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Item 7. Management’s Discussion and Analysis

2021-02-26 compared with 2020-02-28 · 351 added, 615 removed, 539 unchanged (64% of the section changed)

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 Consolidated Financial Statements and notes thereto included in Part II, Item 8 of this Form 10-K.

The following discussion and analysis of our financial condition and results of operations should be read together with our Consolidated Financial Statements and related notes included in Part II, Item 8 of this Form 10-K.

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” include in Part I, Item 1A of this Form 10-K, “Cautionary Note Regarding Forward-Looking Statements” and in other parts of this Form 10-K.

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 this Form 10-K, the “Cautionary Note Regarding Forward-Looking Statements” and in other parts of this Form 10-K.

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-K, references herein to the approximately 10 million U.S.

households that own a recreational vehicle ("RV") are based on “RV Quick Facts” from the Recreation Vehicle Industry Association website at RVIA.com.

Camping World Holdings, Inc., together with its subsidiaries, is America’s largest retailer of RVs and related products and services.

For purposes of this Form 10-K, 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 December 31, 2020, our most recently completed fiscal quarter.

In this Item 7, we discuss the results of operations for the years ended December 31, 2020 and 2019 and comparisons of the year ended December 31, 2020 to the year ended December 31, 2019.

Discussions of the results of operations for the year ended December 31, 2018 and comparisons of the year ended December 31, 2019 to the year ended December 31, 2018 can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2019 filed with the Securities and Exchange Commission (“SEC”) on February 28, 2020.

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 enthusiast community and the RV lifestyle.

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 December 31, 2020, we operated a total of 171 retail locations, with 170 of these selling and/or servicing RVs.

In 2019, we made a strategic decision to refocus our business around our core RV competencies and on September 3, 2019, our board of directors approved a strategic plan to shift our business away from locations that did not have the ability or resources to sell and/or service RVs (the “2019 Strategic Shift”).

This resulted in the sale, closing or divestiture of 34 non-RV retail stores and the liquidation of approximately $108 million of non-RV related inventory in 2019.

See Note 1 ─ Summary of Significant Accounting Policies ─ Description of the Business to our consolidated financial statements included in Part II, Item 8 of this Form 10-K.

With the COVID-19 crisis (see “COVID-19” below) causing many state and local governments to issue “stay-at-home” and “shelter-in-place” restrictions in mid-to-late March, sales and traffic levels across the RV industry declined significantly in March 2020.

In response to the COVID-19 pandemic, many RV manufacturers, including Thor Industries, Forest River, Inc., and Winnebago Industries, temporarily suspended production from late March to mid-May.

This led to a 44.6% decrease in wholesale shipments of new RVs for the three month period of March, April, and May 2020, according to the RV Industry Association’s survey of manufacturers.

The Company had taken steps to add new private label lines, expand its relationships with smaller RV manufacturers, and acquire used inventory from distressed sellers to help manage risks in its supply chain.

In conjunction with the stay-at-home and shelter-in-place restrictions enacted in many areas, the Company saw significant sequential declines in its overall customer traffic levels and its overall revenues from the mid-March to mid-to-late April 2020 timeframe.

In the latter part of April, the Company began to see significant improvements in its online web traffic levels and number of electronic leads, and in early May, the Company began to see improvements in its overall revenue levels.

As the stay-at-home restrictions began to ease across certain areas of the country, the Company experienced significant acceleration in its in-store and online traffic, lead generation, and revenue trends in May continuing throughout the remainder of 2020 and early indications appear to show favorable trends continuing into 2021.

On September 15, 2020 we announced a number of initiatives heading into 2021, including plans to launch a peer-to-peer RV rental service, and a mobile RV technician marketplace, as well as plans to acquire RV dealerships.

These initiatives continue to keep RVs as the focal point while expanding our value proposition to the customer and, in particular, to our 2.1 million active Good Sam members.

We operate two reportable segments:

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Our reportable segment financial information has been recast to reflect the updated reportable segment structure for all periods presented.

See Note 22 — Segment Information to our consolidated financial statements included in Part II, Item 8 of this Form 10-K for further information regarding our reportable segments.

Our Good Sam Services and Plans segment consists of programs, plans and services that are geared towards protecting, insuring and promoting the RV lifestyle.

Within the Good Sam Services and Plans segment, we primarily derive 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 financing and refinancing assistance, consumer shows and events, and consumer publications and directories.

See Note 1 — Summary of Significant Accounting Policies — Description of the Business and Note 22 — Segment Information to our consolidated financial statements included in Part II, Item 8 of this Form 10-K for further information regarding our reportable segments.

For the years ended December 31, 2020, 2019, and 2018, we generated 3.3%, 3.7%, and 3.6% of our total revenue and 6.4%, 7.9%, and 7.1% of our total gross profit from our Good Sam Services and Plans segment, respectively.

Our RV and Outdoor Retail segment consists of all aspects of our RV dealership and retail operations.

Within the RV and Outdoor Retail segment, we primarily derive revenue from the following:

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 maintenance work, the sale of RV parts, accessories, and supplies, the sale of outdoor products, equipment, gear and supplies, and the sale of Good Sam memberships and co-branded credit cards.

For the years ended December 31, 2020, 2019, and 2018, we generated 96.7%, 96.3%, and 96.4% of our total revenue and 93.6%, 92.1%, and 92.9% of our total gross profit from our RV and Outdoor Retail segment, respectively.

We attract new customers primarily through our retail locations, e-commerce platforms and direct marketing operations.

When we obtain a new customer through a transaction, the new customer becomes part of our customer database and we leverage customized customer relationship management (“CRM”) tools and analytics to actively and intelligently engage, service and market other offerings, including Good Sam memberships.

Once a customer joins our Good Sam Club, we are then able to gather product and purchasing data that allows us to better target additional product and service offerings based on a customer’s profile.

