In the Conference Call Information section, it should read: A
conference call to discuss the fiscal 2017 third quarter financial
results is scheduled for today, November 9, 2017, at 11:00 a.m.
Eastern Time. Investors and analysts can participate on the
conference call by dialing 800-441-0022 or 719-457-2607 and using
conference ID # 6378900 (instead of A conference call to discuss
the fiscal 2017 third quarter financial results is scheduled for
today, November 9, 2017, at 4:30 p.m. Eastern Time. Investors and
analysts can participate on the conference call by dialing
800-441-0022 or 719-457-2605 and using conference ID #
6378900).
The corrected release reads:
CAMPING WORLD HOLDINGS, INC. REPORTS THIRD
QUARTER RESULTS
Camping World Holdings, Inc. (NYSE: CWH) (“Camping World,”
“Company,” “we,” “us” or “our”) today reported results for the
third quarter ended September 30, 2017.
Third Quarter 2017
Summary
- Total revenue increased 25.0% to $1.24
billion;
- Gross profit increased 27.3% to $356.7
million and gross margin increased 51 basis points to 28.8%;
- Income from operations increased 27.8%
to $112.1 million and operating margin increased 20 basis points to
9.0%;
- Net income increased 24.6% to $85.3
million, net income margin decreased 2 basis points to 6.9% and
adjusted pro forma net income(1) increased 53.4% to $68.6
million
- Diluted earnings per share(2) was $0.68
and adjusted pro forma earnings per fully exchanged and diluted
share (1) increased 44.7% to $0.77; and
- Adjusted EBITDA(1) increased 35.2% to
$122.1 million and adjusted EBITDA margin(1) increased 74 basis
points to 9.9%.
_______________________________________
(1) Adjusted pro forma net income, adjusted pro forma
earnings per fully exchanged and diluted share, adjusted EBITDA and
adjusted EBITDA margin are non-GAAP measures. For reconciliations
of these non-GAAP measures to the most directly comparable GAAP
measures, see the “Non-GAAP Financial Measures” section later in
this press release. (2) Diluted earnings per Class A common stock
is applicable only for periods after the Company’s initial public
offering. For a discussion of earnings per share see the “Earnings
Per Share” section later in this press release.
Marcus Lemonis, Chairman and Chief Executive Officer, stated,
“We are very pleased with our third quarter results and the
continued strength in the underlying trends across our business.
For the quarter, total revenue grew 25.0%, adjusted pro forma net
income increased 53.4% and adjusted EBITDA grew 35.2%, once again
demonstrating the power and leverage of our unique business and
operating model. Looking ahead, we believe we are well positioned
to continue gaining share in the RV market and broadening our reach
across the outdoor lifestyle consumer market.”
Presentation
This press release presents historical results, for the periods
presented, of the Company and its subsidiaries that are presented
in accordance with accounting principles generally accepted in the
United States (“GAAP”), unless noted as a non-GAAP financial
measure. The Company’s initial public offering (“IPO”) and related
reorganization transactions (“Reorganization Transactions”) that
occurred on October 6, 2016 resulted in CWH as the sole managing
member of CWGS Enterprises, LLC (“CWGS, LLC”), with sole voting
power in and control of the management of CWGS, LLC. Despite its
position as sole managing member of CWGS, LLC, CWH has a minority
economic interest in CWGS, LLC. As of September 30, 2017, CWH owned
34.1% of CWGS, LLC. Accordingly, the Company consolidates the
financial results of CWGS, LLC and reports a non-controlling
interest in its consolidated financial statements. As the
Reorganization Transactions are considered transactions among
entities under common control, the financial statements for the
periods prior to the IPO and related Reorganization Transactions
have been adjusted to combine the previously separate entities for
presentation purposes. Unless otherwise indicated, all financial
comparisons in this press release compare our financial results
from the 2017 third quarter to our financial results from the 2016
third quarter.
Third Quarter 2017 Results Compared to
Third Quarter 2016 Results
Units and Average Selling Prices
New vehicle units sold increased 33.3% to 19,107 units and the
average selling price of a new vehicle decreased 1.6% to $37,430.
The increase in new vehicle units sold was primarily driven by
strong consumer demand for new vehicles. The decrease in the
average selling price of a new vehicle was driven by a higher mix
of lower-priced towable units.
Used vehicle units sold increased 7.2% to 8,557 units and the
average selling price of a used vehicle decreased 3.3% to $22,009.
The increase in used vehicle units sold was primarily driven by
sales at new stores.
