assets of a consortium of five RV dealerships and one RV service center. The reasons for this acquisition and the primary items generating the goodwill are consistent with the previous RV dealership acquisitions discussed above.

12. Income Taxes

CWH is organized as a Subchapter C corporation and, as of September 30, 2022, is a 50.1% owner of CWGS, LLC (see Note 14 — Stockholders’ Equity and Note 15 — Non-Controlling Interests). CWGS, LLC is

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organized as a limited liability company and treated as a partnership for U.S. federal and most applicable state and local income tax purposes and as such, is generally not subject to any U.S. federal entity-level income taxes. However, certain CWGS, LLC subsidiaries, including Americas Road and Travel Club, Inc., Camping World, Inc. (“CW”), and FreedomRoads RV, Inc. and their wholly-owned subsidiaries, are subject to entity-level taxes as they are Subchapter C corporations.

As further described in Note 1 — Summary of Significant Accounting Policies — COVID-19, in response to the COVID-19 pandemic, many governments enacted measures to provide aid and economic stimulus. These measures included deferring the due dates of income tax and payroll tax payments or other changes to their income and non-income-based tax laws. The Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), which was enacted on March 27, 2020 in the U.S., includes measures to assist companies, including temporary changes to income and non-income-based tax laws. For the nine months ended September 30, 2022, there were no material tax impacts to the Company’s condensed consolidated financial statements as it relates to COVID-19 measures other than the deferral of non-income-based payroll taxes under the CARES Act of $14.6 million as of September 30, 2022 and December 31, 2021, which were included in accrued liabilities in the condensed consolidated balance sheets and must be paid by December 31, 2022. The Company will continue to monitor additional guidance issued by the U.S. Treasury Department, the Internal Revenue Service and others. Furthermore, on March 11, 2021 the American Rescue Plan Act, a $1.9 trillion tax-and-spending package aimed at addressing the continuing economic and health impacts of the coronavirus pandemic, was enacted. The American Rescue Plan Act provisions do not have a material impact on the Company’s income tax expense and effective tax rate.

On August 16, 2022, President Biden signed the Inflation Reduction Act of 2022 (“IRA”) into law. The IRA contains several revisions to the Internal Revenue Code, including a 15% corporate minimum income tax and a 1% excise tax on corporate stock repurchases in tax years beginning after December 31, 2022 with certain exclusions for (a) repurchased shares for withholding taxes on vested restricted stock units (“RSUs”) and (b) treasury shares reissued in the same tax year for settlement of stock option exercises or vesting of RSUs. While these tax law changes have no immediate effect and are not expected to have a material adverse effect on our results of operations going forward, we will continue to evaluate its impact as further information becomes available.

For the nine months ended September 30, 2022, the Company's effective income tax rate was 15.7%, which differed from the federal statutory rate of 21.0% primarily due to a portion of the Company’s earnings being attributable to non-controlling interests in limited liability companies, which are not subject to corporate level taxes, and a $2.8 million increase in the accrual for uncertain tax positions, net of income tax benefits of $0.8 million related to current state combined unitary losses. For the nine months ended September 30, 2021, the Company’s effective income tax rate was 12.5% primarily due to a portion of the Company’s earnings being attributable to non-controlling interests in limited liability companies, which are not subject to corporate level taxes, income tax benefits of $14.5 million recorded in the nine months ended September 30, 2021 related to the release of the valuation allowance on deferred tax assets at CW that can now be included in state combined unitary income tax returns and $4.1 million for the revaluation of deferred tax assets as a result of increased state tax rates. Additionally, for the nine months ended September 30, 2022, the Company reduced its deferred tax asset by $9.4 million relating to CWH’s investment in CWGS, LLC for the change in ownership of CWGS, LLC from the treasury stock repurchase of 2.6 million shares of Class A common stock during the three months ended March 31, 2022 (see Note 14 — Stockholders’ Equity). These treasury stock repurchases result in a commensurate reduction in common units in CWGS, LLC held by CWH.

The Company evaluates its deferred tax assets on a quarterly basis to determine if they can be realized and establishes valuation allowances when it is more likely than not that all or a portion of the deferred tax assets may not be realized. At September 30, 2022 and December 31, 2021, the Company determined that all of its deferred tax assets (except those of CW and the Outside Basis Deferred Tax Asset discussed below) are more likely than not to be realized. The Company maintains a valuation allowance against the deferred tax assets of CW, excluding certain state deferred tax assets included in the state combined unitary income tax returns, since it was determined that it is more likely than not, based on available objective evidence, that CW would have insufficient taxable income in the current or carryforward periods under the tax laws to realize the future tax benefits for this portion of its deferred tax assets. The Company maintains a valuation allowance against the Outside Basis Deferred Tax Asset pertaining to the portion that is not amortizable for tax purposes,

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since the Company would likely only realize the non-amortizable portion of the Outside Basis Deferred Tax Asset if the investment in CWGS, LLC was divested.

The Company is party to the Tax Receivable Agreement that provides for the payment by the Company to the Continuing Equity Owners and Crestview Partners II GP, L.P. of 85% of the amount of tax benefits, if any, the Company actually realizes, or in some circumstances is deemed to realize, as a result of (i) increases in the tax basis from the purchase of common units from Crestview Partners II GP, L.P. in exchange for Class A common stock in connection with the consummation of the IPO and the related transactions and any future redemptions that are funded by the Company and any future redemptions of common units by Continuing Equity Owners as described above and (ii) certain other tax benefits attributable to payments made under the Tax Receivable Agreement. During the nine months ended September 30, 2022 and 2021, 50,000 and 4,181,552 common units in CWGS, LLC, respectively, were redeemed for Class A common stock subject to the provisions of the Tax Receivable Agreement (see Note 14 — Stockholders’ Equity). The Company recognized a liability for the Tax Receivable Agreement payments due to those parties that redeemed common units, representing 85% of the aggregate tax benefits the Company expects to realize from the tax basis increases related to the redemption, after concluding it was probable that the Tax Receivable Agreement payments would be paid based on estimates of future taxable income. As of September 30, 2022 and December 31, 2021, the amount of Tax Receivable Agreement payments due under the Tax Receivable Agreement was $171.5 million and $182.4 million, respectively, of which $11.7 million and $11.3 million at September 30, 2022 and December 31, 2021, respectively, was included in the current portion of the Tax Receivable Agreement liability in the condensed consolidated balance sheets.

The Tax Receivable Agreement liability and Deferred Tax Assets increased $0.4 million and $0.5 million, respectively, as a result of a Continuing Equity Owner’s redemption of 50,000 common units in CWGS, LLC for 50,000 shares of the Company’s Class A common stock during the nine months ended September 30, 2022 and were recorded to additional paid-in capital (see the condensed consolidated statements of stockholders’ equity). Payments pursuant to the Tax Receivable Agreement relating to this redemption will begin during the year ending December 31, 2023.

The Tax Receivable Agreement liability and Deferred Tax Assets increased $38.5 million and $45.3 million, respectively, as a result of Continuing Equity Owner’s, primarily Crestview Partners II GP, L.P., combined redemption of 4.0 million common units in CWGS, LLC for 4.0 million shares of the Company’s Class A common stock during the nine months ended September 30, 2021 and were recorded to additional paid-in capital (see the condensed consolidated statements of stockholders’ equity). Payments pursuant to the Tax Receivable Agreement relating to these redemptions began during the year ending December 31, 2022.

13. Related Party Transactions

Transactions with Directors, Equity Holders and Executive Officers

FreedomRoads leases various retail locations from managers and officers. During the three months ended September 30, 2022 and 2021, the related party lease expense for these locations were $0.6 million and $0.5 million, respectively. During the nine months ended September 30, 2022 and 2021, the related party lease expense for these locations were $1.9 million and $1.6 million, respectively.

In January 2012, FreedomRoads entered into a lease for the offices in Lincolnshire, Illinois, which was amended in March 2013, November 2019, October 2020, and October 2021 (the “Lincolnshire Lease”). For the three months ended September 30, 2022 and 2021, rental payments for the Lincolnshire Lease, including common area maintenance charges, were each $0.2 million. For the nine months ended September 30, 2022 and 2021, rental payments for the Lincolnshire Lease, including common area maintenance charges, were $0.7 million and $0.6 million, respectively. The Company’s Chairman and Chief Executive Officer has personally guaranteed the Lincolnshire Lease.

As of September 30, 2022 and December 31, 2021, the Company had an expense reimbursement payable to Mr. Lemonis of $0 and $0.1 million, respectively, relating primarily to advertising expenses for the Company that were processed through Mr. Lemonis’ social media accounts.

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In October 2022, the Company purchased a property to be used as office space in Lincolnshire, Illinois, for $4.5 million from the Company’s Chairman and Chief Executive Officer.

Other Transactions

The Company does business with certain companies in which Mr. Lemonis has a direct or indirect material interest. The Company purchased fixtures for interior store sets at the Company’s retail locations from Precise Graphix. Mr. Lemonis exited his economic interest in Precise Graphix. The Company received refunds from Precise Graphix totaling $0.2 million in the nine months ended September 30, 2021.

The Company paid Kaplan, Strangis and Kaplan, P.A., of which Andris A. Baltins is a member, and a member of the Company’s board of directors, $0.2 million for both the nine months ended September 30, 2022 and 2021, for legal services.

14. Stockholders’ Equity

CWH has authorized preferred stock and three classes of common stock. The Class A common stock entitles the holders to receive dividends; distributions upon the liquidation, dissolution, or winding up of the Company; and have voting rights. The Class B common stock and Class C common stock entitles the holders to voting rights, which in certain cases are disproportionate to the voting rights of the Class A common stock; however, the holders of Class B common stock and Class C common stock are not entitled to receive dividends or distributions upon the liquidation, dissolution, or winding up of the Company.

CWH is the sole managing member of CWGS, LLC and CWH has had and continues to have the sole voting power in, and controls the management of, CWGS, LLC. CWH’s position as sole managing member of CWGS, LLC includes periods where CWH held a minority economic interest in CWGS, LLC. Accordingly, the Company consolidated the financial results of CWGS, LLC and reported a non-controlling interest in its consolidated financial statements.

In accordance with the amended and restated limited liability company agreement of CWGS, LLC (the “LLC Agreement”), the Continuing Equity Owners with common units in CWGS, LLC may elect to redeem the common units for newly-issued shares of the Company’s Class A common stock or cash at the Company’s election, subject to certain restrictions. If the redeeming or exchanging party also holds Class B common stock, then simultaneously with the payment of cash or newly-issued shares of Class A common stock, as applicable, in connection with a redemption of common units, a number of shares of the Company’s Class B common stock will be cancelled for no consideration on a one-for-one basis with the number of common units so redeemed. As required by the LLC Agreement, the Company must, at all times, maintain a one-to-one ratio between the number of outstanding shares of Class A common stock and the number of common units of CWGS, LLC owned by CWH (subject to certain exceptions for treasury shares and shares underlying certain convertible or exchangeable securities).

Stock Repurchase Program

In October 2020, the Company’s Board of Directors initially authorized a stock repurchase program for the repurchase of up to $100.0 million of the Company’s Class A common stock, expiring on October 31, 2022. In August 2021 and January 2022, the Company’s Board of Directors authorized increases to the stock repurchase program for the repurchase of up to an additional $125.0 million and $152.7 million, respectively, of the Company’s Class A common stock and extended the stock repurchase program to expire on August 31, 2023 and December 31, 2025, respectively. Repurchases under the program are subject to any applicable limitations on the availability of funds to be distributed to the Company by CWGS, LLC to fund repurchases and may be made in the open market, in privately negotiated transactions or otherwise, with the amount and timing of repurchases to be determined at the Company’s discretion, depending on market conditions and corporate needs. Open market repurchases will be structured to occur in accordance with applicable federal securities laws, including within the pricing and volume requirements of Rule 10b-18 under the Securities Exchange Act of 1934, as amended. The Company may also, from time to time, enter into Rule 10b5-1 plans to facilitate repurchases of its shares under this authorization. This program does not obligate the Company to acquire any

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particular amount of Class A common stock and the program may be extended, modified, suspended or discontinued at any time at the Board’s discretion. The Company expects to fund the repurchases using cash on hand.

During the three months ended September 30, 2022, the Company did not repurchase Class A common stock under the stock repurchase program. During the nine months ended September 30, 2022, the Company repurchased 2,592,524 shares of Class A common stock under this 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 condensed consolidated balance sheets. Class A common stock held as treasury stock is not considered outstanding. During the nine months ended September 30, 2022, the Company reissued 540,646 shares of Class A common stock from treasury stock to settle the exercises of stock options and vesting of restricted stock units. As of September 30, 2022, the remaining approved amount for repurchases of Class A common stock under the share repurchase program was approximately $120.2 million.

As described in Note 12 — Income Taxes, the IRA imposes a 1% excise tax on corporate stock repurchases in tax years beginning after December 31, 2022 with certain exclusions for (a) repurchased shares for withholding taxes on vested RSUs and (b) treasury shares reissued in the same tax year for settlement of stock option exercises or vesting of RSUs.

15. Non-Controlling Interests

As described in Note 14 — Stockholders’ Equity, CWH is the sole managing member of CWGS, LLC and, as a result, consolidates the financial results of CWGS, LLC. The Company reports a non-controlling interest representing the common units of CWGS, LLC held by Continuing Equity Owners. Changes in CWH’s ownership interest in CWGS, LLC while CWH retains its controlling interest in CWGS, LLC will be accounted for as equity transactions. As such, future redemptions of common units of CWGS, LLC by the Continuing Equity Owners will result in a change in ownership and reduce or increase the amount recorded as non-controlling interest and increase or decrease additional paid-in capital when CWGS, LLC has positive or negative net assets, respectively. At the end of each period, the Company will record a non-controlling interest adjustment to additional paid-in capital such that the non-controlling interest on the condensed consolidated balance sheet is equal to the non-controlling interest’s ownership share of the underlying CWGS, LLC net assets (see the condensed consolidated statement of stockholders’ equity).