As a result, our Good Sam Club members tend to buy a higher number of our products and services and spend a higher annual total dollar amount on these products and services than customers who are not members of our Good Sam Club.

Our organic growth is dependent on the execution of our RV retailing and service business strategy and the strength and reputation of our brands and retail locations.

Our new and used RV vehicle sales have historically been impacted by fluctuations in product availability as well as local and national economic conditions, including consumer confidence, availability of consumer credit, fuel prices, interest rates, employment levels, and other factors outside of our control.

As discussed in Note 1 ─ Summary of Significant Accounting Policies ─ COVID-19 to our consolidated financial statements included in Part II, Item 8 of this Form 10-K, the COVID-19 pandemic adversely impacted our business from mid-March through much of April 2020, but shifted to a favorable impact beginning primarily in May 2020.

In response to the pandemic, we have implemented preparedness plans to keep our employees and customers safe, which include social distancing, providing employees with face coverings and/or other protective clothing as required, implementing additional cleaning and sanitization routines, and work-from-home orders for a significant portion of our workforce.

The majority of our retail locations have continued to operate as essential businesses and consequently have remained open to serve our customers through the pandemic, and we continue to operate our e-commerce business.

As of December 31, 2020, we have temporarily closed two of our dealerships as a result of COVID-19 and branding changes.

These two dealerships are expected to reopen in 2021.

We temporarily reduced salaries and hours throughout the Company, including for our executive officers and implemented headcount and other cost reductions primarily from the middle of March 2020 through the middle of May 2020, in an attempt to better align expenses with the initially expected reduced sales resulting from the impact of COVID-19 on our business.

Most of these temporary salary reductions ended in May 2020 as the adverse impacts of the pandemic began to decline and we increased hours for certain employees and reinstated many positions from the initial headcount reductions as the demand for our products increased.

In conjunction with the stay-at-home and shelter-in-place restrictions enacted in many areas, we saw significant sequential declines in overall customer traffic levels and overall revenues from the mid-March to mid-to-late April 2020 timeframe.

In the latter part of April, we began to see a significant improvement in online web traffic levels, and in early May, we began to see improvements in overall revenue levels.

As the stay-at-home restrictions began to ease across certain areas of the country, we experienced significant acceleration in our in-store traffic and revenue trends in May and continuing throughout the remainder of 2020 and early indications appear to show favorable trends continuing into 2021.

We believe that the demand will remain elevated as consumers continue to view RVs as an opportunity to work and school remotely.

We have been implementing marketing and operational plans to optimize our leadership position through the pandemic, regardless of the ultimate timing and slope of the recovery curve.

We have adapted our sales practices to accommodate customers’ safety concerns in this COVID-19 environment, such as offering virtual tours of RVs and providing home delivery options.

As a consequence of COVID-19, we held fewer consumer shows and events during 2020 than in 2019 and we debuted our first virtual show in 2020.

If stay-at-home and shelter-in-place restrictions are put back into place or as other modes of transportation and vacation options recover from the impact of COVID-19, the increased demand for our products may not be sustained.

We are unable to accurately quantify the future impact that COVID-19 may have on our business, results of operations and liquidity due to numerous uncertainties, including the severity of the disease, the duration of the pandemic, including additional waves of infection and the effectiveness and availability of vaccines, the economic impact of the pandemic, actions that may be taken by governmental authorities and other as yet unanticipated consequences.

In addition, there could be weakening demand for items that are not basic goods, and our supply chain could be disrupted in the future as a result of the outbreak, such as if Thor Industries, Inc.

were to again close its North American production facilities as it did from late March to early May 2020.

Any of these events could have a materially adverse impact on our operating results.

Key Performance Indicators

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As of December 31, 2020, 2019, and 2018, we had a base of 142, 132, and 118 same stores, respectively.

For the years ended December 31, 2019, 2018 and 2017 our aggregate same store revenue were $3.7 billion, $3.9 billion, and $3.6 billion, respectively.

For the years ended December 31, 2020, 2019 and 2018 our aggregate same store revenue was $4.5 billion, $3.7 billion, and $3.9 billion, respectively.

With same store revenue driven by the number of transactions and the average transaction price, changes in our mix of new vehicle sales has and will likely continue to negatively impact our new vehicle same store revenue.

Over the past several years, we have seen a shift in our overall mix of new RV sales towards travel trailer vehicles, which tend to carry lower average selling prices than other classes of new RV vehicles.

This change in mix of new RV sales has led to declines in the average selling price of a new vehicle unit.

From 2015 to 2020, new vehicle travel trailer units have increased from 62% to 74% of total new vehicle unit sales and the average selling price of a new vehicle unit has declined from $39,853 to $36,277.

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We believe the overall growth of our RV and Outdoor Retail segments will allow us to continue to drive growth in gross profit due to our ability to cross sell our Good Sam Services and Plans to our increasing Active Customer base.

Gross margin in our RV and Outdoor Retail segment was negatively impacted in 2018 and 2017 by the opening of Gander Outdoors locations and the 2019 Strategic Shift.

Gross margin in our RV and Outdoor Retail segment was negatively impacted in 2018 and 2017 by the opening of Gander Outdoors locations and in 2019 by the 2019 Strategic Shift.

Adjusted EBITDA and Adjusted EBITDA Margin.

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• to evaluate the performance and effectiveness of our operational strategies.

We define Adjusted EBITDA as net income before other interest expense, net (excluding floor plan interest expense), provision for income tax expense, depreciation and amortization, loss and expense on debt restructure, goodwill impairment, loss (gain) on disposal of assets and other expense, net, monitoring fees, equity-based compensation, Tax Receivable Agreement liability adjustment, transaction expenses related to acquisitions, Gander Outdoors pre-opening costs, an adjustment to rent on right-to-use assets, long-lived asset impairment, restructuring costs, lease termination, and other unusual or one-time items.