Revenue
Total revenue increased 25.0% to $1.24 billion from $991.1
million in last year’s third quarter. Consumer Services and Plans
revenue increased 1.6% to $46.2 million and Retail revenue
increased 26.1% to $1.19 billion. In the Retail segment, new
vehicle revenue increased 31.2% to $715.2 million primarily driven
by the 33.3% increase in new vehicle unit sales, used vehicle
revenue increased 3.7% to $188.3 million, parts, services and other
revenue increased 24.3% to $187.8 million and finance and insurance
revenue increased 50.0% to $101.6 million. Finance and insurance,
net revenue as a percentage of total new and used vehicle revenue
increased to 11.2% from 9.3% in last year’s third quarter.
Same store sales for the base of 115 retail locations that were
open both at the end of the corresponding period and at the
beginning of the preceding fiscal year increased 9.4% to $982.2
million for the three months ended September 30, 2017. The increase
in same store sales was primarily driven by a 14.5% increase in new
vehicle same store sales, a 30.5% increase in finance and insurance
same store sales, and a 1.4% increase in parts, services and other
same store sales, partially offset by a 7.9% decrease in used
vehicle same store sales.
The Company operated a total of 137 Camping World retail
locations, two Overton’s locations, two TheHouse.com locations, and
one W82 location as of September 30, 2017 compared to 120 Camping
World retail locations and zero Overton’s, TheHouse.com, and W82
locations at September 30, 2016.
Gross Profit
Total gross profit increased 27.3% to $356.7 million, or 28.8%
of total revenue, from $280.2 million, or 28.3% of total revenue,
in last year’s third quarter. On a segment basis, Consumer Services
and Plans gross profit increased 2.3% to $26.1 million, or 56.5% of
segment revenue, from $25.5 million, or 56.1% of segment revenue,
and Retail gross profit increased 29.8% to $330.6 million, or 27.7%
of segment revenue, from $254.8 million, or 26.9% of segment
revenue, in last year’s third quarter. A 41 basis point improvement
in Consumer Services and Plans gross margin was primarily driven by
an increase in roadside assistance file size and reduced program
costs. A 77 basis point increase in Retail gross margin was
primarily driven by an increase in the finance and insurance, net
revenue as a percentage of total new and used vehicle revenue to
11.2% of vehicle sales from 9.3% of vehicle sales in last year’s
third quarter, and the 33.3% increase in new units sold.
Operating Expenses
Operating expenses increased 27.0% to $244.6 million from $192.5
million in last year’s third quarter. Selling, general and
administrative (“SG&A”) expenses increased 26.8% to $236.2
million from $186.3 million in last year’s third quarter. The
increase in SG&A expenses was primarily driven by the
additional expenses associated with the incremental eighteen
dealerships and two Overton’s locations operated during the third
quarter of 2017 versus the prior year period, $7.3 million of
pre-opening and payroll costs associated with the Gander Mountain
Acquisition, and $0.5 million of transaction expenses associated
with the acquisition into new or complimentary markets. As a
percentage of total gross profit, SG&A expenses declined 25
basis points to 66.2% compared to last year’s third quarter.
Depreciation and amortization expense increased 34.8% to $8.4
million primarily due to the addition of acquired and greenfield
locations, and acquired businesses.
Floor Plan Interest & Other Interest Expenses
Floor plan interest expense increased to $7.4 million from $4.3
million in last year’s third quarter. The increase was primarily
attributable to higher inventory from new dealership locations and
locations expecting higher unit sales, as well as a 68 basis point
increase in the average floor plan borrowing rate. Other interest
expense decreased $1.7 million to $11.0 million from $12.7 million
in last year’s third quarter. The decrease was primarily
attributable to a decrease in average debt outstanding, and an 86
basis point decrease in the average interest rate.
Net Income, Adjusted Pro Forma Net Income(1),
Diluted Earnings Per Share, and Adjusted Pro Forma Earnings Per
Fully Exchanged and Diluted Share(1)
Net income increased 24.6% to $85.3 million. Adjusted pro forma
net income(1) increased 53.4% to $68.6 million from $44.8 million.
Diluted earnings per share(2) was $0.68, and adjusted pro forma
earnings per diluted fully exchanged and diluted share(1) increased
44.7% to $0.77 from $0.53 in last year’s third quarter.
Adjusted EBITDA and Adjusted EBITDA Margin(1)
Adjusted EBITDA(1) increased 35.2% to $122.1 million from $90.3
million and adjusted EBITDA margin(2) increased 74 basis points to
9.9% from 9.1% in the third quarter of fiscal 2016.