The following table summarizes the CWGS, LLC common unit ownership by CWH and the Continuing Equity Owners:


	As of September 30, 2022				As of December 31, 2021
	Common Units		Ownership %		Common Units		Ownership %
CWH		42,129,078		50.1%		44,130,956		51.2%
Continuing Equity Owners		42,044,536		49.9%		42,094,536		48.8%
Total		84,173,614		100.0%		86,225,492		100.0%

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The following table summarizes the effects of changes in ownership in CWGS, LLC on the Company’s equity:


	Three Months Ended September 30,				Nine Months Ended September 30,
($ in thousands)	2022		2021		2022		2021
Net income attributable to Camping World Holdings, Inc.	$	41,126	$	79,703	$	170,167	$	251,213
Transfers to non-controlling interests:
Decrease in additional paid-in capital as a result of the purchase of common units from CWGS, LLC with proceeds from the exercise of stock options		(20)		(592)		(149)		(1,861)
Decrease in additional paid-in capital as a result of the vesting of restricted stock units		(14,713)		(16,376)		(22,342)		(19,241)
Increase (decrease) in additional paid-in capital as a result of repurchases of Class A common stock for withholding taxes on vested RSUs		829		(411)		1,120		(467)
Increase in additional paid-in capital as a result of repurchases of Class A common stock for treasury stock		—		19,623		28,398		41,750
Increase in additional paid-in capital as a result of the redemption of common units of CWGS, LLC		—		—		416		34,711
Change from net income attributable to Camping World Holdings, Inc. and transfers to non-controlling interests	$	27,222	$	81,947	$	177,610	$	306,105

16. Equity-Based Compensation Plans

The following table summarizes the equity-based compensation that has been included in the following line items within the consolidated statements of operations during:


	Three Months Ended September 30,				Nine Months Ended September 30,
($ in thousands)	2022		2021		2022		2021
Equity-based compensation expense:
Costs applicable to revenue	$	196	$	252	$	559	$	575
Selling, general, and administrative		6,596		6,661		26,875		18,494
Total equity-based compensation expense	$	6,792	$	6,913	$	27,434	$	19,069

The following table summarizes stock option activity for the nine months ended September 30, 2022:




	Stock Options
	(in thousands)
Outstanding at December 31, 2021		272
Exercised		(14)
Forfeited		(7)
Outstanding and exercisable at September 30, 2022		251

The following table summarizes restricted stock unit activity for the nine months ended September 30, 2022:


	Restricted
	Stock Units
	(in thousands)
Outstanding at December 31, 2021		4,177
Granted		195
Vested		(741)
Forfeited		(475)
Outstanding at September 30, 2022		3,156

During the nine months ended September 30, 2022, the Company granted 162,333 RSUs to employees with an aggregate grant date fair value of $3.6 million and weighted-average grant date fair value of $22.43 per RSU, which will be recognized, net of forfeitures, over a vesting period of five years. In accordance with the Company’s non-employee director compensation policy, six members of the Company’s board of

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directors each received grants of 5,478 RSUs on the date of the Company’s annual shareholders’ meeting in May 2022 with a grant date fair value of $27.38 per RSU, which will be recognized, net of forfeitures, over a vesting period of one year.

17. Earnings Per Share

Basic earnings per share of Class A common stock is computed by dividing net income 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 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:


	Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands except per share amounts)	2022		2021		2022		2021
Numerator:
Net income	$	102,948	$	189,308	$	408,232	$	582,809
Less: net income attributable to non-controlling interests		(61,822)		(109,605)		(238,065)		(331,596)
Net income attributable to Camping World Holdings, Inc. — basic	$	41,126	$	79,703		170,167		251,213
Add: reallocation of net income attributable to non-controlling interests from the assumed dilutive effect of stock options and RSUs		281		1,226		1,019		3,793
Net income attributable to Camping World Holdings, Inc. — diluted	$	41,407	$	80,929	$	171,186	$	255,006
Denominator:
Weighted-average shares of Class A common stock outstanding — basic		41,985		45,628		42,419		45,072
Dilutive options to purchase Class A common stock		53		138		62		157
Dilutive restricted stock units		467		1,256		466		1,204
Weighted-average shares of Class A common stock outstanding — diluted		42,505		47,022		42,947		46,433

Earnings per share of Class A common stock — basic	$	0.98	$	1.75	$	4.01	$	5.57
Earnings per share of Class A common stock — diluted	$	0.97	$	1.72	$	3.99	$	5.49

Weighted-average anti-dilutive securities excluded from the computation of diluted earnings per share of Class A common stock:
Restricted stock units		1,396		10		2,094		9
Common units of CWGS, LLC that are convertible into Class A common stock		42,045		42,635		42,045		43,731

Shares of the Company’s Class B common stock and Class C common stock do not share in the earnings or losses of the Company and are therefore not participating securities. As such, separate presentation of basic and diluted earnings per share of Class B common stock or Class C common stock under the two-class method has not been presented.

18. Segments Information

The Company has the following two reportable segments: (i) Good Sam Services and Plans, and (ii) RV and Outdoor Retail. Within the Good Sam Services and Plans segment, the Company primarily derives revenue from the sale of the following offerings: emergency roadside assistance plans; property and casualty insurance programs; travel assist programs; extended vehicle service contracts; vehicle refinancing and refinancing assistance; consumer shows and events; and consumer publications and directories. Within the RV and Outdoor Retail segment, the Company primarily derives revenue from the sale of new and used RVs; commissions on the finance and insurance contracts related to the sale of RVs; the sale of RV service and collision work; the sale of RV parts, accessories, and supplies; the sale of outdoor products, equipment, gear and supplies; business to business distribution of RV furniture; and the sale of Good Sam Club memberships and co-branded credit cards.

The reportable segments identified above are the business activities of the Company for which discrete financial information is available and for which operating results are regularly reviewed by the Company’s chief operating decision maker to allocate resources and assess performance. The Company’s chief operating

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decision maker is a group comprised of the Chief Executive Officer and the President. Segment revenue includes intersegment revenue. Segment income includes intersegment allocations for subsidiaries and shared resources.

Reportable segment revenue; segment income; floor plan interest expense; depreciation and amortization; other interest expense, net; and total assets are as follows:


	Three Months Ended September 30, 2022								Three Months Ended September 30, 2021
	Good Sam		RV and						Good Sam		RV and
	Services		Outdoor		Intersegment				Services		Outdoor		Intersegment
($ in thousands)	and Plans		Retail		Eliminations		Total		and Plans		Retail		Eliminations		Total
Revenue:
Good Sam services and plans	$	50,413	$	—	$	(61)	$	50,352	$	46,632	$	—	$	(51)	$	46,581
New vehicles		—		835,596		(1,484)		834,112		—		865,886		(1,583)		864,303
Used vehicles		—		527,078		(1,090)		525,988		—		520,565		(1,015)		519,550
Products, service and other		—		269,177		(237)		268,940		—		306,241		(359)		305,882
Finance and insurance, net		—		169,825		(4,689)		165,136		—		171,861		(4,082)		167,779
Good Sam Club		—		11,154		—		11,154		—		12,479		—		12,479
Total consolidated revenue	$	50,413	$	1,812,830	$	(7,561)	$	1,855,682	$	46,632	$	1,877,032	$	(7,090)	$	1,916,574

	Nine Months Ended September 30, 2022								Nine Months Ended September 30, 2021
	Good Sam		RV and						Good Sam		RV and
	Services		Outdoor		Intersegment				Services		Outdoor		Intersegment
($ in thousands)	and Plans		Retail		Eliminations		Total		and Plans		Retail		Eliminations		Total
Revenue:
Good Sam services and plans	$	144,914	$	—	$	(410)	$	144,504	$	134,499	$	—	$	(145)	$	134,354
New vehicles		—		2,751,391		(5,068)		2,746,323		—		2,750,643		(5,586)		2,745,057
Used vehicles		—		1,488,078		(3,100)		1,484,978		—		1,276,811		(2,867)		1,273,944
Products, service and other		—		762,724		(810)		761,914		—		863,958		(1,252)		862,706
Finance and insurance, net		—		528,798		(14,877)		513,921		—		495,786		(12,068)		483,718
Good Sam Club		—		35,070		—		35,070		—		36,383		—		36,383
Total consolidated revenue	$	144,914	$	5,566,061	$	(24,265)	$	5,686,710	$	134,499	$	5,423,581	$	(21,918)	$	5,536,162


	Three Months Ended September 30,				Nine Months Ended September 30,
($ in thousands)	2022		2021		2022		2021
Segment income:⁽¹⁾
Good Sam Services and Plans	$	23,946	$	18,030	$	67,242	$	62,415
RV and Outdoor Retail		143,098		247,762		538,082		709,411
Total segment income		167,044		265,792		605,324		771,826
Corporate & other		(2,789)		(2,667)		(9,681)		(7,157)
Depreciation and amortization		(18,207)		(23,552)		(61,369)		(49,297)
Other interest expense, net		(20,526)		(11,250)		(49,762)		(35,262)
Tax Receivable Agreement liability adjustment		—		—		—		(3,520)
Loss and expense on debt restructure		—		(24)		—		(10,445)
Other expense, net		(177)		(122)		(472)		(77)
Income before income taxes	$	125,345	$	228,177	$	484,040	$	666,068

(1)

Segment income is defined as income from operations before depreciation and amortization plus floor plan interest expense.


	Three Months Ended September 30,				Nine Months Ended September 30,
($ in thousands)	2022		2021		2022		2021
Depreciation and amortization:
Good Sam Services and Plans	$	979	$	723	$	2,478	$	2,292
RV and Outdoor Retail		17,228		22,829		58,891		47,005
Total depreciation and amortization	$	18,207	$	23,552	$	61,369	$	49,297


	Three Months Ended September 30,				Nine Months Ended September 30,
($ in thousands)	2022		2021		2022		2021
Other interest expense, net:
Good Sam Services and Plans	$	22	$	(1)	$	24	$	(1)
RV and Outdoor Retail		3,865		1,934		9,791		5,643
Subtotal		3,887		1,933		9,815		5,642
Corporate & other		16,639		9,317		39,947		29,620
Total other interest expense, net	$	20,526	$	11,250	$	49,762	$	35,262

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	September 30,		December 31,
($ in thousands)	2022		2021
Assets:
Good Sam Services and Plans	$	93,539	$	158,988
RV and Outdoor Retail		4,150,947		3,849,217
Subtotal		4,244,486		4,008,205
Corporate & other		266,900		364,724
Total assets	$	4,511,386	$	4,372,929

Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read together with our financial statements and related notes included in Part I, Item 1 of this Form 10-Q, as well as our Annual Report on Form 10-K for the year ended December 31, 2021 (the “Annual Report”). This discussion contains forward-looking statements based upon current plans, expectations and beliefs involving risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various important factors, including those set forth under “Risk Factors” included in Part I, Item 1A of our Annual Report, Part II, Item 1A of this Form 10-Q, the “Cautionary Note Regarding Forward-Looking Statements” in this Form 10-Q and in other parts of this Form 10-Q. Except to the extent that differences among reportable segments are material to an understanding of our business taken as a whole, we present the discussion in Management’s Discussion and Analysis of Financial Condition and Results of Operations on a consolidated basis.

For purposes of this Form 10-Q, we define an "Active Customer" as 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 September 30, 2022, our most recently completed fiscal quarter.

Overview

Camping World Holdings, Inc. (together with its subsidiaries) is America’s largest retailer of recreational 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 lifestyle. On September 30, 2022, we operated a total of 193 retail locations, with 192 of these selling and/or servicing RVs. See Note 1 – Summary of Significant Accounting Policies to our condensed consolidated financial statements included in Part I, Item 1 of this Form 10-Q.

Good Sam Rentals, which is a peer-to-peer RV rental marketplace that can be accessed at RVRentals.com, was launched during the third quarter of 2021 and the financial results and cash needs to date were immaterial. Our previously announced mobile RV technician marketplace is expected to launch in 2022, with nominal further investment. We executed a limited rollout of our online RV sales process on our RVs.com domain in one state during the quarter ended June 30, 2022. We plan to expand RVs.com to additional markets after implementing enhancements, with limited additional investment, based on data gathered during the test rollout.

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A summary of the changes in quantities and types of retail stores and changes in same stores from September 30, 2021 to September 30, 2022, are in the table below:


	RV		RV Service &		Other			Same
	Dealerships		Retail Centers		Retail Stores		Total	Store⁽²⁾
Number of store locations as of September 30, 2021		176		10		1	187	158
Opened		9		—		—	9	—
Re-opened		1		—		—	1	—
Converted ⁽¹⁾		(1)		—		1	—	—
Temporarily closed		—		(1)		—	(1)	(1)
Closed ⁽¹⁾		(1)		(1)		(1)	(3)	(1)
Achieved designation of same store ⁽²⁾		—		—		—	—	12
Number of store locations as of September 30, 2022		184		8		1	193	168

(1)	One RV dealership was converted to a retail clearance center, which was subsequently closed.

(2)	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.

COVID-19

As discussed in Note 1 — Summary of Significant Accounting Policies — COVID-19 to our condensed consolidated financial statements included in Part I, Item 1 of this Form 10-Q, the COVID-19 pandemic has had a primarily favorable impact on our business beginning in May 2020.

Within a few months of the initial significant outbreaks of COVID-19 in the U.S., we experienced elevated demand for RVs and many of our related products and services. We believe that consumers view RVs as a safer alternative to many other travel and recreational activities, in addition to an opportunity to enjoy the outdoors after many consumers spent much of their time at home during portions of the pandemic. We believe this has led to an introduction of many new customers to the RV lifestyle and a greater appreciation of outdoor activities. For much of the COVID-19 pandemic, demand and interest in new and used vehicles outpaced vehicle supply. Beginning in September 2021, we were able to procure more new vehicles from our suppliers than were sold and new towables inventory levels, in particular, normalized in early 2022. As other modes of transportation and vacation options have mostly recovered from the impact of COVID-19, the increased demand for our products, while still elevated, has not remained at the peak levels experienced in recent years.

Historically, most of our consumer shows and events took place during the first quarter. As a consequence of COVID-19, we held one in-person consumer show in 2021, compared to 37 in-person consumer shows held prior to the pandemic in 2019, and we plan to hold fewer than five in-person consumer shows in 2022. Moving forward, we have shifted our consumer show strategy to focus on shows which support our own Camping World dealerships as opposed to hosting other competing dealerships. We expect to annually host fewer than five ticketed in-person consumer shows under the Good Sam brand in future years. We do not expect consumer shows to be material to our consolidated financial statements. We have also held several of our virtual RV Show events beginning in 2020 and have continued these virtual shows in 2022.

Cybersecurity Incident

We rely on the integrity, security and successful functioning of our information technology systems and network infrastructure (collectively, “IT Systems”) across our operations. In February 2022, we announced that we had experienced a cybersecurity incident that resulted in the encryption of certain IT Systems and theft of certain data and information (the “Cybersecurity Incident”). The Cybersecurity Incident resulted in our temporary inability to access certain of our IT Systems, caused by the disabling of some of our IT Systems by the threat actor and our temporarily taking certain other IT Systems offline as a precautionary measure. We engaged leading outside forensics and cybersecurity experts, launched containment and remediation efforts and a forensic investigation. The forensic investigation is now complete and we have restored and are taking measures to enhance our IT Systems. We have identified that personal information of approximately 30,000 individuals was acquired without authorization, including, depending on the individual, dates of birth, Social Security numbers, and driver’s license numbers. We are in the process of complying with notification obligations in accordance with relevant law and are continuing to coordinate with law enforcement.