We calculate Adjusted EBITDA Margin by dividing Adjusted EBITDA by total revenue for the period.

Adjusted EBITDA and Adjusted EBITDA Margin are not GAAP measures of our financial performance and should not be considered as alternatives to net income or net income margin, respectively, as measures of financial performance, or any other performance measure derived in accordance with GAAP.

Adjusted EBITDA and Adjusted EBITDA Margin should not be construed as an inference that our future results will be unaffected by unusual or nonrecurring items.

Additionally, Adjusted EBITDA and Adjusted EBITDA Margin are not intended to be a measure of discretionary cash to invest in the growth of our business, as it does not reflect tax payments, debt service requirements, capital expenditures and certain other cash costs that may recur in the future, including, among other things, cash requirements for working capital needs and cash costs to replace assets being depreciated and amortized.

Management compensates for these limitations by relying on our GAAP results in addition to using Adjusted EBITDA and Adjusted EBITDA Margin supplementally.

Our measure of Adjusted EBITDA is not necessarily comparable to similarly titled captions of other companies due to different methods of calculation.

For a reconciliation of Adjusted EBITDA to net income, a reconciliation of Adjusted EBITDA Margin to net income margin, and a further discussion of how we utilize these non-GAAP financial measures, see “Non-GAAP Financial Measures” below.

For the definitions of Adjusted EBITDA and Adjusted EBITDA Margin, a reconciliation of Adjusted EBITDA to net income, a reconciliation of Adjusted EBITDA Margin to net income margin, and a further discussion of how we utilize these non-GAAP financial measures and their limitations, see “Non-GAAP Financial Measures” below.

Industry Trends

After several years of strong growth, the overall RV industry experienced decelerating demand for new vehicles in 2019.

According to data gathered by Statistical Surveys, Inc., which tracks the number of new recreational vehicle registrations in every state except Hawaii and Alaska, the number of new RV unit registrations in the United States, excluding Hawaii and Alaska decreased an estimated 6.5% to approximately 408,298 new vehicles in 2019.

Decelerating industry trends in 2018 and 2019 had a negative impact on our same store unit and revenue trends in 2018 and 2019.

Longer term, however, we believe the increase in the number of light-weight towable RV models offered by the manufacturers, the increase in the number of pickup trucks and sport utility vehicles in operation, the ease of towing and the affordability of many of the light-weight RVs, the savings RVs offer on a variety of vacation costs, an increase in the pool of potential RV customers due to an aging baby boomer and millennial demographic, and the increased RV ownership among younger consumers are positive long-term secular trends driving the growth of the RV industry and the installed base of RV owners.

After several years of strong growth, the overall RV industry experienced decelerating demand for new vehicles in 2018 and 2019.

Along with the decelerating demand trends, wholesale shipments of new RV vehicles declined 16.0% in 2019 according to the RV Industry Association’s survey of manufacturers.

In late 2019, the demand for new RVs across the overall RV industry began improving.

Wholesale shipments of new RVs increased 13.2% in the first two months of 2020 according to the RV Industry Association’s survey of manufacturers but then there was a six to eight week shutdown by RV manufacturers last spring which resulted in an 18.7% decrease in wholesale shipments for the first half of 2020.

Wholesale shipments of RVs for the second half of 2020 increased 34.2% over the comparable period in 2019.

For the year ended December 31, 2020 total RV shipments increased 6.0% versus the comparable period in 2019, with the travel trailer group showing the largest increase.

With the COVID-19 crisis causing many state and local governments to issue “stay-at-home” and “shelter-in-place” restrictions in mid-to-late March, sales and traffic levels across the RV industry declined significantly in April 2020.

In response to the COVID-19 pandemic, many RV manufacturers, including Thor Industries, Forest River, Inc., and Winnebago Industries, temporarily suspended production from late March to mid-May.

This led to a 44.6% decrease in wholesale shipments of new RVs for the three month period of March, April, and May 2020, according to the RV Industry Association’s survey of manufacturers.

Longer term, however, we believe the increase in the number of light-weight towable RV models offered by the manufacturers, the increase in the number of pickup trucks and sport utility vehicles in operation, the ease of towing, the affordability of many of the light-weight RVs, the savings RVs offer on a variety of vacation costs, an increase in the pool of potential RV customers due to an aging baby boomer and millennial demographic, and the increased RV ownership among younger consumers are positive long-term secular trends driving the growth of the RV industry and the installed base of RV owners.

In addition, we believe the growth in the number of U.S.

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The 2020 North American Camping Report estimated that the total number of camping households in the U.S.

has increased by more than 7 million over the past five years to 79 million.

The popularity of camping is growing across all ages, demographics and ethnic groups, with the largest growth of new campers coming from Asian, Hispanic and African American descent.

has increased by more than 9.7 million over the past six years to 82 million.

Campers are increasing the amount of time they camp each year, with the number of campers who camp three times or more each year increasing by 82% since 2014.

As campers age, they are more likely to use RVs as part of their camping experience.

Over the past six years, an increasing number of campers have said that they use an RV as their primary camping accommodation.

From 2014 to 2019, the number of campers using an RV to camp increased from 21% to an estimated 27%.

Finally, the camping and RV industry are expected to benefit from Baby Boomers reaching retirement age and Generation X and Millennial consumers reaching their prime camping age, which is generally considered between the ages of 30 and 50.

As of July 1, 2016 (the latest date for which population estimates are available), Millennials between the ages of 20 and 35 numbered an estimated 71 million individuals and Baby Boomers between the ages of 52 and 70 numbered an estimated 74 million individuals in the United States.

According to U.

Census Bureau data in the 2019 American Community Survey 1-Year Estimates, the population for the ages of 20 and 34 were estimated at 67 million individuals and the population between the ages of 50 and 69 were estimated at 80 million individuals in the United States.