Select Balance Sheet and Cash Flow
Items
The Company's working capital and cash and cash equivalents
balance at September 30, 2017 were $343.7 million and $163.2
million, respectively, compared to $266.8 million and $114.2
million, respectively, at December 31, 2016. At the end of the
third quarter 2017, the Company had $3.2 million of letters of
credit outstanding under its $35 million revolving credit facility,
$734.5 million of term loan principal outstanding under its senior
secured credit facilities and $799.7 million of floor plan notes
payable outstanding under its floor plan financing facility.
Inventory at the end of the third quarter of fiscal 2017 increased
32.4% to $1,204.1 million compared to $909.3 million at December
31, 2016.
Conference Call
Information
A conference call to discuss the fiscal 2017 third quarter
financial results is scheduled for today, November 9, 2017, at
11:00 a.m. Eastern Time. Investors and analysts can participate on
the conference call by dialing 800-441-0022 or 719-457-2607 and
using conference ID # 6378900. Interested parties can also listen
to a live webcast or replay of the conference call by logging on to
the Investor Relations section on the Company’s website at
http://investor.campingworld.com. The replay of the conference call
webcast will be available at the investor relations website until
November 16, 2017.
About Camping World
Camping World, headquartered in Lincolnshire, Illinois, is the
leading outdoor and camping retailer, offering an extensive
assortment of recreational vehicles for sale, RV and camping gear,
RV maintenance and repair and the industry’s broadest and deepest
range of services, protection plans, products and resources. Since
the Company’s founding in 1966, Camping World has grown to become
one of the most well-known destinations for everything RV, with 137
retail locations in 36 states and a comprehensive e-commerce
platform.
Forward Looking
Statements
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995. All statements contained in this press release that do not
relate to matters of historical fact should be considered
forward-looking statements, including, without limitation,
statements about our expectation to continue gaining market share
in the RV business and broadening our reach across the outdoor
lifestyle consumer market. These forward-looking statements are
based on management’s current expectations.
These statements are neither promises nor guarantees, but
involve known and unknown risks, uncertainties and other important
factors that may cause our actual results, performance or
achievements to be materially different from any future results,
performance or achievements expressed or implied by the
forward-looking statements, including, but not limited to, the
following: the availability of financing to us and our customers;
fuel shortages, or high prices for fuel; the well-being, as well as
the continued popularity and reputation for quality, of our
manufacturers; general economic conditions in our markets and
ongoing economic and financial uncertainties; our ability to
attract and retain customers; competition in the market for
services, protection plans, products and resources targeting the RV
lifestyle or RV enthusiast; our expansion into new, unfamiliar
markets as well as delays in opening or acquiring new retail
locations; unforeseen expenses, difficulties, and delays frequently
encountered in connection with expansion through acquisitions; our
failure to maintain the strength and value of our brands; our
ability to successfully order and manage our inventory to reflect
consumer demand in a volatile market and anticipate changing
consumer preferences and buying trends; fluctuations in our same
store sales and whether they will be a meaningful indicator of
future performance; the cyclical and seasonal nature of our
business; our ability to operate and expand our business and to
respond to changing business and economic conditions, which depends
on the availability of adequate capital; the restrictive covenants
in our existing senior secured credit facilities and our floorplan
financial facility; our reliance on three fulfillment and
distribution centers for our retail, e-commerce and catalog
businesses; natural disasters, whether or not caused by climate
change, unusual weather condition, 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; whether third party lending institutions and
insurance companies will continue to provide financing for RV
purchases; our inability to retain senior executives and attract
and retain other qualified employees; our ability to meet our labor
needs; 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;
regulations applicable to the sale of extended service contracts;
our dealerships’ susceptibility to termination, non-renewal or
renegotiation of dealer agreements if state dealer laws are
repealed or weakened; our failure to comply with certain
environmental regulations; 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
our information technology systems or breaches of our network
security; 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 and may
approve or disapprove substantially all transactions and other
matters requiring approval by our stockholders, including, but not
limited to, the election of directors; the exemptions from certain
corporate governance requirements that we will qualify for, and
intend to 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; and whether we are able to realize any
tax benefits that may arise from our organizational structure and
any redemptions or exchanges of CWGS, LLC common units for cash or
stock.
These and other important factors discussed under the caption
“Risk Factors” in our Annual Report on Form 10-K filed with the
Securities and Exchange Commission, or SEC, on March 13, 2017, and
our other reports filed with the SEC could cause actual results to
differ materially from those indicated by the forward-looking
statements made in this press release. Any such forward-looking
statements represent management’s estimates as of the date of this
press release. While we may elect to update such forward-looking
statements at some point in the future, we disclaim any obligation
to do so, even if subsequent events cause our views to change,
except as required under applicable law. These forward-looking
statements should not be relied upon as representing our views as
of any date subsequent to the date of this press release.