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We have incurred costs related to investigation, containment, and remediation and expect to continue to incur incremental costs for the investigation and remediation of the Cybersecurity Incident, including legal and other professional fees, and investments to enhance the security of our IT Systems. Other actual and potential consequences include, but are not limited to, negative publicity, reputational damage, lost trust with customers, regulatory enforcement action, and litigation that could result in financial judgments or the payment of settlement amounts and disputes with insurance carriers concerning coverage. We do not expect that the Cybersecurity Incident will cause future disruptions to our business or that the Cybersecurity Incident will have a material impact on our business, results of operations or financial condition.

Industry Trends

According to the RV Industry Association’s survey of manufacturers, wholesale shipments of recreational vehicles for 2021 were 600,240 units, a new record for RV shipments for any year. Shipments for the year ended December 31, 2021 increased 39.5% over the year ended December 31, 2020 and surpassed 2017, the previous record year, by 19.0%. Wholesale shipments for the nine months ended September 2022 were 8.2% less than the comparable period in 2021, primarily driven by reduced travel trailer shipments.

Thor Industries, our largest supplier of RVs, disclosed in their Form 10-K for the year ended July 31, 2022 filed with the Securities and Exchange Commission on September 28, 2022 that their North American RV order backlog as of July 31, 2022 had declined 45% from April 30, 2022 and declined 55% from July 31, 2021. Thor Industries also disclosed that they believe their North American backlog is generally more in line with their historical levels given improved dealer stocking inventory levels and their anticipated future consumer demand.

The per unit cost of new vehicles has been significantly higher than we experienced prior to the COVID-19 pandemic, which was largely driven by the RV manufacturers’ supply constraints described above and the strong demand for new vehicles, as well as the impact of higher inflation and interest rates. These higher costs have been partially mitigated by the higher average selling prices on new vehicles, but we experienced a decrease in new vehicle gross margins during the three and nine months ended September 30, 2022 as a result of these higher costs. We expect average selling prices to decrease as industry-wide supply continues to normalize, which would continue to reduce new vehicle gross margins. We will continue to evaluate supplier pricing, among other criteria, as part of our vehicle procurement process.

Inflation

In 2022, we have experienced the impact of inflation on our operations, particularly with the increased cost of new vehicles. The price risk relating to new vehicles includes the cost from the manufacturer, as well as freight and logistics costs. Each of these costs have been impacted, to differing degrees, by factors such as high demand for product, supply chain disruptions, labor shortages, and increased fuel costs, some of which were caused, in part, by the COVID-19 pandemic. We expect these cost pressures to continue into 2023.

Inflationary factors, such as increases to our product and overhead costs, may adversely affect our operating results if the selling prices of our products and services do not increase proportionately with those increased costs. Additionally, our leases require us to pay taxes, maintenance, repairs, insurance and utilities, all of which are generally subject to inflationary increases. Further, the cost of remodeling acquired retail locations and constructing new retail locations is subject to inflationary increases in the costs of labor and material, which results in higher rent expense on new retail locations. Finally, we finance substantially all of our new vehicle inventory and certain of our used vehicle inventory through revolving floor plan arrangements with interest rates that vary based on various benchmarks. Such rates have historically increased during periods of increasing inflation.

Strategic Shift

In 2019, we made a strategic decision to refocus our business around our core RV competencies. During the year ended December 31, 2021, we completed our analysis of our retail product offerings that are not RV related as part of the 2019 Strategic Shift. The information available at the inception of the 2019 Strategic Shift relating to these product categories was incomplete based on the relative immaturity of the locations offering these products and was further delayed by the impact of COVID-19 on consumer buying behavior (see

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COVID-19 in Part I, Item 2 of this Form 10-Q). The Company does not expect to close additional locations or incur further one-time termination benefits or incremental reserve charges in connection with the 2019 Strategic Shift. The remaining potential ongoing charges under the 2019 Strategic Shift relate to lease termination costs and other associated costs relating to the leases of previously closed locations under the 2019 Strategic Shift. The process of identifying subtenants and negotiating lease terminations has been delayed in part due to the ongoing COVID-19 pandemic and is expected to continue. The timing of these negotiations will vary as both subleases and terminations are contingent on landlord approvals. See Note 4 — Restructuring and Long-Lived Asset Impairment to our condensed consolidated financial statements included in Part I, Item 1 of this Form 10-Q.

Our Corporate Structure Impact on Income Taxes

Our corporate structure is commonly referred to as an “Up-C” structure and typically results in a different relationship between income (loss) before income taxes and income tax expense than would be experienced by most public companies with a more traditional corporate structure. More traditional structures are typically comprised predominately of Subchapter C corporations and/or lacking significant non-controlling interests with holdings through limited liability companies or partnerships. Typically, most of our income tax expense is recorded at the CWH level, our public holding company, based on its allocation of taxable income from CWGS, LLC.

More specifically, as discussed in Note 12 — Income Taxes to our condensed consolidated financial statements included in Part I, Item 1 of this Form 10-Q, CWH is organized as a Subchapter C corporation and, as of September 30, 2022, is a 50.1% owner of CWGS, LLC (see Note 14 — Stockholders’ Equity and Note 15 — Non-Controlling Interests to our condensed consolidated financial statements included in Part I, Item 1 of this Form 10-Q). CWGS, LLC is organized as a limited liability company and treated as a partnership for U.S. federal and most applicable state and local income tax purposes and, as such is generally not subject to any U.S. federal entity-level income taxes (“Pass-Through”), with the exception of Americas Road and Travel Club, Inc., Camping World, Inc. (“CW”), and FreedomRoads RV, Inc. and their wholly-owned subsidiaries, which are Subchapter C corporations (“C-Corp”) embedded within the CWGS, LLC structure.

CWH receives an allocation of its share of the net income (loss) of CWGS, LLC based on CWH’s weighted-average ownership of CWGS, LLC for the period. CWH recognizes income tax expense on its pre-tax income including its portion of this income allocation from CWGS, LLC primarily relating to Pass-Through entities. The income tax relating to the net income (loss) of CWGS, LLC allocated to CWH that relates to separately taxed C-Corp entities is recorded within the consolidated results of CWGS, LLC. No income tax expense is recognized by the Company for the portion of net income (loss) of CWGS, LLC allocated to non-controlling interest other than income tax expense recorded by CWGS, LLC. Rather, tax distributions are paid to the non-controlling interest holders which are recorded as distributions to holders of LLC common units in the condensed consolidated statements of cash flows. CWH is subject to U.S. federal, state and local income taxes with respect to its allocable share of any taxable income of CWGS, LLC and is taxed at the prevailing corporate tax rates. For the nine months ended September 30, 2022 and 2021, the Company used effective income tax rate assumptions of 25.4% and 25.5%, respectively, for income adjustments applicable to CWH when calculating the adjusted net income (loss) attributable to Camping World Holdings, Inc. ─ basic and diluted (see “Non-GAAP Financial Measures” in Part I, Item 2 of this Form 10-Q). CWGS, LLC may be liable for various other state and local taxes.

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The following table presents the allocation of CWGS, LLC’s C-Corp and Pass-Through net income to CWH, the allocation of CWGS, LLC’s net income to non-controlling interests, income tax expense recognized by CWH, and other items:


	Three Months Ended September 30,				Nine Months Ended September 30,
($ in thousands)	2022		2021		2022		2021
C-Corp portion of CWGS, LLC net loss allocated to CWH	$	(1,701)	$	(11,625)	$	(14,852)	$	(7,219)
Pass-Through portion of CWGS, LLC net income allocated to CWH		63,435		128,922		254,243		352,165
CWGS, LLC net income allocated to CWH		61,734		117,297		239,391		344,946
CWGS, LLC net income allocated to noncontrolling interests		61,822		109,605		238,065		331,596
CWGS, LLC net income		123,556		226,902		477,456		676,542
Tax Receivable Agreement liability adjustment		—		—		—		(3,520)
Income tax expense recorded by CWH		(20,811)		(37,608)		(69,582)		(90,296)
Other incremental CWH net income		203		14		358		83
Net income	$	102,948	$	189,308	$	408,232	$	582,809

The following table presents further information on income tax (expense) benefit:


	Three Months Ended September 30,				Nine Months Ended September 30,
($ in thousands)	2022		2021		2022		2021
Income tax expense recorded by CWH	$	(20,811)	$	(37,608)	$	(69,582)	$	(90,296)
Income tax (expense) benefit recorded by CWGS, LLC		(1,586)		(1,261)		(6,226)		7,037
Income tax expense	$	(22,397)	$	(38,869)	$	(75,808)	$	(83,259)

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Results of Operations

Three Months Ended September 30, 2022 Compared to Three Months Ended September 30, 2021

The following table sets forth information comparing the components of net income for the three months ended September 30, 2022 and 2021:


	Three Months Ended
	September 30, 2022			September 30, 2021
			Percent of			Percent of	Favorable/ (Unfavorable)
($ in thousands)	Amount		Revenue	Amount		Revenue	$		%
Revenue:
Good Sam Services and Plans	$	50,352	2.7%	$	46,581	2.4%	$	3,771	8.1%
RV and Outdoor Retail:
New vehicles		834,112	44.9%		864,303	45.1%		(30,191)	(3.5%)
Used vehicles		525,988	28.3%		519,550	27.1%		6,438	1.2%
Products, service and other		268,940	14.5%		305,882	16.0%		(36,942)	(12.1%)
Finance and insurance, net		165,136	8.9%		167,779	8.8%		(2,643)	(1.6%)
Good Sam Club		11,154	0.6%		12,479	0.7%		(1,325)	(10.6%)
Subtotal		1,805,330	97.3%		1,869,993	97.6%		(64,663)	(3.5%)
Total revenue		1,855,682	100.0%		1,916,574	100.0%		(60,892)	(3.2%)

Gross profit (exclusive of depreciation and amortization shown separately below):
Good Sam Services and Plans		31,481	1.7%		24,944	1.3%		6,537	26.2%
RV and Outdoor Retail:
New vehicles		158,993	8.6%		251,885	13.1%		(92,892)	(36.9%)
Used vehicles		127,106	6.8%		142,698	7.4%		(15,592)	(10.9%)
Products, service and other		101,642	5.5%		93,438	4.9%		8,204	8.8%
Finance and insurance, net		165,136	8.9%		167,779	8.8%		(2,643)	(1.6%)
Good Sam Club		9,330	0.5%		10,632	0.6%		(1,302)	(12.2%)
Subtotal		562,207	30.3%		666,432	34.8%		(104,225)	(15.6%)
Total gross profit		593,688	32.0%		691,376	36.1%		(97,688)	(14.1%)

Operating expenses:
Selling, general and administrative expenses		419,102	22.6%		424,385	22.1%		5,283	1.2%
Debt restructure expense		—	—		24	0.0%		24	n/m
Depreciation and amortization		18,207	1.0%		23,552	1.2%		5,345	22.7%
Long-lived asset impairment		887	0.0%		316	0.0%		(571)	(180.7%)
Lease termination		—	—		329	0.0%		329	n/m
(Gain) loss on sale or disposal of assets		(40)	(0.0%)		96	0.0%		136	n/m
Total operating expenses		438,156	23.6%		448,702	23.4%		10,546	2.4%
Income from operations		155,532	8.4%		242,674	12.7%		(87,142)	(35.9%)
Other expense:
Floor plan interest expense		(9,484)	(0.5%)		(3,125)	(0.2%)		(6,359)	(203.5%)
Other interest expense, net		(20,526)	(1.1%)		(11,250)	(0.6%)		(9,276)	(82.5%)
Other expense, net		(177)	(0.0%)		(122)	(0.0%)		(55)	(45.1%)
Total other expense		(30,187)	(1.6%)		(14,497)	(0.8%)		(15,690)	(108.2%)
Income before income taxes		125,345	6.8%		228,177	11.9%		(102,832)	(45.1%)
Income tax expense		(22,397)	(1.2%)		(38,869)	(2.0%)		16,472	42.4%
Net income		102,948	5.5%		189,308	9.9%		(86,360)	(45.6%)
Less: net income attributable to non-controlling interests		(61,822)	(3.3%)		(109,605)	(5.7%)		47,783	43.6%
Net income attributable to Camping World Holdings, Inc.	$	41,126	2.2%	$	79,703	4.2%	$	(38,577)	(48.4%)

n/m – not meaningful

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Supplemental Data


	Three Months Ended September 30,				Increase			Percent
	2022		2021		(decrease)			Change
Unit sales
New vehicles		17,616		18,748		(1,132)			(6.0%)
Used vehicles		14,460		13,631		829			6.1%
Total		32,076		32,379		(303)			(0.9%)

Average selling price
New vehicles	$	47,350	$	46,101	$	1,249			2.7%
Used vehicles	$	36,375	$	38,115	$	(1,740)			(4.6%)

Same store unit sales⁽¹⁾
New vehicles		16,045		17,293		(1,248)			(7.2%)
Used vehicles		13,114		12,852		262			2.0%
Total		29,159		30,145		(986)			(3.3%)

Same store revenue⁽¹⁾ ($ in 000's)
New vehicles	$	764,144	$	801,412	$	(37,268)			(4.7%)
Used vehicles		482,329		493,914		(11,585)			(2.3%)
Products, service and other		186,260		211,591		(25,331)			(12.0%)
Finance and insurance, net		151,039		156,870		(5,831)			(3.7%)
Total	$	1,583,772	$	1,663,787	$	(80,015)			(4.8%)

Average gross profit per unit
New vehicles	$	9,025	$	13,435	$	(4,410)			(32.8%)
Used vehicles	$	8,790		10,469	$	(1,679)			(16.0%)
Finance and insurance, net per vehicle unit	$	5,148		5,182	$	(34)			(0.7%)
Total vehicle front-end yield⁽²⁾	$	14,068		17,368	$	(3,300)			(19.0%)

Gross margin
Good Sam Services and Plans		62.5%		53.5%		897	bps
New vehicles		19.1%		29.1%		(1,008)	bps
Used vehicles		24.2%		27.5%		(330)	bps
Products, service and other		37.8%		30.5%		725	bps
Finance and insurance, net		100.0%		100.0%		unch.	bps
Good Sam Club		83.6%		85.2%		(155)	bps
Subtotal RV and Outdoor Retail		31.1%		35.6%		(450)	bps
Total gross margin		32.0%		36.1%		(408)	bps

Inventories ($ in 000's)
New vehicles	$	1,180,364	$	723,593	$	456,771			63.1%
Used vehicles		425,824		391,466		34,358			8.8%
Products, parts, accessories and misc.		293,588		246,900		46,688			18.9%
Total RV and Outdoor Retail inventories	$	1,899,776	$	1,361,959	$	537,817			39.5%

Vehicle inventory per location ($ in 000's)
New vehicle inventory per dealer location	$	6,415	$	4,111	$	2,304			56.0%
Used vehicle inventory per dealer location	$	2,314		2,224	$	90			4.0%

Vehicle inventory turnover⁽³⁾
New vehicle inventory turnover		2.0		3.6		(1.5)			(42.9%)
Used vehicle inventory turnover		3.5		4.4		(0.8)			(18.8%)

Retail locations
RV dealerships		184		176		8			4.5%
RV service & retail centers		8		10		(2)			(20.0%)
Subtotal		192		186		6			3.2%
Other retail stores		1		1		—			0.0%
Total		193		187		6			3.2%

Other data
Active Customers⁽⁴⁾		5,366,558		5,458,531		(91,973)			(1.7%)
Good Sam Club members		2,038,826		2,185,100		(146,274)			(6.7%)
Service bays ⁽⁵⁾		2,639		2,599		40			1.5%
Finance and insurance gross profit as a % of total vehicle revenue		12.1%		12.1%		2	bps		n/a
Same store locations		168		n/a		n/a			n/a

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(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 unit sales.