Strategic Shift

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In connection with the 2019 Strategic Shift, we recorded restructuring charges of $27.7 million in the third quarter of 2019 and $19.5 million in the fourth quarter of 2019.

In total, we expect to incur costs relating to one-time employee termination benefits of $1.0 million to $1.5 million, lease termination costs of between $15.0 million and $20.0 million, incremental inventory reserve charges of $41.9 million, and other associated costs of between $20.0 million and $25.0 million.

In total, we expect to incur costs relating to one-time employee termination benefits of $1.2 million, all of which has been incurred through December 31, 2020, lease termination costs of between $18.0 million and $32.0 million, incremental inventory reserve charges of $42.4 million all of which has been incurred through December 31, 2020, and other associated costs of between $28.0 million and $35.0 million.

Through December 31, 2019, we incurred $21.2 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.

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Lease costs may continue to be incurred after December 31, 2020 on these leases if we are 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.

See Note 5 — Restructuring and Long-lived Asset Impairment to our consolidated financial statements included in Part II, Item 8 of this Form 10-K.

The following table details the costs incurred associated with the 2019 Strategic Shift (in thousands):

December 31, 2020

December 31, 2019

Restructuring costs:

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Total restructuring costs

lease termination costs

Total restructuring costs excluding lease termination costs

These costs were included in selling, general, and administrative expenses in the consolidated statements of operations.

These costs were included in lease termination charges in the consolidated statements of operations and excludes a gain of $0.7 million relating to lease terminations of closed locations that were not related to the 2019 Strategic Shift.

These costs incurred in 2020 were primarily included in costs applicable to revenues – products, service and other in the consolidated statements of operations.

These costs incurred in 2019 were primarily included in selling, general and administrative expenses in the consolidated statements of operations.

These costs were included in lease termination charges in the consolidated statements of operations.

This reflects termination fees paid, net of any gain from derecognition of the related operating lease assets and liabilities.

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

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The following tables set forth information comparing the components of net income for the years ended December 31, 2020 and 2019.

Fiscal year ended

December 31, 2020

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Selling, general and administrative expenses

Debt restructure expense

Depreciation and amortization

Goodwill impairment

Long-lived asset impairment

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Other interest expense, net

Loss on debt restructure

Tax Receivable Agreement liability adjustment

Total other income (expense)

(Loss) income before income taxes

Income (loss) before income taxes

Income tax expense

Net (loss) income

net loss (income) attributable to non-controlling interests

Net (loss) income attributable to Camping World Holdings, Inc.

Net income (loss)

net (income) loss attributable to non-controlling interests

Net income (loss) attributable to Camping World Holdings, Inc.

nm- not meaningful

Supplemental Data

For the Years

Ended December 31,

Year Ended December 31,

Used vehicles

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Products, service and other

Finance and insurance

Finance and insurance, net

Average gross profit per unit

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Products, parts, accessories and misc.

Total RV and Outdoor inventories

Total RV and Outdoor Retail inventories

Vehicle inventory per location ($ in 000's)

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Total revenue was $5.4 billion for 2020, an increase of $554.6 million, or 11.3%, from $4.9 billion for 2019.

The increase in total revenue was driven by a 2.0%, or $93.1 million, increase in RV and Outdoor Retail revenue, and a 4.0%, or $6.9 million, increase in Good Sam Services and Plans revenue.

Total gross profit was $1.3 billion for 2019, a decrease of $75.5 million, or 5.5%, from $1.4 billion for 2018.

The decrease in total gross profit was driven by a $80.4 million, or 6.3%, decrease in RV and Outdoor Retail gross profit, partially offset by a $4.9 million, or 5.0%, increase in Good Sam Services and Plans gross profit.

Income from operations was $8.7 million for 2019, a decrease of $192.3 million, or 95.6%, from $201.0 million for 2018.

The decrease in income from operations was primarily driven by a $75.5 million decrease in gross profit, a $72.3 million increase in selling, general and administrative expenses, a $66.3 million increase in long-lived asset impairment, a $10.6 million increase in depreciation and amortization, and an $8.7 million increase in loss on disposal of assets, partially offset by a $40.0 million decrease in goodwill impairment, a $0.7 million gain on lease termination and $0.4 million reduction in debt restructure expense.

Total other expenses were $99.5 million for 2019, a decrease of $5.2 million, or 4.9% from $104.6 million for 2018.

The decrease in other expenses was driven by an $11.3 million decrease in Tax Receivable Agreement Liability adjustment, and a $1.7 million decrease in loss of debt restructure, partially offset by a $6.0 million increase in other interest expense, and a $1.8 million increase in floor plan interest expense.

As a result of the above factors, loss before income taxes was $90.7 million for 2019 compared to income before income taxes of $96.4 million for 2018.

Income tax expense was $29.6 million for 2019, a decrease of $1.2 million from $30.8 million for 2018.

As a result, net loss was $120.3 million for 2019 compared to net income of $65.6 million for 2018.

The increase in total revenue was driven by a $553.1 million, or 11.7%, increase in RV and Outdoor Retail revenue, and a $1.4 million, or 0.8%, increase in Good Sam Services and Plans revenue.

Total gross profit was $1.7 billion for 2020, an increase of $415.1 million, or 32.2%, from $1.3 billion for 2019.

The increase in total gross profit was driven by a $408.5 million, or 34.4%, increase in RV and Outdoor Retail gross profit, and a $6.6 million, or 6.5%, increase in Good Sam Services and Plans gross profit.

Income from operations was $476.2 million for 2020, an increase of $467.4 million from $8.7 million for 2019.