Results of Operations for the Third
Quarter of Fiscal 2017
Camping World Holdings, Inc. and
Subsidiaries Condensed Consolidated Statements of Operations (In
Thousands Except Per Share Amounts)
Three Months Ended
September 30, Nine Months Ended September 30,
2017 2016 2017 2016 (unaudited)
(unaudited) (unaudited) (unaudited) Revenue: Consumer services and
plans $ 46,169 $ 45,442 $ 144,518 $ 135,868 Retail New vehicles
715,182 545,154 1,982,644 1,532,919 Used Vehicles 188,331 181,675
531,324 576,964 Parts, services and other 187,750 151,090 478,169
422,316 Finance and insurance, net 101,570
67,710 268,829 188,607 Subtotal
1,192,833 945,629 3,260,966 2,720,806 Total revenue
1,239,002 991,071 3,405,484 2,856,674 Costs applicable to
revenue (exclusive of depreciation and amortization shown
separately below): Consumer services and plans 20,085 19,953 61,792
59,071 Retail New vehicles 614,624 471,140 1,703,622 1,317,147 Used
Vehicles 138,796 138,637 393,436 454,659 Parts, services and other
108,830 81,105 265,376
223,781 Subtotal 862,250 690,882 2,362,434 1,995,587
Total costs applicable to revenue 882,335 710,835 2,424,226
2,054,658 Gross profit: Consumer services and plans 26,084
25,489 82,726 76,797 Retail New vehicles 100,558 74,014 279,022
215,772 Used Vehicles 49,535 43,038 137,888 122,305 Parts, services
and other 78,920 69,985 212,793 198,535 Finance and insurance, net
101,570 67,710 268,829
188,607 Subtotal 330,583 254,747 898,532 725,219
Total gross profit 356,667 280,236 981,258 802,016
Operating expenses: Selling, general, and administrative 236,174
186,255 640,108 536,966 Depreciation and amortization 8,382 6,219
22,819 18,144 Loss (gain) on sale of assets (5 ) 21
(292 ) (227 ) Total operating expenses
244,551 192,495 662,635
554,883 Income from operations 112,116 87,741 318,623
247,133 Other income (expense): Floor plan interest expense
(7,414 ) (4,322 ) (19,303 ) (14,851 ) Other interest expense, net
(11,012 ) (12,715 ) (30,973 ) (38,040 ) Other expense, net
(96 ) – (79 ) (2 ) (18,522 )
(17,037 ) (50,355 ) (52,893 ) Income
before income taxes 93,594 70,704 268,268 194,240 Income tax
expense (8,336 ) (2,288 ) (28,247 )
(4,638 ) Net income 85,258 68,416 240,021 189,602 Less: net income
attributable to non-controlling interests (65,131 )
– (193,036 )
– Net income
attributable to Camping World Holdings, Inc. $ 20,127 $
68,416 $ 46,985 $ 189,602 Earnings per
share of Class A common stock (1): Basic $ 0.68 $ 1.97 Diluted $
0.68 $ 1.92 Weighted average shares of Class A common stock
outstanding (1): Basic 29,522 23,854 Diluted 88,452 85,947 (1)
Basic and diluted earnings per Class A common stock is applicable
only for periods after the Company's IPO. Camping World Holdings,
Inc. and Subsidiaries Condensed Consolidated Balance Sheets ($ in
Thousands Except Per Share Amounts)
September
30, December 31, 2017 2016 Assets
Current assets: Cash and cash equivalents
$ 163,225 $
114,196 Contracts in transit
79,499 29,012 Accounts
receivable, net
73,700 58,488 Inventories, net
1,204,138 909,254 Prepaid expenses and other assets
27,685 21,755 Total current assets
1,548,247 1,132,705 Property and equipment, net
183,485 130,760 Deferred tax asset, net
262,433
125,878 Intangibles assets, net
37,972 3,386 Goodwill
328,402 153,105 Other assets
17,940
17,931 Total assets
$ 2,378,479 $ 1,563,765
Liabilities and stockholders' equity (deficit)
Current liabilities: Accounts payable
$ 158,026 $
68,655 Accrued liabilities
125,349 78,044 Deferred revenues
and gains
78,934 68,643 Current portion of capital lease
obligation
908 1,224 Current portion of tax receivable
agreement liability
7,378 991 Current portion of long-term
debt
7,400 6,450 Notes payable – floor plan, net
799,682 625,185 Other current liabilities
26,822 16,745 Total current liabilities
1,204,499 865,937 Capital lease obligations, net of
current portion
207 841 Right to use liability
10,231
10,343 Tax receivable agreement liability, net of current portion
102,485 18,190 Long-term debt, net of current portion
709,507 620,303 Deferred revenues and gains
56,782
52,210 Deferred tax liabilities
49 – Other long-term
liabilities
35,775 24,156 Total
liabilities
2,119,535 1,591,980 Commitments and
contingencies Stockholders' equity (deficit):
Preferred stock, par value $0.01 per share
– 20,000,000 shares authorized; none issued andoutstanding as of