(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.

Revenue and Gross Profit

Good Sam Services and Plans

Good Sam Services and Plans revenue increased primarily due to a $2.9 million increase from the roadside assistance programs primarily resulting from increased contracts in force and favorable updates to assumptions for cancellations, a $0.7 million increase from the extended vehicle warranty programs revenue primarily resulting from increased contracts in force, and a $0.6 million increase from the Good Sam Insurance Agency primarily resulting from increased contracts in force, partially offset by a decrease of $0.3 million from our RV financing programs and a $0.1 million decrease from other programs.

Good Sam Services and Plans gross profit increased primarily due to a $6.6 million increase from the roadside assistance programs resulting from increased contracts in force, favorable updates to assumptions for cancellations and reduced marketing costs; a $0.6 million increase from the extended vehicle warranty programs; and a $0.5 million increase from Good Sam Insurance Agency; partially offset by a $0.5 million reduction from other services and plans; a $0.4 million reduction from our RV financing products; and a $0.3 million increase in overhead support expenses. Gross margin increased in the three months ended September 30, 2022 compared to the three months ended September 30, 2021, primarily due to the increases from the roadside assistance programs.

RV and Outdoor Retail

New Vehicles

New vehicles revenue decreased primarily due to a 6.0% decrease in vehicles sold partially offset by a 2.7% increase in the average selling price per vehicle sold. On a same store basis, new vehicles revenue decreased 4.7% to $764.1 million, and vehicles sold decreased 7.2%.

New vehicles gross profit decreased primarily due to a 17.3% increase in the average cost of new vehicles sold and a 6.0% decrease in new vehicles sold. The decrease in new vehicles gross margin was primarily due to compression from higher cost per unit sold, partially offset by the 2.7% increase in the average selling price of new vehicles.

Used Vehicles

Used vehicles revenue increased primarily due to a 6.1% increase in vehicles sold, driven by an increase in demand for used vehicles, as they are a lower-cost alternative to new vehicles, partially offset by a 4.6% decrease in average selling price per vehicle sold. On a same store basis, used vehicles revenue decreased 2.3% to $482.3 million and vehicles sold increased 2.0%.

Used vehicles gross profit and gross margin decreased primarily due to a 4.6% decrease in the average selling price per vehicle sold.

Products, service and other

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service and other revenue decreased 12.0% to $186.3 million for the three months ended September 30, 2022 from $211.6 million in the three months ended September 30, 2021.

Products, service and other gross profit increased primarily due to increased labor billing rates and the absence of lower margined revenue from our exit of certain non-RV product categories during the second half of 2021. The increase in products, service and other gross margin was primarily due to the shift in mix to higher margin products and services, such as our RV service revenues, after our exit of certain lower margin, non-RV product categories during the second half of 2021, partially offset by increased compression from higher costs.

Finance and Insurance, net

Finance and insurance revenue and gross profit is recorded net, since the Company is acting as an agent in the transaction, and commission is recognized when a finance and insurance product contract payment has been received or financing has been arranged. Finance and insurance, net revenue decreased primarily due to the 0.9% decrease in total vehicles sold. Finance and insurance, net as a percentage of new and used vehicle revenue was 12.1% for the three months ended September 30, 2022 and for the three months ended September 30, 2021. On a same store basis, finance and insurance, net decreased 3.7%, or $5.8 million, to $151.0 million versus the three months ended September 30, 2021.

Good Sam Club

Good Sam Club revenue decreased primarily from reduced revenue related to decreased Club file size and reduced marketing fee revenue from the Good Sam Club co-branded credit cards due to lower transaction count at retail locations driven mainly by the exit from certain non-RV product categories.

Good Sam Club gross profit and gross margin decreased primarily due to the revenue reduction items noted above.

Operating Expenses and Other

Selling, general and administrative expenses

Selling, general and administrative expenses decreased primarily due to a $25.7 million decrease in labor expenses attributable, in large part, to a reduction in variable compensation based on the decrease in gross profit, and a $1.4 million reduction in real property expense, partially offset by a $10.9 increase in selling and advertising expenses, a $4.0 million increase in dealer open lot insurance and other insurance costs, a $2.8 million increase in occupancy costs and a $4.0 million increase in other store and corporate overhead expenses.

Depreciation and amortization

Depreciation and amortization decreased due primarily to $7.4 million of accelerated depreciation on store fixtures in the third quarter of 2021 related to categories exited as part of the 2019 Strategic Shift, partially offset by increased depreciation from the higher average property and equipment balance that has been driven primarily by our expansion of RV dealership locations.

Long-Lived Asset Impairment

Long-lived asset impairment was $0.9 million for the three months ended September 30, 2022 and $0.3 million for the three months ended September 30, 2021. See Note 4 – Restructuring and Long-Lived Asset Impairment to our condensed consolidated financial statements included in Part I, Item 1 of this Form 10-Q.

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Lease termination

Lease termination expense of $0.3 million in the three months ended September 30, 2021, was related primarily to the 2019 Strategic Shift discussed above.

Floor plan interest expense

Floor plan interest expense increased 203.5%, or $6.4 million, to $9.5 million in the three months ended September 30, 2022 from $3.1 million in the three months ended September 30, 2021. The increase was primarily due to a 64.2% increase in average floor plan borrowings driven by higher new vehicle inventory quantities from the normalization of the new travel trailer supply chain, increases in average new unit costs, and 186 basis point increase in the average floor plan borrowing rate. We expect higher floor plan interest expense to continue through the end of 2022 as the floor plan borrowings are expected to be higher in 2022 compared to 2021. Since we do not expect the same new vehicle supply chain constraints that existed in 2021 to be experienced for the remainder of 2022, we expect to have higher average new vehicle inventory levels in 2022. We also expect that interest rates will continue to increase during the remainder of 2022.

Other interest expense, net

Other interest expense increased primarily due to a 141 basis point increase in the Term Loan Facility average interest rate, and to a lesser extent, increased average debt outstanding. The interest rate at September 30, 2022 was 5.34%, which is above the interest rate floor. We expect that interest rates will continue to increase during the remainder of 2022.

Income tax expense

Income tax expense decreased primarily due to both lower income generated and a decrease in ownership interest in CWGS, LLC for which the Company is subject to U.S. federal and state taxes on its allocable share.

Segment results

The following tables sets forth a reconciliation of total segment income to consolidated income before income taxes for each of our segments for the periods presented:


	Three Months Ended
	September 30, 2022			September 30, 2021			Favorable/
			Percent of			Percent of	(Unfavorable)
($ in thousands)	Amount		Revenue	Amount		Revenue	$		%
Revenue:
Good Sam Services and Plans	$	50,413	2.7%	$	46,632	2.4%	$	3,781	8.1%
RV and Outdoor Retail		1,812,830	97.7%		1,877,032	97.9%		(64,202)	(3.4%)
Elimination of intersegment revenue		(7,561)	(0.4%)		(7,090)	(0.4%)		(471)	(6.6%)
Total consolidated revenue		1,855,682	100.0%		1,916,574	100.0%		(60,892)	(3.2%)
Segment income:⁽¹⁾
Good Sam Services and Plans		23,946	1.3%		18,030	0.9%		5,916	32.8%
RV and Outdoor Retail		143,098	7.7%		247,762	12.9%		(104,664)	(42.2%)
Total segment income		167,044	9.0%		265,792	13.9%		(98,748)	(37.2%)
Corporate & other		(2,789)	(0.2%)		(2,667)	(0.1%)		(122)	(4.6%)
Depreciation and amortization		(18,207)	(1.0%)		(23,552)	(1.2%)		5,345	22.7%
Other interest expense, net		(20,526)	(1.1%)		(11,250)	(0.6%)		(9,276)	(82.5%)
Loss and expense on debt restructure		—	—		(24)	(0.0%)		24	n/m
Other (expense) income, net		(177)	(0.0%)		(122)	(0.0%)		(55)	(45.1%)
Income before income taxes	$	125,345	6.8%	$	228,177	11.9%	$	(102,832)	45.1%

Same store revenue- RV and Outdoor Retail⁽²⁾	$	1,583,772		$	1,663,787		$	(80,015)	(4.8%)

n/m – not meaningful

(1)	Segment income represents income for each of our reportable segments and is defined as income from operations before depreciation and amortization, plus floor plan interest expense.

(2)	Same store revenue definition not applicable to the Good Sam Services and Plans segment.

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Good Sam Services and Plans

Good Sam Services and Plans segment revenue increased primarily due to a $2.9 million increase from the roadside assistance programs primarily resulting from increased contracts in force and favorable updates to assumptions for cancellations, a $0.7 million increase from the extended vehicle warranty programs revenue primarily resulting from increased contracts in force, and a $0.6 million increase from the Good Sam Insurance Agency primarily resulting from increased contracts in force, partially offset by a decrease of $0.3 million from our RV financing programs and a $0.1 million decrease from other programs.

Good Sam Services and Plans segment income increased primarily due to a $6.6 million increase from the roadside assistance programs resulting from increased contracts in force, favorable updates to assumptions for cancellations, and reduced marketing costs, a $0.6 million increase from the extended vehicle warranty programs; and a $0.5 million increase from Good Sam Insurance Agency; partially offset by a $0.6 million increase in selling, general and administrative expenses primarily consisting of increases in compensation and professional fees; a $0.5 million reduction from other services and plans; a $0.4 million reduction from our RV financing products; and a $0.3 million increase in overhead support expenses. Segment income margin net of intersegment revenue elimination increased 885 basis points to 47.6% primarily due to increased margin from the roadside assistance programs and a reduced rate of selling, general and administrative expenses as a percent of gross profit for the three months ended September 30, 2022 versus the comparable period in 2021.

RV and Outdoor Retail

RV and Outdoor Retail segment revenue decreased primarily due a $37.1 million, or 12.1%, decrease in products, service and other revenue, a $30.3 million, or 3.5%, decrease in new vehicle revenue, a $2.0 million, or 1.2%, decrease in finance and insurance, net revenue, and a $1.3 million, or 10.6%, decrease in Good Sam Club revenue, partially offset by a $6.5 million, or 1.3%, increase in used vehicle revenue,

RV and Outdoor Retail segment income decreased primarily due to decreased segment gross profit of $104.2 million primarily relating to increased unit costs and reduced average sales prices per unit, a $6.4 million increase in floor plan interest expense, a $0.6 million increase in long-lived asset impairment, partially offset by a $6.0 million decrease in selling, general and administrative expenses (see discussion of selling, general and administrative expenses above for the similar drivers of this change), a $0.3 million decrease in lease termination expense, and a $0.1 million reduction in loss on sale or disposal of assets. RV and Outdoor Retail segment margin decreased to 7.9% in the three months ended September 30, 2022 from 13.2% in the three months ended September 30, 2021 primarily due to increased vehicle costs and a lower average sales price per unit sold.

Corporate and other expenses

The increase in corporate and other expenses was primarily due to increased professional fees.

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Nine Months Ended September 30, 2022 Compared to Nine Months Ended September 30, 2021

The following table sets forth information comparing the components of net income for the nine months ended September 30, 2022 and 2021:


	Nine Months Ended
	September 30, 2022			September 30, 2021
			Percent of			Percent of	Favorable/ (Unfavorable)
($ in thousands)	Amount		Revenue	Amount		Revenue	$		%
Revenue:
Good Sam Services and Plans	$	144,504	2.5%	$	134,354	2.4%	$	10,150	7.6%
RV and Outdoor Retail:
New vehicles		2,746,323	48.3%		2,745,057	49.6%		1,266	0.0%
Used vehicles		1,484,978	26.1%		1,273,944	23.0%		211,034	16.6%
Products, service and other		761,914	13.4%		862,706	15.6%		(100,792)	(11.7%)
Finance and insurance, net		513,921	9.0%		483,718	8.7%		30,203	6.2%
Good Sam Club		35,070	0.6%		36,383	0.7%		(1,313)	(3.6%)
Subtotal		5,542,206	97.5%		5,401,808	97.6%		140,398	2.6%
Total revenue		5,686,710	100.0%		5,536,162	100.0%		150,548	2.7%

Gross profit (exclusive of depreciation and amortization shown separately below):
Good Sam Services and Plans		89,972	1.6%		81,113	1.5%		8,859	10.9%
RV and Outdoor Retail:
New vehicles		574,663	10.1%		730,851	13.2%		(156,188)	(21.4%)
Used vehicles		369,102	6.5%		339,070	6.1%		30,032	8.9%
Products, service and other		294,234	5.2%		306,164	5.5%		(11,930)	(3.9%)
Finance and insurance, net		513,921	9.0%		483,718	8.7%		30,203	6.2%
Good Sam Club		28,791	0.5%		30,797	0.6%		(2,006)	(6.5%)
Subtotal		1,780,711	31.3%		1,890,600	34.2%		(109,889)	(5.8%)
Total gross profit		1,870,683	32.9%		1,971,713	35.6%		(101,030)	(5.1%)