The increase in income from operations was primarily driven by a $415.1 million increase in gross profit, a $53.9 million decrease in long-lived asset impairment, a decrease of approximately $10.1 million in loss on disposal of assets, and a decrease of approximately $7.9 million in depreciation and amortization, partially offset by an increase of $14.4 million in selling, general and administrative expenses, and a $5.2 million increase in lease termination expense.

Total other expenses were $74.2 million for 2020, a decrease of $25.2 million, or 25.4% from $99.5 billion for 2019.

The decrease in other expenses was driven by a $20.4 million decrease in floor plan interest expense, and a $14.7 million decrease in other interest expense, partially offset by a $9.9 million favorable adjustment in Tax Receivable Agreement Liability in 2019, which did not reoccur in 2020.

As a result of the above factors, income before income taxes was $402.0 million for 2020 compared to loss before income taxes of $90.7 million for 2019.

Income tax expense was $57.7 million for 2020, an increase of $28.2 million from $29.6 million for 2019.

As a result, net income was $344.2 million for 2020 compared to net loss of $120.3 million for 2019.

Good Sam Services and Plans

Good Sam Services and Plans revenue was $181.0 million for 2020, an increase of $1.4 million, or 0.8%, from $179.5 million for 2019.

The increased revenue was attributable to a $5.3 million increase from our roadside assistance programs primarily due to increased file size, a $1.4 million increase from our vehicle insurance and extended vehicle warranty programs primarily due to increased policies in force, and $0.2 million of other increases.

The $1.4 million increase was primarily attributable to $2.4 million from increased contracts in force from our roadside assistance programs, $1.8 million from increased contracts in force for our extended vehicle warranty programs, $1.6 million from increased contracts in force for our vehicle insurance products, and $1.1 million from increased RV financing loan volume, partially offset by a $2.4 million decrease from 13 fewer consumer shows, and decreases in advertising revenue of $1.4 million from the magazine group and $1.7 million for the annual directory.

Good Sam Services and Plans gross profit was $108.0 million for 2020, an increase of $6.6 million, or 6.5%, from $101.5 million for 2019.

This increase was primarily due to increased roadside assistance contracts in force and reduced claims, together resulting in a gross profit increase of $6.7 million;

and increased vehicle insurance contracts in force and reduced marketing expenses, together resulting in a gross profit increase of $2.8 million;

partially offset by a decrease from additional marketing support expenses of $3.4 million, reduced gross profit from our extended vehicle warranty programs of $1.0 million, and other reductions of $0.2 million.

The increase in gross profit was primarily attributable to $4.2 million from increased policies in force and reduced marketing expenses for our extended vehicle programs, $3.2 million of increased policies in force and reduced program expenses in our roadside assistance programs, and $1.2 million from increased loan volume for our RV financing, partially offset by $1.1 million of reduced gross profit from reduced consumer shows, $0.8 million from the annual directory and $0.1 million from other services and plans.

RV and Outdoor Retail:

New vehicle revenue was $2.4 billion for 2019, a decrease of $142.5 million, or 5.7%, from $2.5 billion for 2018.

The decrease was primarily due to a 7.6% decrease in units sold to 66,111, partially offset by a 2.1% increase in average selling price to $35,854.

Same store new vehicle revenue decreased 13.3% to

$2.1 billion in 2019 from $2.4 billion in 2018.

The decrease in same store new vehicle revenue was driven by a 16.0% decrease in same store vehicle volume, partially offset by a 2.1% increase in average selling price.

New vehicle gross profit was $296.1 million for 2019 , a decrease of $28.1 million, or 8.7%, from $324.1 million for 2018.

The decrease was primarily driven by a 1.2% decrease in average gross profit per unit and a 7.6% decrease in unit volume.

New vehicle revenue was $2.8 billion for 2020, an increase of $453.0 million, or 19.1%, from $2.4 billion for 2019.

The increase was primarily due to a 17.7% increase in vehicle units sold and a 1.2% increase in

average selling price per vehicle, driven by increases in nearly all product types.

On a same store basis, new vehicle revenue increased 15.4% to $2.6 billion in 2020 from $2.2 billion in 2019.

New vehicle gross profit increased 69.8%, or $206.7 million, to $502.8 million for 2020 from $296.1 million for 2019.

The increase was primarily due to a 44.3% increase in average gross profit per vehicle sold and by a 17.7% increase in vehicle units sold.

Gross margin increased 532 basis points to 17.8% in 2020 from 12.5% in 2019.

The increase was primarily due to higher towable and motorized gross margins resulting from lower supply from manufacturers and outsized demand from consumers turning to RVing as a vacation alternative.

Used Vehicles

Used vehicle revenue was $857.6 million for 2019, an increase of $125.6 million, or 17.2%, from $732.0 million for 2018.

The increase was primarily due a 10.6% increase in units sold to 36,213 and a 6.0% increase in average selling price to $23,683.

Same store used vehicle revenue increased 12.4% to $775.3 million in 2019 from $689.9 million in 2018.

The increase in same store used vehicle revenue was driven by a 4.3% increase in same store vehicle volume and a 6.0% increase in same store average selling price.

Used vehicle gross profit was $179.0 million for 2019, an increase of $15.4 million, or 9.4%, from $163.6 million for 2018.

The increase was primarily driven by a 10.6% increase in vehicle volume partially offset by a 1.1% decrease in average gross profit per unit.

Used vehicle revenue increased 14.8%, or $127.2 million, to $984.9 million for 2020 from $857.6 million for 2019.

The increase was primarily due to a 10.1% increase in average selling price per vehicle sold, and a 4.3% increase in vehicle units sold, driven mostly by towable units where a dip in trade-in rates through a portion of the year compressed inventory levels while product demand remained high.

On a same store basis, used vehicle revenue increased 10.0% to $911.3 million in 2020 from $828.3 million in 2019.

Used vehicle gross profit increased 30.6%, or $54.8 million, to $223.8 million in 2020 from $179.0 million in 2019.