June 30, 2017 and December 31, 2016
– –
Class A common stock, par value $0.01 per
share – 250,000,000 shares authorized;30,227,113 issued and
30,227,031 outstanding as of September 30, 2017 and
18,935,916issued and outstanding as of December 31, 2016
302 189
Class B common stock, par value $0.0001
per share – 75,000,000 shares authorized;69,066,445 issued; and
57,031,184 outstanding as of September 30, 2017 and
62,002,729outstanding as of December 31, 2016
6 6
Class C common stock, par value $0.0001
per share – one share authorized, issued andoutstanding as of
September 30, 2017 and December 31, 2016
– – Additional paid-in capital
157,031 74,239
Retained earnings
35,655 544 Total
stockholders' equity attributable to Camping World Holdings, Inc.
192,994 74,978 Non-controlling interests
65,950 (103,193 ) Total stockholders' equity
(deficit)
258,944 (28,215 ) Total liabilities
and stockholders' equity (deficit)
$ 2,378,479 $
1,563,765
Earnings Per Share
On October 6, 2016, the limited liability company agreement of
CWGS, LLC was amended and restated to, among other things, (i)
provide for a new single class of common membership interests, the
common units of CWGS, LLC, and (ii) exchange all of the
then-existing membership interests in CWGS, LLC for common units of
CWGS, LLC (collectively, the “Recapitalization”). This
Recapitalization changed the relative membership rights of the
owners of membership interests in CWGS, LLC such that retroactive
application of the Recapitalization to periods prior to the IPO for
the purposes of calculating earnings per share would not be
appropriate.
Prior to the IPO, the CWGS, LLC membership structure included
membership units, preferred units, and profits units. The Company
analyzed the calculation of earnings per unit for periods prior to
the IPO using the two-class method and determined that it resulted
in a value that would not be meaningful to the users of the
consolidated financial statements. Therefore, earnings per share
information has not been presented for periods prior to the IPO on
October 6, 2016.
Three Months Nine Months Ended
Ended September 30, September 30, (In
thousands except per share amounts)
2017 2017
Numerator: Net income $ 85,258 $ 240,021 Less: net income
attributable to non-controlling interests (65,131 )
(193,036 ) Net income attributable to Camping World Holdings, Inc.
— basic 20,127 46,985
Add: Reallocation of net income
attributable to non-controllinginterests from the assumed exchange
of common units ofCWGS, LLC for Class A common stock
39,917 118,110
Net income attributable to Camping World
Holdings, Inc. —diluted
$ 60,044 $ 165,095 Denominator:
Weighted-average shares of Class A common
stock outstanding— basic
29,522 23,854
Dilutive common units of CWGS, LLC that
are convertible intoClass A common stock
58,930 62,093
Weighted-average shares of Class A common
stockoutstanding — diluted
88,452 85,947 Earnings per share of Class A common stock —
basic $ 0.68 $ 1.97 Earnings per share of Class A common stock —
diluted $ 0.68 $ 1.92
Non-GAAP Financial Measures
To supplement our consolidated financial statements, which are
prepared and presented in accordance with accounting principles
generally accepted in the U.S. (“GAAP”), we use the following
non-GAAP financial measures: EBITDA, adjusted EBITDA, adjusted
EBITDA margin, adjusted pro forma net income and adjusted pro forma
earnings per fully exchanged and diluted share (collectively the
"Non-GAAP Financial Measures"). We believe that these Non-GAAP
Financial Measures, when used in conjunction with GAAP financial
measures, provide useful information about operating results,
enhance the overall understanding of past financial performance and
future prospects, and allow for greater transparency with respect
to the key metrics we use in our financial and operational decision
making. These non-GAAP measures are also frequently used by
analysts, investors and other interested parties to evaluate
companies in the Company’s industry. The presentation of this
financial information is not intended to be considered in isolation
or as a substitute for, or superior to, the financial information
prepared and presented in accordance with GAAP, and they should not
be construed as an inference that the Company’s future results will
be unaffected by any items adjusted for in these non-GAAP measures.