Operating expenses:
Selling, general and administrative expenses		1,245,540	21.9%		1,193,668	21.6%		(51,872)	(4.3%)
Debt restructure expense		—	—		9,055	0.2%		9,055	n/m
Depreciation and amortization		61,369	1.1%		49,297	0.9%		(12,072)	(24.5%)
Long-lived asset impairment		3,505	0.1%		1,398	0.0%		(2,107)	(150.7%)
Lease termination		1,122	0.0%		2,085	0.0%		963	46.2%
Loss on sale or disposal of assets		390	0.0%		7	0.0%		(383)	n/m
Total operating expenses		1,311,926	23.1%		1,255,510	22.7%		(56,416)	(4.5%)
Income from operations		558,757	9.8%		716,203	12.9%		(157,446)	(22.0%)
Other expense:
Floor plan interest expense		(24,483)	(0.4%)		(9,886)	(0.2%)		(14,597)	(147.7%)
Other interest expense, net		(49,762)	(0.9%)		(35,262)	(0.6%)		(14,500)	(41.1%)
Loss on debt restructure		—	—		(1,390)	(0.0%)		1,390	n/m
Tax Receivable Agreement liability adjustment		—	—		(3,520)	(0.1%)		3,520	n/m
Other expense, net		(472)	(0.0%)		(77)	(0.0%)		(395)	(513.0%)
Total other expense		(74,717)	(1.3%)		(50,135)	(0.9%)		(24,582)	(49.0%)
Income before income taxes		484,040	8.5%		666,068	12.0%		(182,028)	(27.3%)
Income tax expense		(75,808)	(1.3%)		(83,259)	(1.5%)		7,451	8.9%
Net income		408,232	7.2%		582,809	10.5%		(174,577)	(30.0%)
Less: net income attributable to non-controlling interests		(238,065)	(4.2%)		(331,596)	(6.0%)		93,531	28.2%
Net income attributable to Camping World Holdings, Inc.	$	170,167	3.0%	$	251,213	4.5%	$	(81,046)	(32.3%)

n/m – not meaningful

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Supplemental Data


	Nine Months Ended September 30,				Increase			Percent
	2022		2021		(decrease)			Change
Unit sales
New vehicles		60,040		66,362		(6,322)			(9.5%)
Used vehicles		40,991		38,269		2,722			7.1%
Total		101,031		104,631		(3,600)			(3.4%)

Average selling price
New vehicles	$	45,742	$	41,365	$	4,377			10.6%
Used vehicles	$	36,227	$	33,289	$	2,938			8.8%

Same store unit sales⁽¹⁾
New vehicles		54,831		63,436		(8,605)			(13.6%)
Used vehicles		37,670		36,870		800			2.2%
Total		92,501		100,306		(7,805)			(7.8%)

Same store revenue⁽¹⁾ ($ in 000's)
New vehicles	$	2,524,359	$	2,628,952	$	(104,593)			(4.0%)
Used vehicles		1,379,819		1,233,022		146,797			11.9%
Products, service and other		553,833		650,283		(96,450)			(14.8%)
Finance and insurance, net		473,898		465,100		8,798			1.9%
Total	$	4,931,909	$	4,977,357	$	(45,448)			(0.9%)

Average gross profit per unit
New vehicles	$	9,571	$	11,013	$	(1,442)			(13.1%)
Used vehicles		9,004		8,860		144			1.6%
Finance and insurance, net per vehicle unit		5,087		4,623		464			10.0%
Total vehicle front-end yield⁽²⁾		14,428		14,849		(421)			(2.8%)

Gross margin
Good Sam Services and Plans		62.3%		60.4%		189	bps
New vehicles		20.9%		26.6%		(570)	bps
Used vehicles		24.9%		26.6%		(176)	bps
Products, service and other		38.6%		35.5%		313	bps
Finance and insurance, net		100.0%		100.0%		unch.	bps
Good Sam Club		82.1%		84.6%		(255)	bps
Subtotal RV and Outdoor Retail		32.1%		35.0%		(287)	bps
Total gross margin		32.9%		35.6%		(272)	bps

Inventories ($ in 000's)
New vehicles	$	1,180,364	$	723,593	$	456,771			63.1%
Used vehicles		425,824		391,466		34,358			8.8%
Products, parts, accessories and misc.		293,588		246,900		46,688			18.9%
Total RV and Outdoor Retail inventories	$	1,899,776	$	1,361,959	$	537,817			39.5%

Vehicle inventory per location ($ in 000's)
New vehicle inventory per dealer location	$	6,415	$	4,111	$	2,304			56.0%
Used vehicle inventory per dealer location		2,314		2,224		90			4.0%

Vehicle inventory turnover⁽³⁾
New vehicle inventory turnover		2.0		3.6		(1.5)			(42.9%)
Used vehicle inventory turnover		3.5		4.4		(0.8)			(18.8%)

Retail locations
RV dealerships		184		176		8			4.5%
RV service & retail centers		8		10		(2)			(20.0%)
Subtotal		192		186		6			3.2%
Other retail stores		1		1		—			0.0%
Total		193		187		6			3.2%

Other data
Active Customers⁽⁴⁾		5,366,558		5,458,531		(91,973)			(1.7%)
Good Sam Club members		2,038,826		2,185,100		(146,274)			(6.7%)
Service bays ⁽⁵⁾		2,639		2,599		40			1.5%
Finance and insurance gross profit as a % of total vehicle revenue		12.1%		12.0%		11	bps		n/a
Same store locations		168		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 unit sales.

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(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.

Revenue and Gross Profit

Good Sam Services and Plans

Good Sam Services and Plans revenue increased primarily due to a $6.1 million increase from the roadside assistance programs primarily resulting from increased contracts in force and favorable updates to assumptions for cancellations; a $1.5 million increase in Good Sam TravelAssist revenue primarily resulting from increased contracts in force; a $1.3 million increase from the Good Sam Insurance Agency primarily resulting from increased contracts in force; a $1.3 million increase from the extended vehicle warranty programs; and an $0.8 million increase from the consumer shows due to no shows produced in 2021 and one show produced in 2022; partially offset by an $0.8 million reduction from the RV financing programs.

Good Sam Services and Plans gross profit increased primarily due to a $7.6 million increase from the roadside assistance programs resulting from increased contracts in force, favorable updates to assumptions for cancellations, and reduced marketing costs; a $1.6 million increase from the Good Sam TravelAssist programs; a $1.4 million increase from the Good Sam Insurance Agency; a $1.0 million increase from the extended warranty insurance programs; and a $0.7 million increase from consumer shows; partially offset by a $1.8 million increase in overhead support expenses; an $0.8 million reduction from the RV financing programs; and an $0.8 million reduction from other services and plans. The gross margin increase in Good Sam Services and Plans was primarily due to increases from the roadside assistance programs.

RV and Outdoor Retail

New Vehicles

New vehicle revenue increased primarily due to a 10.6% increase in average selling price per vehicle sold partially offset by an 9.5% decrease in vehicles sold. On a same store basis, new vehicle revenue decreased 4.0% to $2.5 billion, and new vehicle units decreased 13.6%.

New vehicle gross profit decreased primarily due to a 19.2% increase in the average cost of new units sold and a 9.5% decrease in vehicles sold, partially offset by a 10.6% increase in the average selling price per new vehicle sold. New vehicle gross margin decreased primarily due to the 19.2% higher average cost of new units sold, partially offset by the 10.6% increase in the average selling price of new vehicles.

Used Vehicles

Used vehicle revenue increased primarily due to a 7.1% increase in vehicles sold and an 8.8% increase in average selling price per vehicle, driven by an increase in demand for used vehicles, as they are a lower-cost alternative to new vehicles. On a same store basis, used vehicle revenue increased 11.9% to $1.4 billion and used vehicle units increased 2.2%.

Used vehicle gross profit increased due to a 7.1% increase in vehicles sold, and an 8.8% increase in the average sales price per vehicle sold. The decrease in used vehicle gross margin was the result of compression from a 11.4% higher average cost per unit sold, partially offset by the 8.8% increase in average selling price per vehicle sold.

Products, service and other

Products, service and other revenue decreased primarily due to our exit from certain non-RV product categories that were sold in the 2021 period, but not in the 2022 period. On a same store basis, products, service and other revenue decreased 14.8% to $553.8 million for the nine months ended September 30, 2022 from $650.3 million in the nine months ended September 30, 2021.

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Products, service and other gross profit decreased primarily due to the absence of revenue resulting from our exit of certain non-RV product categories during the second half of 2021. The increase in products, service and other gross margin was primarily due to the shift in mix to higher margin products and services, such as our RV service revenues, after our exit of certain lower margin, non-RV product categories during the second half of 2021.

Finance and Insurance, net

Finance and insurance revenue and gross profit is recorded net, since the Company is acting as an agent in the transaction, and commission is recognized when a finance and insurance product contract payment has been received or financing has been arranged. Finance and insurance, net revenue increased primarily due to an increase in the products sold per used vehicle and increased gross profit per contract for both new and used vehicles sold, partially offset by lower volume of vehicles sold. Finance and insurance, net as a percentage of new and used vehicle revenue was 12.1% for the nine months ended September 30, 2022 compared to 12.0% for the nine months ended September 30, 2021. On a same store basis, finance and insurance, net increased 1.9%, or $8.8 million, to $473.9 million.

Good Sam Club

Good Sam Club revenue decreased primarily due to a reduction in marketing fee revenue from Good Sam Club co-branded credit cards driven by lower transaction counts at retail locations resulting mainly from the exit from certain non-RV product categories and reduced revenue related to decreased Club file size.

Good Sam Club gross profit and gross margin decreased primarily due to the revenue reduction items noted above and investment in new programs.

Operating Expenses and Other

Selling, general and administrative expenses

Selling, general and administrative expenses increased primarily due to a $19.5 million increase in selling expenses, an $11.5 million increase in insurance costs due to increased inventory levels, a $8.9 million increase in occupancy expenses due to net increase of six store locations over the prior year, a $5.9 million increase in professional fees, a $4.4 million increase in personal property expenses, and $1.8 million of costs associated with the February 2022 Cybersecurity Incident, net of insurance recoveries, partially offset by a $0.1 million decrease in other store and corporate overhead expenses.

Equity-based compensation expenses increased $8.4 million for the nine months ended September 30, 2022 (See Note 16 — Equity-Based Compensation to our condensed consolidated financial statements included in Part I, Item 1 of this Form 10-Q), which included an increase of $3.8 million for expense related to the modification of restricted stock units to accelerate and/or continue vesting under employee separation agreements and/or post-termination consulting arrangements. The remaining increase in equity-based compensation expense was a result of more restricted stock units outstanding and a higher weighted-average grant date fair value of those restricted stock units.

Depreciation and amortization

Depreciation and amortization increased due primarily to $8.8 million of incremental accelerated amortization during the first quarter of 2022 from the adjustment of the useful lives of certain trademark and trade name intangible assets, associated with brands not traditionally associated with RVs, that we are phasing out and increased depreciation from the higher average property and equipment balance that has been driven primarily by our expansion of RV dealership locations. The trademark and trade name intangible assets were fully amortized as of March 31, 2022. These increases were partially offset by $7.4 million of accelerated depreciation on store fixtures in the third quarter of 2021 related to categories exited as part of the 2019 Strategic Shift.

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Long-lived asset impairment

Long-lived asset impairment was $3.5 million for the nine months ended September 30, 2022 and $1.4 million for the nine months ended September 30, 2021. See Note 4 – Restructuring and Long-Lived Asset Impairment to our condensed consolidated financial statements included in Part I, Item 1 of this Form 10-Q.

Lease termination

Lease termination expense related primarily to the 2019 Strategic Shift discussed above.

Floor plan interest expense

Floor plan interest expense increased primarily due to a 90.2% increase in average floor plan borrowings driven by higher new vehicle inventory quantities from the normalization of the new travel trailer supply chain and increases in average new unit costs, and a 66 basis point increase in the average floor plan borrowing rate. We expect higher floor plan interest expense to continue to increase during the remainder of 2022 as the floor plan borrowings are expected to be higher in 2022 compared to 2021. Since we do not expect the same new vehicle supply chain constraints that existed in 2021 to be experienced for the remainder of 2022, we expect to continue to have higher average new vehicle inventory levels in 2022. We also expect that interest rates will continue to increase during the remainder of 2022.

Other interest expense, net

Other interest expense increased primarily due to increased average debt outstanding, and to a lesser extent, a 39 basis point increase in the Term Loan Facility average interest rate. The increase in interest rates during the nine months ended September 30, 2022 did not have a proportionate impact on the increase in other interest expense, since the refinance of the Term Loan Facility in June 2021 resulted in a reduction in interest rates from the 25 basis point decrease in the applicable rate (as defined in the Credit Agreement (as defined in Note 6 – Long-Term Debt to our condensed consolidated financial statements included in Part I, Item 1 of this Form 10-Q)) and the Term Loan Facility was subject to the interest rate floor, including the 2.50% applicable rate, of 3.25% for the first four months of 2022 which negated interest rate increases during that period subject to the interest rate floor. The applicable interest rate on the Term Loan Facility has subsequently risen above the interest rate floor and at September 30, 2022 is 5.34%. For the Term Loan Facility, if the 5.34% interest rate was applicable for the entirety of the nine months ended September 30, 2022, other interest expense would have increased an additional $16.2 million. We expect that interest rates will continue to increase during the remainder of 2022.

Loss and expense on debt restructure

Loss and expense on debt restructure of $10.4 million in the nine months ended September 30, 2021 was comprised of $0.4 million in extinguishment of the original issue discount related to the Company’s prior term loan facility, $1.0 million in extinguishment of capitalized finance costs related to the Company’s prior term loan facility, and $9.0 million in legal and other expenses related to the Company’s current term loan facility.

Tax Receivable Agreement Liability adjustment

The Tax Receivable Agreement Liability adjustment of $3.5 million in the nine months ended September 30, 2021 related to a remeasurement during the nine months ended September 30, 2021 to reflect an increase in state tax rates.

Income tax expense

Income tax expense decreased primarily due to a $14.5 million release of valuation allowance and a $4.1 million benefit for the revaluation of deferred tax assets as a result of increased state tax rates that were both recorded for the nine months ended September 30, 2021. For the nine months ended September 30, 2022 there was also lower income generated for which the Company is subject to U.S. federal and state taxes on its allocable share and the benefit from higher losses at CW that are available to offset state combined income in

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certain unitary states for the nine months ended September 30, 2022. The valuation allowance release during 2021 was attributable to the change in the entities within state combined filing groups due to unitary relationships, which provide additional taxable income sources to utilize CW’s deferred tax assets. CWH’s increased ownership in CWGS, LLC and other qualitative unity factors impacted the unitary relationships.