The increase was primarily from a 25.3% increase in average gross profit per vehicle sold and a 4.3% increase in vehicle units sold.

Used vehicle gross margin increased 287 basis points to 23.7% in 2020 from 20.9% in 2019.

The increase was driven by nearly all types of towable units as a result of strength in the used market.

Products, Service and Other

Products, service and other revenue was $1.0 billion for 2019, an increase of $85.2 million, or 9.0%, from $949.4 million for 2018.

The increase was driven by an increase in product revenue, partially offset by a decrease in service and installation revenue.

The increase in product revenue was primarily driven by higher levels of promotional activity related to the 2019 Strategic Shift whereby we decided to close non RV-centric retail locations where we could not sell and/or service RVs, and the exit of certain non-RV merchandise categories.

The decrease in service and installation revenue was primarily driven by a decrease in new vehicles sold.

Products, service and other gross profit was $271.7 million for 2019, a decrease of $92.5 million, or 25.4%, from $364.1 million for 2018.

The decrease was driven by a decrease in product gross profit and a decrease in service and installation gross profit.

The decrease in product gross profit was primarily driven by higher levels of promotional activity related to the 2019 Strategic Shift whereby we decided to close non RV-centric retail locations where we could not sell and/or service RVs and the exit of certain non-RV merchandise categories, as well as incremental inventory reserve charges of $41.9 million related to the 2019 Strategic Shift.

The decrease in service and installation gross profit was primarily driven by increased promotional activity to drive service and installation traffic and volume.

Products, service and other revenue decreased 8.3%, or $85.7 million, to $948.9 million in 2020 from $1.0 billion in 2019.

The decrease was driven by store closures related to the 2019 Strategic Shift, partially offset by improvements in same store sales.

On a same store basis, products, service and other revenue increased 13.5% to $594.1 million for 2020 from $523.3 million in 2019.

Products, service and other gross profit increased 31.8%, or $86.5 million, to $358.2 million in 2020 from $271.7 million in 2019.

The increase was driven by the 2019 Strategic Shift inventory liquidation charge of $27.3 million in 2019 and improved margin at the remaining locations.

Product, service and other gross margin increased to 37.7% in 2020 from 26.3% in 2019.

The increase was primarily due to a sales mix shift towards higher margin legacy RV products and the 2019 Strategic Shift inventory liquidation charge of $27.3 million in 2019.

Finance and Insurance, net

Finance and insurance, net revenue and gross profit were each $401.3 million for 2019, an increase of $17.6 million, or 4.6%, from $383.7 million for 2018.

The increase was primarily driven by an increase in the percentage of new and used vehicles financed and an increase in the gross profit per finance and insurance contract, partially offset by a decrease in vehicles sold.

As a result, finance and insurance, net revenue as a percentage of total new and used vehicle revenue increased to 12.4% for 2019 from 11.8% for 2018.

Finance and insurance, net revenue increased 15.7%, or $63.0 million to $464.3 million in 2020 from $401.3 million for 2019, primarily due to increased volume of vehicles sold.

Finance and insurance, net as a percentage of new and used vehicle revenue decreased to 12.2% for 2020 from 12.4% for 2019.

On a same store basis, finance and insurance, net revenue increased 12.2%, or $46.4 million, to $426.2 million in 2020 versus $379.8 million in 2019.

Good Sam Club

Good Sam Club revenue decreased 8.9%, or $4.4 million, to $44.3 million in 2020 from $48.7 million in 2019.

The decrease resulted from a reduced number of members and reduced royalty fees from the credit card related to fewer retail locations that resulted from store closures related to the 2019 Strategic Shift.

Good Sam Club gross profit decreased 6.6%, or $2.5 million, to $35.4 million in 2020 from $37.9 million in 2019.

The decrease was primarily due to a reduced number of members from the decreased number of stores as a result of the store closures related to the 2019 Strategic Shift.

Gross margin increased to 79.9% in 2020 from 77.9% in 2019 primarily due to reduced club marketing expenses.

Selling, general and administrative

SG&A expenses were $1.1 billion for 2019, an increase of $72.3 million, or 6.8%, from $1.1 billion for 2018.

The increase was due to an incremental $23.5 million of variable selling expenses;

$12.0 million of wage-related expenses primarily from the RV and Outdoor Retail locations opened over the last 24 months;

$16.9 million of additional real property expense primarily attributable to the new locations;

$7.3 million of additional occupancy expenses;

$3.6 million of incremental corporate service and professional fees;

and $9.0 million of incremental store and corporate overhead expenses.

Included in the 2018 amounts is the incremental impact of the Gander Outdoors store openings totaling $114.8 million in 2018.

SG&A expenses as a percentage of total gross profit was 88.7% for 2019, compared to 78.5% for 2018.

Debt restructure expense

Debt restructure expense was $0.4 million for 2018 resulting from the expense related to the Third Amendment to the Credit Agreement entered into in March 2018.

Selling, general and administrative expenses increased 1.3%, or $14.4 million, to $1.2 billion in 2020 from $1.1 billion for 2019.

The $14.4 million increase was primarily due to a $46.7 million increase in wage-related expenses attributable in large part to variable pay on increased gross profit, partially offset by an $18.1 million decrease in advertising as the Company shifted towards a more digitally-driven marketing approach, $8.1 million decrease in personal and real property expense primarily due to closed stores as a result of the 2019 Strategic Shift, and a $6.1 million decrease in other store and corporate overhead expenses.

Selling, general and administrative expenses as a percentage of total gross profit decreased to 67.9% in 2020 from 88.7% in 2019.

Depreciation and amortization

Depreciation and amortization was $59.9 million for 2019, an increase of $10.6 million, or 21.5%, from $49.3 million for 2018.

The increase reflects additional depreciation due to capital expenditures for new and existing RV and Outdoor Retail locations.