In evaluating these non-GAAP measures, you should be aware that in
the future the Company may incur expenses that are the same as or
similar to some of those adjusted in this presentation. The
Non-GAAP Financial Measures that we use are not necessarily
comparable to similarly titled measures used by other companies due
to different methods of calculation.
EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin
We define “EBITDA” as net income before other interest expense
(excluding floor plan interest expense), provision for income taxes
and depreciation and amortization. We define “Adjusted EBITDA” as
EBITDA further adjusted for the impact of certain non-cash and
other items that we do not consider in our evaluation of ongoing
operating performance. These items include, among other things,
loss (gain) on sale of assets, monitoring fees, equity-based
compensation, gain on remeasurement of our Tax Receivable
Agreements, acquisition related transaction expenses and
pre-opening costs, and other unusual or one-time items. We define
“Adjusted EBITDA Margin” as Adjusted EBITDA as a percentage of
total revenue. We caution investors that amounts presented in
accordance with our definitions of EBITDA, Adjusted EBITDA and
Adjusted EBITDA Margin may not be comparable to similar measures
disclosed by our competitors, because not all companies and
analysts calculate EBITDA, Adjusted EBITDA and Adjusted EBITDA
Margin in the same manner. We present EBITDA, Adjusted EBITDA and
Adjusted EBITDA Margin because we consider them to be important
supplemental measures of our performance and believe they are
frequently used by securities analysts, investors and other
interested parties in the evaluation of companies in our industry.
Management believes that investors’ understanding of our
performance is enhanced by including these Non-GAAP Financial
Measures as a reasonable basis for comparing our ongoing results of
operations.
The following tables reconcile EBITDA, Adjusted EBITDA, and
Adjusted EBITDA Margin to the most directly comparable GAAP
financial performance measure, which are net income, net income and
net income margin, respectively:
Three Months Ended Nine Months Ended
September 30, September 30, ($ in thousands)
2017 2016 2017 2016
Net income $ 85,258 $ 68,416 $ 240,021 $ 189,602
Other interest expense, net 11,012 12,715 30,973 38,040
Depreciation and amortization 8,382 6,219 22,819 18,144 Income tax
expense 8,336 2,288 28,247
4,638
EBITDA 112,988 89,638 322,060
250,424 Adjustments: Loss (gain) on sale of assets (a) (5 )
21 (292 ) (225 ) Monitoring fee (b) – 625 – 1,875 Equity-based
compensation (c) 1,204 – 2,792 60
Loss on remeasurement of TaxReceivable
Agreement (d)
96 – 79 – Acquisitions - transaction expense (e) 453 – 2,553 –
Acquisitions - pre-opening costs (f) 7,318 –
8,669 –
Adjusted EBITDA $
122,054 $ 90,284 $ 335,861 $ 252,134
Three Months Ended Nine Months Ended
September 30, September 30, (as percentage of total
revenue)
2017 2016 2017 2016
Net income margin 6.9 % 6.9 % 7.0 % 6.6 % Other interest
expense, net 0.9 % 1.3 % 0.9 % 1.3 % Depreciation and amortization
0.7 % 0.6 % 0.7 % 0.6 % Income tax expense 0.7 % 0.2
% 0.8 % 0.2 %
Subtotal EBITDA margin 9.1 % 9.0
% 9.5 % 8.8 % Adjustments: Loss (gain) on sale of assets (a)
(0.0 %) 0.0 % (0.0 %) (0.0 %) Monitoring fee (b) – 0.1 % – 0.1 %
Equity-based compensation (c) 0.1 % – 0.1 % 0.0 %
Loss on remeasurement of TaxReceivable
Agreement (d)
0.0 % – 0.0 % – Acquisitions - transaction expense (e) 0.0 % – 0.1
% – Acquisitions - pre-opening costs (f) 0.6 % –
0.3 % –
Adjusted EBITDA margin
9.9 % 9.1 % 9.9 % 8.8 %
_________________________________________________
(a)
Represents an adjustment to eliminate the
losses and gains on sales of various assets.
(b)
Represents monitoring fees paid pursuant
to a monitoring agreement to Crestview and Stephen Adams. The
monitoring agreement was terminated on October 6, 2016 in
connection with the IPO.
(c)
Represents non-cash equity-based
compensation expense relating to employees and directors of the
Company.
(d)
Represents an adjustment to eliminate the
loss on remeasurement of the Tax Receivable Agreement primarily due
to changes in our effective income tax rate.