Segment results

The following tables sets forth a reconciliation of total segment income to consolidated income before income taxes for each of our segments for the periods presented:


	Nine Months Ended
	September 30, 2022			September 30, 2021			Favorable/
			Percent of			Percent of	(Unfavorable)
($ in thousands)	Amount		Revenue	Amount		Revenue	$		%
Revenue:
Good Sam Services and Plans	$	144,914	2.5%	$	134,499	2.4%	$	10,415	7.7%
RV and Outdoor Retail		5,566,061	97.9%		5,423,581	98.0%		142,480	2.6%
Elimination of intersegment revenue		(24,265)	(0.4%)		(21,918)	(0.4%)		(2,347)	(10.7%)
Total consolidated revenue		5,686,710	100.0%		5,536,162	100.0%		150,548	2.7%
Segment income:⁽¹⁾
Good Sam Services and Plans		67,242	1.2%		62,415	1.1%		4,827	7.7%
RV and Outdoor Retail		538,082	9.5%		709,411	12.8%		(171,329)	(24.2%)
Total segment income		605,324	10.6%		771,826	13.9%		(166,502)	(21.6%)
Corporate & other		(9,681)	(0.2%)		(7,157)	(0.1%)		(2,524)	(35.3%)
Depreciation and amortization		(61,369)	(1.1%)		(49,297)	(0.9%)		(12,072)	(24.5%)
Tax Receivable Agreement liability adjustment		—	—		(3,520)	(0.1%)		3,520	n/m
Other interest expense, net		(49,762)	(0.9%)		(35,262)	(0.6%)		(14,500)	(41.1%)
Loss and expense on debt restructure		—	—		(10,445)	(0.2%)		10,445	n/m
Other (expense) income, net		(472)	(0.0%)		(77)	(0.0%)		(395)	(513.0%)
Income before income taxes	$	484,040	8.5%	$	666,068	12.0%	$	(182,028)	(27.3%)

Same store revenue- RV and Outdoor Retail⁽²⁾	$	4,931,909		$	4,977,357		$	(45,448)	(0.9%)

n/m – not meaningful

(1)	Segment income represents income for each of our reportable segments and is defined as income from operations before depreciation and amortization, plus floor plan interest expense.

(2)	Same store revenue definition not applicable to the Good Sam Services and Plans segment.

Good Sam Services and Plans

Good Sam Services and Plans segment revenue increased primarily due to a $6.1 million increase from the roadside assistance programs primarily resulting from increased contracts in force and favorable updates to assumptions for cancellations; a $1.5 million increase in Good Sam TravelAssist revenue primarily resulting from increased contracts in force, a $1.3 million increase from the Good Sam Insurance Agency primarily resulting from increased contracts in force, a $1.3 million increase from the extended vehicle warranty programs, a $1.0 million increase from the consumer shows due to no shows produced in 2021 and one show produced in 2022, partially offset by a $0.8 million reduction from the RV financing programs.

Good Sam Services and Plans segment income increased primarily due to a $7.6 million increase from the roadside assistance programs resulting from increased contracts in force, favorable updates to assumptions for cancellations, and reduced marketing expenses, a $1.6 million increase from the Good Sam TravelAssist programs; a $1.4 million increase from the Good Sam Insurance Agency; a $1.0 million increase from the extended warranty insurance programs; and a $0.7 million increase from consumer shows; partially offset by a $4.0 million increase in selling, general and administrative expenses consisting mostly of increases in wages and professional fees; a $1.8 million increase in overhead support expenses; an $0.8 million reduction from the RV financing programs; and an $0.9 million reduction from other services and plans. Segment income margin net of intersegment revenue elimination of 46.0% remained unchanged from the prior year and reflected increases from the roadside assistance programs offset by increased selling, general and administrative expenses.

RV and Outdoor Retail

RV and Outdoor Retail segment revenue increased primarily due to a $211.3 million, or 16.5%, increase in used vehicle revenue, a $33.0 million, or 6.7%, increase in finance and insurance, net revenue, and a $0.7

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million increase in new vehicle revenue, partially offset by a $101.2 million, or 11.7%, decrease in products, service and other revenue, and a $1.3 million reduction in Good Sam Club revenue.

RV and Outdoor Retail segment income decreased primarily due to decreased segment gross profit of $109.9 million primarily due to increased average cost per vehicle sold and reduced vehicles sold, a $45.4 million increase in selling, general and administrative expenses (see discussion of selling, general and administrative expenses above), a $14.6 million increase in floor plan interest expense, a $2.1 million increase in long-lived asset impairment, and a $0.3 million increase in loss on sale or disposal of assets, partially offset by a $1.0 million decrease in lease termination expense. RV and Outdoor Retail segment margin decreased 342 basis points to 9.7% primarily due to higher vehicle costs and increased selling, general and administrative expenses.

Corporate and other expenses

Corporate and other expenses increased primarily due to costs relating to the Cybersecurity Incident, which are net of insurance recoveries, and increased other professional fees.

Tax Receivable Agreement Liability adjustment

The Tax Receivable Agreement Liability adjustment for 2021 was an expense of $3.5 million, which represented an adjustment for higher state income tax rates.

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, 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 and are used by management to evaluate our operating performance, liquidity and capital resources, to evaluate the effectiveness of strategic initiatives and for planning purposes. 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 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. 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, 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 section and in the reconciliation tables below help management with a measure of our core operating performance over time by removing items that are not related to day-to-day operations.

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.

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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, 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, and Adjusted EBITDA Margin to the most directly comparable GAAP financial performance measures:


	Three Months Ended September 30,				Nine Months Ended September 30,
($ in thousands)	2022		2021		2022		2021
EBITDA and Adjusted EBITDA:
Net income	$	102,948	$	189,308	$	408,232	$	582,809
Other interest expense, net		20,526		11,250		49,762		35,262
Depreciation and amortization		18,207		23,552		61,369		49,297
Income tax expense		22,397		38,869		75,808		83,259
Subtotal EBITDA		164,078		262,979		595,171		750,627
Long-lived asset impairment (a)		887		316		3,505		1,398
Lease termination (b)		—		329		1,122		2,085
(Gain) loss on sale or disposal of assets, net (c)		(40)		96		390		7
Equity-based compensation (d)		6,792		6,913		27,434		19,069
Tax Receivable Agreement liability adjustment (e)		—		—		—		3,520
Restructuring costs (f)		1,671		17,362		5,548		23,439
Loss and expense on debt restructure (g)		—		24		—		10,445
Adjusted EBITDA	$	173,388	$	288,019	$	633,170	$	810,590


	Three Months Ended September 30,				Nine Months Ended September 30,
(as percentage of total revenue)	2022		2021		2022		2021
Adjusted EBITDA margin:
Net income margin		5.5%		9.9%		7.2%		10.5%
Other interest expense, net		1.1%		0.6%		0.9%		0.6%
Depreciation and amortization		1.0%		1.2%		1.1%		0.9%
Income tax expense		1.2%		2.0%		1.3%		1.5%
Subtotal EBITDA margin		8.8%		13.7%		10.5%		13.6%
Long-lived asset impairment (a)		0.0%		0.0%		0.1%		0.0%
Lease termination (b)		—		0.0%		0.0%		0.0%
(Gain) loss on sale or disposal of assets, net (c)		(0.0%)		0.0%		0.0%		0.0%
Equity-based compensation (d)		0.4%		0.4%		0.5%		0.3%
Tax Receivable Agreement liability adjustment (e)		—		—		—		0.1%
Restructuring costs (f)		0.1%		0.9%		0.1%		0.4%
Loss and expense on debt restructure (g)		—		0.0%		—		0.2%
Adjusted EBITDA margin		9.3%		15.0%		11.1%		14.6%

(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. See Note 4 – Restructuring and Long-Lived Asset Impairment to our condensed consolidated financial statements included in Part I, Item 1 of this Form 10-Q for additional information.

(b)

Represents the loss on the 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. See Note 4– Restructuring and Long-Lived Asset Impairment to our condensed consolidated financial statements included in Part I, Item 1 of this Form 10-Q for additional information.

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(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 on remeasurement of the Tax Receivable Agreement primarily due to changes in our blended statutory income tax rate. See Note 12 — Income Taxes to our condensed consolidated financial statements included in Part I, Item 1 of this Form 10-Q.

(f)

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 Note 4 – Restructuring and Long-Lived Asset Impairment to our condensed consolidated financial statements included in Part I, Item 1 of this Form 10-Q for additional information.

(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 of extinguishment of capitalized finance costs related to the Previous Term Loan Facility, and $9.0 million in legal and other expenses related to the New Term Loan Facility.

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 redemption, 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 redemption 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.

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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:


	Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands except per share amounts)	2022		2021		2022		2021
Numerator:
Net income attributable to Camping World Holdings, Inc.	$	41,126	$	79,703	$	170,167	$	251,213
Adjustments related to basic calculation:
Loss and expense on debt restructure (a):
Gross adjustment		—		24		—		10,445
Income tax expense for above adjustment (b)		—		(3)		—		(1,376)
Long-lived asset impairment (c):
Gross adjustment		887		316		3,505		1,398
Income tax expense for above adjustment (b)		—		—		(99)		—
Lease termination (d):
Gross adjustment		—		329		1,122		2,085
Income tax expense for above adjustment (b)		—		1		—		(38)
(Gain) loss on sale or disposal of assets (e):
Gross adjustment		(40)		96		390		7
Income tax expense for above adjustment (b)		(12)		3		(15)		5
Equity-based compensation (f):
Gross adjustment		6,792		6,913		27,434		19,069
Income tax expense for above adjustment (b)		(792)		(820)		(3,080)		(2,181)
Tax Receivable Agreement liability adjustment (g):
Gross adjustment		—		—		—		3,520
Income tax expense for above adjustment (b)		—		—		—		(898)
Restructuring costs (h)
Gross adjustment		1,671		17,362		5,548		23,439
Income tax expense for above adjustment (b)		—		23		—		(42)
Adjustment to net income attributable to non-controlling interests resulting from the above adjustments (i)		(4,642)		(12,091)		(18,866)		(27,580)
Adjusted net income attributable to Camping World Holdings, Inc. – basic		44,990		91,856		186,106		279,066
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 (j)		409		1,892		1,519		—
Income tax on reallocation of net income attributable to non-controlling interests from the dilutive effect of stock options and restricted stock units (k)		(104)		(489)		(404)		—
Reallocation of net income attributable to non-controlling interests from the dilutive redemption of common units in CWGS, LLC (j)		—		—		—		359,176
Income tax on reallocation of net income attributable to non-controlling interests from the dilutive redemption of common units in CWGS, LLC (k)		—		—		—		(89,668)
Assumed income tax expense of combining C-corporations with full or partial valuation allowances with the income of other consolidated entities after the dilutive redemption of common units in CWGS, LLC (l)		—		—		—		(11,227)
Adjusted net income attributable to Camping World Holdings, Inc. – diluted	$	45,295	$	93,259	$	187,221	$	537,347
Denominator:
Weighted-average Class A common shares outstanding – basic		41,985		45,628		42,419		45,072
Adjustments related to diluted calculation:
Dilutive redemption of common units in CWGS, LLC for shares of Class A common stock (m)		—		—		—		43,731
Dilutive options to purchase Class A common stock (m)		53		138		62		157
Dilutive restricted stock units (m)		467		1,256		466		1,204
Adjusted weighted average Class A common shares outstanding – diluted		42,505		47,022		42,947		90,164

Adjusted earnings per share - basic	$	1.07	$	2.01	$	4.39	$	6.19
Adjusted earnings per share - diluted	$	1.07	$	1.98	$	4.36	$	5.96

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	Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands except per share amounts)	2022		2021		2022		2021
Anti-dilutive amounts (n):
Numerator:
Reallocation of net income attributable to non-controlling interests from the anti-dilutive redemption of common units in CWGS, LLC (j)	$	66,055	$	119,804	$	255,412	$	—
Income tax on reallocation of net income attributable to non-controlling interests from the anti-dilutive redemption of common units in CWGS, LLC (k)	$	(16,804)	$	(30,965)	$	(66,789)	$	—
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 redemption of common units in CWGS, LLC (l)	$	627	$	1,466	$	6,464	$	—
Denominator:
Anti-dilutive redemption of common units in CWGS, LLC for shares of Class A common stock (m)		42,045		42,635		42,045		—

Reconciliation of per share amounts:
Earnings per share of Class A common stock — basic	$	0.98	$	1.75	$	4.01	$	5.57
Non-GAAP Adjustments (o)		0.09		0.26		0.38		0.62
Adjusted earnings per share - basic	$	1.07	$	2.01	$	4.39	$	6.19

Earnings per share of Class A common stock — diluted	$	0.97	$	1.72	$	3.99	$	5.49
Non-GAAP Adjustments (o)		0.10		0.26		0.37		0.62
Dilutive redemption of common units in CWGS, LLC for shares of Class A common stock (p)		—		—		—		(0.14)
Dilutive options to purchase Class A common stock and/or restricted stock units (p)		—		—		—		(0.01)
Adjusted earnings per share - diluted	$	1.07	$	1.98	$	4.36	$	5.96

(a)

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 $9.0 million in legal and other expenses related to the New Term Loan Facility.

(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)

(d)

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. See Note 4 – Restructuring and Long-Lived Asset Impairment to our condensed consolidated financial statements included in Part I, Item 1 of this Form 10-Q for additional information.

(e)	Represents an adjustment to eliminate the gains and losses on disposals and sales of various assets.

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

(g)	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. See Note 12 — Income Taxes to our condensed consolidated financial statements included in Part I, Item 1 of this Form 10-Q.

(h)

(i)

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 50.0% and 48.3% for the three months ended September 30, 2022 and 2021, respectively, and 49.8% and 49.2% for the nine months ended September 30, 2022 and 2021, respectively.

(j)	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.

(k)	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 the 2022 and 2021 periods, respectively.

(l)

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 and nine months ended September 30, 2021, this adjustment included the reversal of the $0.3 million expense and $14.5 million benefit, respectively, from changes in the valuation allowance for Camping World, Inc. Subsequent to the redemption 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,

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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 $0.3 million and $14.5 million release of valuation allowance during the three and nine months ended September 30, 2021, respectively, was considered to be reversed and excluded from adjusted net income attributable to Camping World Holdings, Inc. – diluted for purposes of this calculation.

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

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

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

(p)	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.

As discussed under “Our Corporate Structure Impact on Income Taxes” in Part I, Item 2 of this Form 10-Q , 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 redemption 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 (n) above).

Liquidity and Capital Resources

General

Our primary requirements for liquidity and capital have been working capital, inventory management, acquiring and building new retail locations, the improvement and expansion of existing retail locations, debt service, distributions to holders of equity interests in CWGS, LLC and our Class A common stock, and general corporate needs. These cash requirements have historically been met through cash provided by operating activities, cash and cash equivalents, proceeds from registered offerings of our Class A common stock, borrowings under our Senior Secured Credit Facilities (as defined in Part I, Item 1 of this Form 10-Q), borrowings under our Floor Plan Facility (as defined in Part I, Item 1 of this Form 10-Q), borrowings under our Real Estate Facilities (as defined in Part I, Item 1 of this Form 10-Q), and borrowings under our 2022 Real Estate Facility (as defined in Part I, Item 1 of this Form 10-Q).