Goodwill impairment

In the fourth quarter of 2018, the Company performed its annual goodwill impairment test, which resulted in the determination that the carrying value of the former Retail reporting unit, as previously reported (see Note 22 – Segment Information for discussion of the change in segment reporting during the year ended December 31, 2019), which is now a component of the RV and Outdoor Retail segment, exceeded its estimated fair value by an amount that exceeded the reporting unit’s goodwill balance.

The excess of the carrying value over the estimated fair value of this reporting unit was primarily due to a decline in segment income leading to lower expected future cash flows for this reporting unit.

The Company recorded an impairment charge of $40.0 million in the fourth quarter of 2018 related to this reporting unit.

See Note 7 - Goodwill and Intangible Assets to our audited consolidated financial statements in Part II, Item 8 of this Form 10-K for additional information.

No goodwill impairment charges were recognized in 2019.

Depreciation and amortization decreased 13.3%, or $8.0 million, to $52.0 million in 2020 from $59.9 million for 2019 due to reduction in capital expenditures in 2020 and the asset impairment related to the 2019 Strategic Shift in 2019.

Long-lived asset impairment

As discussed in Note 5 – Restructuring and Long-lived Asset Impairment to our consolidated financial statements included in Part II, Item 8 of this Form 10-K, we recognized $66.3 million of long-lived asset impairments during 2019, of which $57.4 million is related to the 2019 Strategic Shift discussed above.

As discussed in Note 5 – Restructuring and Long-lived Asset Impairment to our consolidated financial statements included in Part II, Item 8 of this Form 10-K, we recognized $12.4 million of long-lived asset impairments in 2020, of which $12.3 million related to the 2019 Strategic Shift discussed above, and $66.3 million of long-lived asset impairments during 2019, of which $57.4 million was related to the 2019 Strategic Shift.

Lease termination

Lease termination expense increased $5.2 million to $4.5 million in 2020 from a lease termination benefit of $0.7 million in 2019, related primarily to lease terminations in connection with the 2019 Strategic Shift discussed above.

Floor plan interest expense

Floor plan interest expense was $40.1 million for 2019, an increase of $1.8 million, or 4.7%, from $38.3 million for 2018.

The increase was primarily due to increased average outstanding amount payable under our Floor Plan Facility, primarily resulting from an increased inventory level due to new dealership locations, and a 38-basis point increase in the average floor plan borrowing rate.

Floor plan interest expense decreased 50.9%, or $20.4 million, to $19.7 million for 2020 from $40.1 million in 2019.

The decrease was primarily due to a 169 basis point decrease in the average floor plan borrowing rate, and a 22.3% decrease in average floor plan borrowings driven by lower average inventory levels.

Other interest expense, net

Other interest expense, net was $69.4 million for 2019, an increase of $6.0 million, or 9.5%, from $63.3 million for 2018.

The increase was primarily due to increased average debt outstanding and a 21-basis point increase in the average interest rate.

Other interest expense decreased 21.2%, or $14.7 million, to $54.7 million in 2020 from $69.4 million for 2019.

The decrease was primarily due to a 113 basis point decrease in the average interest rate.

Tax Receivable Agreement liability adjustment

The Tax Receivable Agreement liability adjustment for 2019 was a benefit of $10.0 million, versus an expense of $1.3 million for 2018.

The Tax Receivable Agreement liability adjustment of $10.0 million for 2019 represented an adjustment for lower enacted state income tax rates.

The Tax Receivable Agreement liability adjustment of $1.3 million for 2018 represented an adjustment for an increase in enacted state income tax rates.

The Tax Receivable Agreement liability adjustment for 2020 and 2019 was a benefit of $0.1 million and $10.0 million, respectively, which represented an adjustment for lower enacted state income tax rates in both periods.

Income tax expense

Income tax expense was $29.6 million for 2019, a decrease of $1.2 million, from $30.8 million for 2018.

The decrease in income tax expense for the year ended December 31, 2019 was primarily due to lower enacted state income tax rates charged to the current and deferred income tax provision, revaluation of certain deferred tax assets and related changes in valuation allowance pertaining to a transfer of assets to a

wholly-owned corporate subsidiary, operating losses recorded by our RV and Outdoor Retail segment for which no tax benefit can be recognized, and an increased ownership percentage of CWGS, LLC for which we are subject to U.S.

federal and state taxes on our allocable share of income of CWGS, LLC.

Income tax expense increased 95.2%, or $28.2 million, to $57.7 million in 2020 compared to $29.6 million for 2019.

The increase was primarily due to higher income generated at CWGS, LLC for which the Company is subject to U.S.

federal and state taxes on its allocable share, partially offset by operating losses recorded by Camping World, Inc.

(“CW”) for which no tax benefit can be recognized.

Net income (loss)

Net income increased $464.5 million to a net income of $344.2 million in 2020 from a net loss of $120.3 million in 2019 primarily due to the items mentioned above.

Segment results

12 unchanged sentences

RV and Outdoor Retail

Total segment income (loss)

Corporate & other

Depreciation and amortization

Other interest expense, net

Tax Receivable Agreement liability adjustment

Loss and expense on debt restructure

(Loss) income before income taxes

Same store revenue- RV and Outdoor Retail (2)

(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 segment

Good Sam Services and Plans segment revenue was $181.5 million for 2019, an increase of $6.9 million, or 3.9%, from $174.6 million for 2018.

Good Sam Services and Plans segment income was $83.6 million for 2019, an increase of $2.5 million, or 3.1%, from $81.1 million for 2018.

The increase was primarily attributable to increased roadside assistance contracts in force and reduced claims, together resulting in a gross profit increase of $6.7 million;

and increased vehicle insurance contracts in force and reduced marketing expenses, together resulting in a gross profit increase of $2.8 million;

partially offset by additional marketing support expenses of $3.4 million, increased selling, general and administrative expenses of $2.6 million, and reduced gross profit from our extended vehicle warranty programs of $1.0 million.