(e)
Represents transaction expenses, primarily
legal costs, associated with acquisitions into new or complimentary
markets, including the Gander Mountain Acquisition. This amount
excludes transaction expenses related to the acquisition of RV
dealerships, consumer shows, TheHouse.com, and W82.
(f)
Represents pre-opening store costs,
including payroll costs, associated with the Gander Mountain
Acquisition.
Adjusted Pro Forma Net Income and Adjusted Pro Forma Earnings
Per Fully Exchanged and Diluted Share
We define “Adjusted Pro Forma Net Income” as net income
attributable to CWH adjusted for the reallocation of income
attributable to non-controlling interests from the assumed exchange
of all outstanding common units in CWGS, LLC (or the common unit
equivalent of membership interests in CWGS, LLC for periods prior
to the IPO) for newly-issued shares of Class A common stock of CWH
and further adjusted for the impact of certain non-cash and other
items that we do not consider in our evaluation of ongoing
operating performance. These items include, among other things,
loss (gain) on sale of assets, monitoring fees, equity-based
compensation, gain on remeasurement of the Tax Receivable
Agreement, acquisition related transaction expenses and pre-opening
costs, other unusual or one-time items, and the income tax expense
effect of (i) these adjustments and (ii) the pass-through entity
taxable income as if the parent company was a subchapter C
corporation in periods prior to the IPO. We define “Adjusted Pro
Forma Earnings Per Fully Exchanged and Diluted Share” as Adjusted
Pro Forma Net Income divided by the weighted-average shares of
Class A common stock outstanding, assuming (i) the full exchange of
all outstanding common units in CWGS, LLC (or the common unit
equivalent of membership interests in CWGS, LLC for periods prior
to the IPO) for newly-issued shares of Class A common stock of CWH,
(ii) the Class A common stock issued in connection with the IPO was
outstanding as of January 1 of each year presented, and (iii) the
dilutive effect of stock options and restricted stock units, if
any. We present Adjusted Pro Forma Net Income and Adjusted Pro
Forma Earnings Per Fully Exchanged and Diluted Share because we
consider them to be important supplemental measures of our
performance and we believe that investors’ understanding of our
performance is enhanced by including these Non-GAAP financial
measures as a reasonable basis for comparing our ongoing results of
operations.
The following table reconciles Adjusted Pro Forma Net Income and
Adjusted Pro Forma Earnings Per Fully Exchanged and Diluted Share
to the most directly comparable GAAP financial performance measure,
which is net income attributable to Camping World Holdings, Inc.
and weighted-average shares of Class A common stock outstanding —
diluted:
Three Months Ended Nine Months Ended September 30,
September 30, September 30, September 30, (In
thousands except per share amounts) 2017 2016 2017 2016
Numerator:
Net income attributable to Camping
WorldHoldings, Inc.
$ 20,127 $ 68,416 $ 46,985 $ 189,602 Adjustments:
Reallocation of net income attributable
tonon-controlling interests from theassumed exchange of common
units inCWGS, LLC (a)
65,131 — 193,036 — Loss (gain) on sale of assets (b) (5 ) 21 (292 )
(225 ) Monitoring fee (c) — 625 — 1,875 Equity-based compensation
(d) 1,204 — 2,792 60
Loss on remeasurement of taxreceivable
agreement (e)
96 — 79 — Acquisitions - transaction expense (f) 453 — 2,553 —
Acquisitions - pre-opening costs (g) 7,318 — 8,669 — Income tax
expense (h) (25,676 ) (24,300 ) (75,888 )
(70,078 ) Adjusted pro forma net income $ 68,648 $
44,762 $ 177,934 $ 121,234
Denominator:
Weighted-average Class A commonshares
outstanding - diluted
88,452 — 85,947 — Adjustments:
Assumed exchange of pre-IPO commonunit
equivalent of membership interestsin CWGS, LLC (i)
— 71,900 — 72,157
Assumed issuance of Class A commonstock in
connection with IPO (j)
— 11,872 — 11,872
Dilutive options to purchase Class Acommon
stock
219 — 140 — Dilutive restricted stock units 128
— 82 —
Adjusted pro forma fully exchangedweighted
average Class A commonshares outstanding - diluted
88,799 83,772 86,169
84,029
Adjusted pro forma earnings per
fullyexchanged and diluted share
$ 0.77 $ 0.53 $ 2.06 $ 1.44
____________________
(a)
Represents the reallocation of net income
attributable to non-controlling interests from the assumed exchange
of common units of CWGS, LLC in periods in which income was
attributable to non-controlling interests.