As a public company, our additional liquidity needs include public company costs, payment of regular and special cash dividends, any exercise of the redemption right by the Continuing Equity Owners from time to time (should we elect to redeem common units for a cash payment), our stock repurchase program as described below, payments under the Tax Receivable Agreement, and state and federal taxes to the extent not reduced as a result of the Tax Receivable Agreement. The Continuing Equity Owners may exercise such redemption right for as long as their common units remain outstanding. Although the actual timing and amount of any payments that may be made under the Tax Receivable Agreement will vary, we expect that the payments that we will be required to make to the Continuing Equity Owners, Former Profits Unit Holders and Crestview Partners II GP, L.P. will be significant. Any payments made by us to Continuing Equity Owners, Former Profits Unit Holders and Crestview Partners II GP, L.P. under the Tax Receivable Agreement will generally reduce the amount of overall cash flow that might have otherwise been available to us or to CWGS, LLC and, to the extent that we are unable to make payments under the Tax Receivable Agreement for any reason, the unpaid amounts generally will be deferred and will accrue interest until paid by us; provided, however, that nonpayment for a specified period may constitute a material breach of a material obligation under the Tax Receivable Agreement and therefore may accelerate payments due under the Tax Receivable Agreement. For a discussion of the Tax Receivable Agreement, see Note 12 — Income Taxes to our condensed consolidated financial statements included in Part I, Item 1 of this Form 10-Q.

Stock Repurchase Program

In January 2022, our board of directors authorized an increase to the existing stock repurchase program for the repurchase of up to an additional $152.7 million of our Class A common stock and an extension of the stock repurchase program to expire on December 31, 2025. During the three months ended September 30,

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2022, we did not repurchase Class A common stock under our stock repurchase program. During the nine months ended September 30, 2022, we repurchased 2,592,524 shares of our Class A common stock for $79.8 million, including broker commissions. As of September 30, 2022, $120.2 million was available under the stock repurchase program to repurchase additional shares of our Class A common stock.

As described in Note 12 — Income Taxes to our condensed consolidated financial statements included in Part I, Item 1 of this Form 10-Q, the Inflation Reduction Act of 2022 imposes a 1% excise tax on corporate stock repurchases in tax years beginning after December 31, 2022 with certain exclusions for (a) repurchased shares for withholding taxes on vested RSUs and (b) treasury shares reissued in the same tax year for settlement of stock option exercises or vesting of RSUs.

Dividends

On February 18, 2022, our board of directors approved the increase of the portion of the quarterly cash dividend relating to all or a portion of the Excess Tax Distribution (as defined under “Dividend Policy” included in Part II, Item 5 of our Annual Report) to $0.475 per share of Class A common stock from $0.35 per share, which increased the total quarterly cash dividend to $0.625 per share of Class A common stock from $0.50 per share beginning in March 2022. For the three and nine months ended September 30, 2022, we paid a regular quarterly cash dividend on our Class A common stock of $0.625 per share, which was funded with a $0.15 per common unit cash distribution from CWGS, LLC and the remainder funded with all or a portion of the Excess Tax Distribution.

Our dividend policy has certain risks and limitations particularly with respect to liquidity, and we may not pay future dividends according to our policy, or at all. See “Dividend Policy” included in Part II, Item 5 of our Annual Report and “Risk Factors ─ Risks Relating to Ownership of Our Class A Common Stock ─ “Our ability to pay regular and special dividends on our Class A common stock is subject to the discretion of our board of directors and may be limited by our structure and statutory restrictions” included in Part I, Item 1A of our Annual Report.

Acquisitions and Capital Expenditures

During the nine months ended September 30, 2022, the RV and Outdoor Retail segment acquired the assets of various RV dealerships comprised of five locations for an aggregate purchase price of approximately $79.8 million (see Note 11 – Acquisitions to our condensed consolidated financial statements included in Part I, Item 1 of this Form 10-Q) and purchased real property of $41.7 million.

We announced a number of initiatives heading into 2022, including an online RV sales process, service bay expansion, the addition of design centers to our existing store footprint, and continued expansion through dealership acquisitions. We have also announced a number of land acquisitions in anticipation of constructing new stores.

For the three months ended December 31, 2022, our expansion of dealerships through acquisition and construction is expected to cost between $160.0 million and $190.0 million through a combination of business acquisitions and capital expenditures relating to land, buildings, and improvements. This amount includes the acquisition completed in October 2022 (see Note 11 – Acquisitions to our condensed consolidated financial statements included in Part I, Item 1 of this Form 10-Q). Factors that could impact the quantity of future locations or the cost to acquire or open those locations include, but are not limited to, our ability to locate potential acquisition targets or greenfield locations in a geographic area and at a cost that meets our success criteria; continued strong cash flow generation from our operations to fund these acquisitions and new locations; and availability of financing on our Floor Plan Facility. We expect the additional cash requirements of the other announced initiatives to be immaterial. In 2023, we expect to invest between $70.0 million and $100 million on additional business acquisitions and capital expenditures relating to real estate and improvements, but we expect to increase or decrease this range as market conditions and expansion opportunities evolve throughout the year.

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2019 Strategic Shift

In connection with the 2019 Strategic Shift during the nine months ended September 30, 2022, we have paid or otherwise settled $2.0 million of lease termination costs and $5.6 million of other associated costs. We expect that approximately $0.2 million to $2.6 million of other associated costs and $4.6 million to $18.6 million of lease termination costs will result in future cash expenditures. For a discussion of the 2019 Strategic Shift, see Note 4 — Restructuring and Long-Lived Asset Impairment to our condensed consolidated financial statements included in Part I, Item 1 of this Form 10-Q.

Other Cash Requirements or Commitments

Substantially all of our new RV inventory and, at times, certain of our used RV inventory is financed under our Floor Plan Facility (defined in Note 3 – Inventories and Floor Plan Payables to our condensed consolidated financial statements included in Part I, Item 1 of this Form 10-Q). As of September 30, 2022, no used RV inventory was financed by our Floor Plan Facility. See “Summary of Credit Facilities, Other Long-Term Debt, and Finance Lease Arrangements” for a summary of the cash requirements related to our indebtedness.

Cash requirements relating to the Tax Receivable Agreement liability, operating and finance lease obligations, and service and marketing sponsorship agreements have not materially changed since our Annual Report.

Sources of Liquidity and Capital

We believe that our sources of liquidity and capital including cash provided by operating activities and borrowings under our various credit facilities, other long-term debt, and finance lease arrangements (see Liquidity and Capital Resources — Summary of Credit Facilities, Other Long-Term Debt, and Finance Lease Arrangements in Part I, Item 2 of this Form 10-Q), including additional borrowing capacity where applicable, will be sufficient to finance our continued operations, growth strategy, including the opening of any additional retail locations, regular and special quarterly cash dividends (as described above), required payments for our obligations under the Tax Receivable Agreement, and additional expenses we expect to incur for at least the next twelve months. However, we cannot assure you that our cash provided by operating activities, cash and cash equivalents or cash available under our Revolving Credit Facility, our Floor Plan Facility, our Real Estate Facilities, and our 2022 Real Estate Facility, including the potential additional borrowings noted above, will be sufficient to meet our future needs. If we are unable to generate sufficient cash flows from operations in the future and if availability under our Revolving Credit Facility, our Floor Plan Facility, our Real Estate Facilities, and our 2022 Real Estate Facility is not sufficient, we may have to obtain additional financing. If we obtain additional capital by issuing equity, the interests of our existing stockholders will be diluted. If we incur additional indebtedness, that indebtedness may impose significant financial and other covenants that may significantly restrict our operations. We cannot assure you that we could obtain refinancing or additional financing on favorable terms or at all, including the expected additional borrowings noted above and particularly in light of the current macroeconomic uncertainty. See “Risk Factors — Risks Related to our Business — Our ability to operate and expand our business and to respond to changing business and economic conditions will depend on the availability of adequate capital” included in Part I, Item 1A of our Annual Report.

As of September 30, 2022 and December 31, 2021, we had working capital of $675.5 million and $685.6 million, respectively, including $148.2 million and $267.3 million, respectively, of cash and cash equivalents. Our working capital reflects the cash provided by deferred revenue and gains reported under current liabilities of $101.9 million and $95.5 million as of September 30, 2022 and December 31, 2021, respectively. Deferred revenue primarily consists of cash collected for club memberships and roadside assistance contracts in advance of services to be provided, which is deferred and recognized as revenue over the life of the membership, and deferred revenue for the annual guide. We use net proceeds from this deferred membership revenue to lower our long-term borrowings and finance our working capital needs. Our Floor Plan Facility includes a flooring line aggregate interest reduction (“FLAIR”) offset account that allows us to transfer cash as an offset to the payables under the Floor Plan Facility. The FLAIR offset account at September 30, 2022 was $218.6 million, all of which could have been withdrawn while remaining in compliance with the financial covenants of the Floor Plan Facility.

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Seasonality

We have experienced, and expect to continue to experience, variability in revenue, net income, and cash flows as a result of annual seasonality in our business (see Note 1 — Summary of Significant Accounting Policies — Seasonality to our condensed consolidated financial statements included in Part I, Item 1 of this Form 10-Q).

Cash Flow

The following table shows summary cash flow information for the nine months ended September 30, 2022 and 2021:



	Nine Months Ended September 30,
(In thousands)	2022		2021
Net cash provided by operating activities	$	523,919	$	571,876
Net cash used in investing activities		(239,305)		(256,315)
Net cash used in financing activities		(403,711)		(348,838)
Net decrease in cash and cash equivalents	$	(119,097)	$	(33,277)

Operating activities. Our cash flows from operating activities are primarily collections from contracts in transit and customers following the sale of new and used vehicles, as well as from the sale of retail products and services and Good Sam services and plans. Contracts in transit represent amounts due from third-party lenders from whom pre-arranged agreements have been determined, and to whom the retail installment sales contracts have been assigned. Our primary uses of cash from operating activities are repayments of vehicle floor plan payables, payments to retail product suppliers, personnel-related expenditures, payments related to leased property, advertising, and various services and program costs.

Net cash provided by operating activities was $523.9 million in the nine months ended September 30, 2022, a decrease of $48.0 million from $571.9 million of net cash provided by operating activities in the nine months ended September 30, 2021. The decrease was primarily due to a $174.6 million reduction in net income, a $52.5 million decrease in the working capital adjustment for accounts payable and other accrued expenses, a $13.0 million decrease in the working capital adjustment for deferred revenue and a $2.5 million reduction in other operating activities, partially offset by a $120.9 million decrease in the working capital adjustment for inventory, a $41.9 million decrease in the working capital adjustment for accounts receivable and contracts in transit, a $19.7 million increase in deferred income taxes, and a $12.1 million increase in depreciation and amortization.

Investing activities. Our investment in business activities primarily consists of expanding our operations through organic growth and the acquisition of retail locations. Substantially all of our new retail locations and capital expenditures have been financed using cash provided by operating activities and borrowings under our various credit facilities, other long-term debt, and finance lease arrangements, as applicable (see Liquidity and Capital Resources — Summary of Credit Facilities, Other Long-Term Debt, and Finance Lease Arrangements in Part I, Item 2 of this Form 10-Q).

The table below summarizes our capital expenditures for the nine months ended September 30, 2022 and 2021:



	Nine Months Ended September 30,
(In thousands)	2022		2021
IT hardware and software	$	9,454	$	5,383
Greenfield and acquired retail locations		49,079		37,489
Existing retail locations		55,445		45,419
Corporate and other		4,467		269
Total capital expenditures	$	118,445	$	88,560

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Our capital expenditures consist primarily of investing in acquired and greenfield retail and RV dealership locations, existing retail locations, information technology, hardware, and software. The expected minimum capital expenditures relating to new dealerships and real estate purchases through December 31, 2023 are discussed above. As of September 30, 2022, we had entered into contracts for construction of new dealership buildings for an aggregate future commitment of capital expenditures of $60.9 million. There were no other material commitments for capital expenditures as of September 30, 2022.

Net cash used in investing activities was $239.3 million for the nine months ended September 30, 2022. The $239.3 million of cash used in investing activities was comprised of $118.4 million of capital expenditures primarily related to retail locations, $83.2 million for the purchase of RV and outdoor retail businesses and a publication business, $41.7 million for the purchase of real property, $3.0 million for purchase of other investments, and $0.9 million for the purchase of intangible assets, partially offset by proceeds from the sale of real property of $6.8 million and proceeds of $1.1 million from the sale of property and equipment. See Note 11 – Acquisitions to our condensed consolidated financial statements included in Part I, Item 1 of this Form 10-Q.

Net cash used in investing activities was $256.3 million for the nine months ended September 30, 2021. The $256.3 million of cash used in investing activities was comprised of $99.7 million for the purchase of RV and outdoor retail businesses, $88.6 million of capital expenditures primarily related to retail locations, $61.1 million for the purchase of real property, $8.0 million of investment in businesses, and $2.6 million for the purchase of intangible assets, partially offset by proceeds of $2.3 million from the sale of property and equipment and $1.4 million from the sale of real property.

Financing activities. Our financing activities primarily consist of proceeds from the issuance of debt and the repayment of principal and debt issuance costs.

Our net cash used in financing activities was $403.7 million for the nine months ended September 30, 2022. The $403.7 million of cash used in financing activities was primarily due to $156.6 million of member distributions, $99.8 million of net payments on borrowings under the Floor Plan Facility, $79.8 million for the repurchase of Class A common stock, $78.9 million of dividends paid on Class A common stock, $11.9 million of payments on long-term debt, $4.5 million for finance lease payments, $6.5 million of withholding taxes paid upon the vesting of restricted stock units (“RSUs”), and $0.1 million for sale-leaseback arrangement payments, partially offset by $28.0 million of net proceeds from a sale-leaseback arrangement, $6.0 million of proceeds from landlord funded construction on finance leases, and $0.3 million of proceeds from exercise of stock options.

Our net cash used in financing activities was $348.8 million for the nine months ended September 30, 2021. The $348.8 million of cash used in financing activities was primarily due to $179.7 million of member distributions, $174.1 million of payments on long-term debt, $86.8 million for the repurchase of Class A common stock, $44.8 million of dividends paid on Class A common stock, $7.2 million of withholding taxes paid upon the vesting of RSUs, $2.2 million for finance lease payments, and $1.8 million of debt issuance costs, partially offset by $124.9 million of proceeds from long-term debt, $19.2 million of net proceeds from borrowings under the Floor Plan Facility, and $3.8 million of proceeds from exercise of stock options.

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Summary of Credit Facilities, Other Long-Term Debt, and Finance Lease Arrangements

The following table shows a summary of the outstanding balances, current portion, and remaining available borrowings under our credit facilities and other long-term debt and finance lease arrangements (see definitions and further details in Note 3 – Inventories and Floor Plan Payables, Note 6 – Long-Term Debt, and Note 7 – Leases to our condensed consolidated financial statements included in Part I, Item 1 of this Form 10-Q) at September 30, 2022:


			Current		Remaining
(In thousands)	Outstanding		Portion		Available
Floor Plan Facility:
Notes payable - floor plan	$	899,568	$	899,568	$	504,175	⁽¹⁾
Revolving line of credit		20,885		—		49,115	⁽²⁾
Senior Secured Credit Facility:
Term Loan Facility		1,359,230		14,015		—
Revolving Credit Facility		—		—		60,070	⁽³⁾
Other:
Real Estate Facilities		21,666		1,689		—
Other long-term debt		3,311		123		—
Finance lease obligations		105,893		10,397		—
	$	2,410,553	$	925,792	$	613,360

(1)

The unencumbered borrowing capacity for the Floor Plan Facility represents the additional borrowing capacity less any accounts payable for sold inventory and less any purchase commitments. Additional borrowings are subject to the vehicle collateral requirements under the Floor Plan Facility.

(2)

The revolving line of credit borrowings are limited by a borrowing base calculation.

(3)

The Revolving Credit Facility remaining available balance was reduced by outstanding undrawn letters of credit. The Credit Agreement requires compliance with a Total Net Leverage Ratio covenant when borrowings on the Revolving Credit Facility (excluding certain amounts relating to letters of credit) is over a 35%, or $22.8 million, threshold (Note 6 – Long-Term Debt to our condensed consolidated financial statements included in Part I, Item 1 of this Form 10-Q).

In October 2022, we entered into a 2022 Real Estate Facility with a maximum principal capacity of $250.0 million (see definitions and further details in Note 6 – Long-Term Debt to our condensed consolidated financial statements included in Part I, Item 1 of this Form 10-Q). No amounts were borrowed as of the closing of the 2022 Real Estate Facility and we expect to borrow between $100.0 million and $150.0 under the 2022 Real Estate Facility during the fourth quarter of 2022.

Sale/Leaseback Arrangements

We have in the past and may in the future enter into sale-leaseback transactions to finance certain property acquisitions and capital expenditures, pursuant to which we sell property and/or leasehold improvements to third parties and agree to lease those assets back for a certain period of time. Such sales generate proceeds which vary from period to period.

On February 8, 2022, FRHP Lincolnshire, LLC sold three properties for a total sale price of $28.0 million. Concurrent with the sale of these properties, the Company entered into three separate twenty-year lease agreements, whereby the Company will lease back the properties from the acquiring company. Under each lease agreement, FR has four consecutive options to extend the lease term for additional periods of five years for each option. This transaction is accounted for as a financing transaction. The Company recorded a liability for the amount received, will continue to depreciate the non-land portion of the assets, and has imputed an interest rate so that the net carrying amount of the financial liability and remaining assets will be zero at the end of the initial lease terms. The financial liability is included in other long-term liabilities in the condensed consolidated balance sheet as of September 30, 2022.

Deferred Revenue

Deferred revenue consists of our sales for products not yet recognized as revenue at the end of a given period. Our deferred revenue as of September 30, 2022 was $175.2 million.

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Critical Accounting Policies and Estimates

We prepare our condensed consolidated financial statements in accordance with GAAP, and in doing so, we have to make estimates, assumptions and judgments affecting the reported amounts of assets, liabilities, revenues and expenses, as well as the related disclosure of contingent assets and liabilities. We base our estimates, assumptions and judgments on historical experience and on various other factors we believe to be reasonable under the circumstances. Different assumptions and judgments would change estimates used in the preparation of our condensed consolidated financial statements, which, in turn, could change our results from those reported. We evaluate our critical accounting estimates, assumptions and judgments on an ongoing basis.

There has been no material change in our critical accounting policies and estimates from those previously reported and disclosed in our Annual Report.

Recent Accounting Pronouncements

See Note 1 – Summary of Significant Accounting Policies to our condensed consolidated financial statements in Item 1, Part I of this Form 10-Q.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We are exposed to market risk from changes in interest rates. This market risk arises in the normal course of business, as we do not engage in speculative trading activities. The following analysis provides quantitative information regarding this risk.

Interest Rate Risk

Our operating results are subject to risk from interest rate fluctuations on our Senior Secured Credit Facilities, our Floor Plan Facility, our Real Estate Facilities, and our 2022 Real Estate Facility, which carry variable interest rates. Interest rate risk is the exposure to loss resulting from changes in the level of interest rates and the spread between different interest rates. Because our Senior Secured Credit Facilities, Floor Plan Facility, Real Estate Facilities, and 2022 Real Estate Facility bear interest at variable rates, we are exposed to market risks relating to changes in interest rates. Interest rate risk is highly sensitive due to many factors, including U.S. monetary and tax policies, U.S. and international economic factors and other factors beyond our control.

Based on September 30, 2022 debt levels (see Liquidity and Capital Resources — Summary of Credit Facilities, Other Long-Term Debt, and Finance Lease Arrangements in Part I, Item 2 of this Form 10-Q), an increase or decrease of 100 basis points in the effective interest rate would cause an increase or decrease in interest expense:

•

under our Term Loan Facility of $14.1 million over the next 12 months;

•

under our Floor Plan Facility of approximately $9.2 million over the next 12 months;

•

under our Floor Plan Facility revolving line of credit of approximately $0.2 million over the next 12 months;

•

under our Real Estate Facilities of approximately $0.2 million over the next 12 months;

•

under our Other Long-Term Debt would be immaterial; and

•

under our 2022 Real Estate Facilities would not be applicable, since there was no outstanding balance at September 30, 2022.

See “Results of Operations” in Part I, Item 2 of this Form 10-Q for a discussion of interest expense for the three and nine months ended September 30, 2022 compared to the three and nine months ended September 30, 2021, respectively.

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We do not use derivative financial instruments for speculative or trading purposes, but this does not preclude our adoption of specific hedging strategies in the future.

Item 4. Controls and Procedures

Limitations on Effectiveness of Controls and Procedures

In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated, as of the end of the period covered by this Quarterly Report on Form 10-Q, the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of September 30, 2022.

Changes in Internal Control over Financial Reporting

During the three months ended September 30, 2022, we completed the implementation of a corporate performance management (“CPM”) system for performing the consolidation of the financial data from our disparate enterprise resource planning (“ERP”) systems. The new CPM system is intended to enhance operating efficiencies by automating certain manual procedures and providing more effective financial reporting to our management. As a result of this CPM implementation, certain internal controls over financial reporting have been automated, modified or implemented.

There were no other changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) identified in connection with the evaluation of our internal control performed during the fiscal quarter ended September 30, 2022, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Part II. Other Information

Item 1. Legal Proceedings

See Note 9 – Commitments and Contingencies to our condensed consolidated financial statements in Item 1, Part I of this Form 10-Q.

Item 1A. Risk Factors

There have been no material changes to our risk factors as previously disclosed in Item 1A of Part I of our Annual Report on Form 10-K for the year ended December 31, 2021 filed with the Securities and Exchange Commission on February 24, 2022, other than with respect to the risk factors described below.

Unanticipated changes in effective tax rates or adverse outcomes resulting from examination of our income or other tax returns could adversely affect our operating results and financial condition.

We are subject to income taxes in the United States, and our tax liabilities will be subject to the allocation of expenses in differing jurisdictions. Our future effective tax rates could be subject to volatility or adversely affected by a number of factors, including:

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●changes in the valuation of our deferred tax assets and liabilities;

●expected timing and amount of increases in or release of any tax valuation allowances;

●tax effects of equity-based compensation;

●costs related to intercompany restructurings; or

●changes in tax laws, regulations or interpretations thereof.

In addition, we may be subject to audits of our income, sales and other transaction taxes by U.S. federal and state authorities. Outcomes from these audits could have an adverse effect on our operating results and financial condition.

CWH is able to benefit from certain state combined filing groups due to unitary relationships, which provide additional taxable income sources to utilize CW’s deferred tax assets. CWH’s annual weighted-average ownership in CWGS, LLC of over 50% and other qualitative unity factors impact the unitary relationships. If changes in unitary factors, such as treasury stock repurchases that reduce CWH’s ownership in CWGS, LLC, result in the inability for combined filing for certain states, then additional income tax expense would be recognized for recording an additional valuation allowance against CW’s deferred tax assets. Additionally, this change in filing status would likely decrease CWH’s state tax rates applied against its current taxable income, which would also result in additional tax expense due to the revaluation of its deferred tax assets and other income from the adjustment to the Tax Receivable Agreement liability.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table presents information related to our repurchases of Class A common stock for the periods indicated:


Period	Total Number of Shares Purchased	Average Price Paid per Share	Total Number of Shares Purchased as Part of Publicly Announced Programs⁽¹⁾	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Programs⁽¹⁾
July 1, 2022 to July 31, 2022	—	$—	—	$120,166,000
August 1, 2022 to August 31, 2022	—	—	—	120,166,000
September 1, 2022 to September 30, 2022	—	—	—	120,166,000
Total	—	$—	—	$120,166,000

(1)

On October 30, 2020, our board of directors authorized a stock repurchase program for the repurchase of up to $100.0 million of the Company’s Class A common stock, expiring on October 31, 2022. In August 2021 and January 2022, our board of directors authorized increases to the stock repurchase program for the repurchase of up to an additional $125.0 million and $152.7 million of the Company’s Class A common stock, respectively. Following these extensions, the stock repurchase program now expires on December 31, 2025. This program does not obligate the Company to acquire any particular amount of Class A common stock and the program may be extended, modified, suspended or discontinued at any time at the board’s discretion.

The table above excludes shares net settled by the Company in connection with tax withholdings associated with the vesting of restricted stock units as these shares were not issued and outstanding.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

On October 27, 2022, certain subsidiaries of FRHP Lincolnshire, LLC (“FRHP”) and certain subsidiaries of FRHP (as borrowers) and CWGS Group, LLC (as guarantor), each indirect subsidiaries of CWGS, LLC,

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entered into a credit agreement (the “FRHP Credit Agreement”) for a new $250.0 million senior secured mortgage facility (the ‘‘2022 Real Estate Facility’’) with Manufacturers and Traders Trust Company, as administrative agent, and the other lenders party thereto. No funds were drawn at closing; $250.0 million is available to be funded on a delayed draw basis on subsequent funding dates as determined by the borrowers. The Company anticipates an initial draw of between $100.0 million to $150.0 million by December 31, 2022. In addition, the borrowers have the ability to add one or more incremental facilities under the 2022 Real Estate Facility, up to a maximum of $100.0 million and subject to the satisfaction of certain customary conditions. The 2022 Real Estate Facility will mature on October 27, 2027.

Borrowings under the 2022 Real Estate Facility bear interest at a rate per annum equal to, at the borrowers’ option, either: (a) SOFR Rate (as defined in the FRHP Credit Agreement) set for an elected interest period or (b) a Base Rate (as defined in the FRHP Credit Agreement) plus an applicable margin as set forth in the FRHP Credit Agreement. In addition to paying interest on outstanding principal under the 2022 Real Estate Facility, the borrowers are required to pay a commitment fee to the lenders under the 2022 Real Estate Facility in respect of the unused commitments thereunder at a rate set forth in the FRHP Credit Agreement.

All obligations under the 2022 Real Estate Facility and the guarantees of those obligations, are secured, subject to certain exceptions, by the mortgaged real property assets.

The 2022 Real Estate Facility contains a number of covenants that, among other things and subject to certain exceptions, restrict the ability of the borrowers and their restricted subsidiaries to:

•

incur additional indebtedness;

•

pay dividends, distributions, redemption of equity and other restricted payments;

•

make loans, advances and investments;

•

enter into agreements with negative pledge clauses or clauses restricting intercompany distributions;

•

engage in transactions with affiliates;

•

sell assets;

•

complete mergers, dissolutions, liquidations, consolidations, acquisitions, division transactions and other fundamental changes; and

•

create liens.

In addition, the 2022 Real Estate Facility requires the borrowers to comply with a minimum debt service coverage ratio of greater than 1.10 to 1.00 as of the last day of any fiscal quarter.

The 2022 Real Estate Facility includes customary representations and warranties of the Company and the borrowers, which must continue to be true and correct in all material respects as a condition to future draws. The 2022 Real Estate Facility also includes customary events of default in certain cases subject to customary notice or cure rights, following which, amounts outstanding under the 2022 Real Estate Facility may be accelerated.

This summary of the FRHP Credit Agreement does not purport to be a complete description and is qualified in its entirety by reference to the full text of the FRHP Credit Agreement, which is filed as Exhibit 10.1 to this Quarterly Report on Form 10-Q.

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Item 6. Exhibits

Exhibits Index


		Incorporated by Reference
Exhibit Number	Exhibit Description	Form	File No.	Exhibit	Filing Date	Filed/ Furnished Herewith
3.1	Amended and Restated Certificate of Incorporation of Camping World Holdings, Inc.	10-Q	001-37908	3.1	11/10/16

3.2	Amended and Restated Bylaws of Camping World Holdings, Inc.	10-Q	001-37908	3.2	11/10/16

4.1	Specimen Stock Certificate evidencing the shares of Class A common stock	S-1/A	333-211977	4.1	9/13/16

10.1	Credit Agreement, dated as of October 27, 2022, by and among certain subsidiaries of FRHP Lincolnshire, LLC, as Holdings, certain subsidiaries of Holdings, as Borrowers, CWGS Group, LLC as Guarantor, Manufacturers and Traders Trust Company, as Administrative Agent, and the Financial Institutions Party thereto, as Lenders					*

31.1	Rule 13a-14(a) / 15d-14(a) Certification of Chief Executive Officer					*

31.2	Rule 13a-14(a) / 15d-14(a) Certification of Chief Financial Officer					*

32.1	Section 1350 Certification of Chief Executive Officer					**

32.2	Section 1350 Certification of Chief Financial Officer					**

101.INS	Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.					***

101.SCH	Inline XBRL Taxonomy Extension Schema Document					***

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		Incorporated by Reference
Exhibit Number	Exhibit Description	Form	File No.	Exhibit	Filing Date	Filed/ Furnished Herewith
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document					***

101.DEF	Inline XBRL Extension Definition Linkbase Document					***

101.LAB	Inline XBRL Taxonomy Label Linkbase Document					***

101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document					***

104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)					***

* Filed herewith

** Furnished herewith

*** Submitted electronically herewith

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	Camping World Holdings, Inc.

Date: November 2, 2022	By:	/s/ Karin L. Bell
		Karin L. Bell
		Chief Financial Officer

		(Authorized Officer and Principal Financial Officer and Principal Accounting Officer)