(b)
Represents an adjustment to eliminate the
losses and gains on sales of various assets.
(c)
Represents monitoring fees paid pursuant
to a monitoring agreement to Crestview and Stephen Adams. The
monitoring agreement was terminated on October 6, 2016 in
connection with our IPO.
(d)
Represents non-cash equity-based
compensation expense relating to employees and directors of the
Company.
(e)
Represents an adjustment to eliminate the
loss on remeasurement of the Tax Receivable Agreement primarily due
to changes in our effective income tax rate.
(f)
Represents transaction expenses, primarily
legal costs, associated with acquisitions into new or complimentary
markets, including the Gander Mountain Acquisition. This amount
excludes transaction expenses related to the acquisition of RV
dealerships, consumer shows, TheHouse.com, and W82.
(g)
Represents pre-opening store costs,
including payroll costs, associated with the Gander Mountain
Acquisition.
(h)
Represents the income tax expense effect
of (i) the above adjustments and (ii) the pass-through entity
taxable income as if the parent company was a subchapter C
corporation in periods prior to the IPO. This assumption uses an
effective tax rate of 38.5% for the adjustments and the
pass-through entity taxable income in periods prior to the IPO.
(i)
Represents the assumed exchange of pre-IPO
membership interests in CWGS, LLC at their common unit equivalent
amount.
(j)
Represents the assumption that the shares
of Class A common stock issued in connection with the IPO were
outstanding as of January 1 of each period.
Uses and Limitations of Non-GAAP Financial Measures
Management and our board of directors use the Non-GAAP financial
measures:
- as a measurement of operating
performance because they assist us in comparing the operating
performance of our business on a consistent basis, as they remove
the impact of items not directly resulting from our core
operations;
- for planning purposes, including the
preparation of our internal annual operating budget and financial
projections;
- to evaluate the performance and
effectiveness of our operational strategies; and
- to evaluate our capacity to fund
capital expenditures and expand our business.
By providing these Non-GAAP financial measures, together with
reconciliations, we believe we are enhancing investors’
understanding of our business and our results of operations, as
well as assisting investors in evaluating how well we are executing
our strategic initiatives. In addition, our existing senior secured
credit facilities use EBITDA to measure our compliance with
covenants such as consolidated leverage ratio. The Non-GAAP
financial measures have limitations as analytical tools, and should
not be considered in isolation, or as an alternative to, or a
substitute for net income or other financial statement data
presented in our unaudited condensed consolidated financial
statements included in this press release as indicators of
financial performance. Some of the limitations are:
- such measures do not reflect our cash
expenditures, or future requirements for capital expenditures or
contractual commitments;
- such measures do not reflect changes
in, or cash requirements for, our working capital needs;
- some of such measures do not reflect
the interest expense, or the cash requirements necessary to service
interest or principal payments on our debt;
- some of such measures do not reflect
our tax expense or the cash requirements to pay our taxes;
- although depreciation and amortization
are non-cash charges, the assets being depreciated and amortized
will often have to be replaced in the future and such measures do
not reflect any cash requirements for such replacements; and
- other companies in our industry may
calculate such measures differently than we do, limiting their
usefulness as comparative measures.
Due to these limitations, the Non-GAAP financial measures should
not be considered as measures of discretionary cash available to us
to invest in the growth of our business. We compensate for these
limitations by relying primarily on our GAAP results and using
these Non-GAAP financial measures only supplementally. As noted in
the tables above, certain of the Non-GAAP financial measures
include adjustments for loss (gain) on sale of assets, monitoring
fees, equity-based compensation, loss on remeasurement of the Tax
Receivable Agreement, acquisition related transaction expenses and
pre-opening costs, other unusual or one-time items, and the income
tax expense effect described above, as applicable. It is reasonable
to expect that certain of these items will occur in future periods.
However, we believe these adjustments are appropriate because the
amounts recognized can vary significantly from period to period, do
not directly relate to the ongoing operations of our business and
complicate comparisons of our internal operating results and
operating results of other companies over time. In addition, these
certain Non-GAAP financial measures adjust for other items that we
do not expect to regularly record in periods after the IPO,
including monitoring fees. Each of the normal recurring adjustments
and other adjustments described in this paragraph and in the
reconciliation tables above help management with a measure of our
core operating performance over time by removing items that are not
related to day to day operations.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20171109005226/en/
Investor Relations:ICRJohn Rouleau / Rachel
Schacter203-682-8200John.Rouleau@ICRinc.com /
Rachel.Schacter@ICRinc.comorMedia:ICRJessica
Liddell203-682-8208Jessica.Liddell@ICRinc.com
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