RV and Outdoor Retail segment

RV and Outdoor Retail segment revenue was $4.7 billion for 2019, an increase of $92.1 million, or 2.0%, from $4.6 billion for 2018.

The increase was primarily due to a 10.6% increase in used vehicles sold and the RV and Outdoor Retail locations opened over the last 24 months, partially offset by the 7.6% reduction in new vehicles sold.

RV and Outdoor Retail segment loss was $42.6 million for 2019, a decrease of $180.7 million, or 130.9%, from segment income of $138.1 million for 2018.

The decrease was primarily due to an $80.4 million reduction in gross profit primarily from the 2019 Strategic Shift initiative, a $64.1 million increase in selling, general and administrative expenses, $66.3 million of long-lived asset impairment in 2019, $8.8 million of incremental loss on disposal of assets, and a $1.8 million increase in floor plan interest expense, partially offset by a $40.0 million reduction in goodwill impairment and a $0.7 million gain on lease termination.

Segment income (loss) margin decreased 389 basis points to (0.9%) primarily due to the 2019 Strategic Shift.

Corporate and other expenses

Corporate and other expenses were $12.5 million for 2019, an increase of $5.6 million, or 82.6%, from $6.8 million for 2018.

The increase was primarily due to increased service and professional fees.

Tax Receivable Agreement liability adjustment

The Tax Receivable Agreement liability adjustment was a benefit of $10.0 million for 2019 represents an adjustment for lower enacted state income tax rates.

The Tax Receivable Agreement liability adjustment expense of $1.3 million for 2018 represented an adjustment for increased enacted state income tax rates.

For the Year Ended December 31 , 2018 Compared to the Year Ended December 31, 2017

The following tables set forth information comparing the components of net income for the years ended December 31, 2018 and 2017.

Fiscal year ended

December 31, 2018

December 31, 2017

Favorable/ (Unfavorable)

($ in thousands)

Good Sam Services and Plans

RV and Outdoor Retail

Used vehicles

Products, service and other

Finance and insurance, net

Good Sam Club

Total revenue

Gross profit (exclusive of depreciation and amortization shown separately below):

Good Sam Services and Plans

RV and Outdoor Retail

Used vehicles

Products, service and other

Finance and insurance, net

Good Sam Club

Total gross profit

Operating expenses:

Selling, general, and administrative

Debt restructure expense

Depreciation and amortization

Goodwill impairment

Loss (gain) on sale of assets

Total operating expenses

Income from operations

Other income (expense):

Floor plan interest expense

Other interest expense, net

Loss on debt restructure

Tax Receivable Agreement liability adjustment

Total other income (expense)

Income before income taxes

Income tax expense

net (income) loss attributable to non-controlling interests

Net income attributable to Camping World Holdings, Inc.

Supplemental Data

For the Years

Ended December 31,

Used vehicles

Average selling price

Used vehicles

Same store unit sales

Used vehicles

Same store revenue ($ in 000's)

Used vehicles

Products, service and other

Finance and insurance

Average gross profit per unit

Used vehicles

Finance and insurance, net per vehicle unit

Total vehicle front-end yield (1)

Good Sam Services and Plans

Used vehicles

Products, service and other

Finance and insurance, net

Good Sam Club

Subtotal RV and Outdoor Retail

Total gross margin

Inventories ($ in 000's)

Used vehicles

Products, parts, accessories and misc.

Total RV and Outdoor inventories

Vehicle inventory per location ($ in 000's)

New vehicle inventory per dealer location

Used vehicle inventory per dealer location

Vehicle inventory turnover (2)

New vehicle inventory turnover

Used vehicle inventory turnover

Retail locations

RV dealerships

RV service & retail centers

Other retail stores

Active Customers (3)

Good Sam Club members

Finance and insurance gross profi t as a % of total vehicle revenue

Same store locations

(1) Front end yield is calculated as gross profit from new vehicles, used vehicles and finance and insurance (net), divided by combined new and used retail unit sales.

(2) Inventory turnover calculated as vehicle costs applicable to revenue divided by the average vehicle inventory.

(3) An Active Customer is a customer who has transacted with us in any of the eight most recently completed fiscal quarters prior to the date of measurement.

Total Revenue

Total revenue was $4.8 billion in 2018, an increase of $512.2 million, or 12.0%, from $4.3 billion for 2017.

The increase was primarily driven by a 12.2%, or $501.4 million, increase in RV and Outdoor Retail revenue, and a 6.7%, or $10.8 million, increase in Good Sam Services and Plans revenue.

Total gross profit was $1.4 billion in 2018, an increase of $122.0 million, or 9.8%, from $1.2 billion in 2017.

The increase in total gross profit was driven by a $113.7 million, or 9.9%, increase in RV and Outdoor Retail gross profit and an $8.4 million, or 9.5%, increase in Good Sam Services and Plans gross profit.

Income from operations was $201.0 million in 2018, a decrease of $154.9 million, or 43.5%, from $356.0 million in 2017.

The decrease in income from operations was primarily driven by a $216.2 million increase in selling, general and administrative expenses, a $40.0 million increase in goodwill impairment, a $17.8 million increase in depreciation and amortization, and a $2.9 million increase in loss on disposal of assets, partially offset by a $122.0 million increase in gross profit.

Total other expenses were $104.6 million in 2018, an increase of $134.3 million, or 453.0%, from other income of $29.6 million in 2017.

The increase in other expenses was driven by a $102.1 million increase in Tax Receivable Agreement liability adjustment, a $20.4 million increase in other interest expense, a $10.6 million increase in floor plan interest expense, and a $1.2 million increase in loss of debt restructure.

As a result of the above factors, income before income taxes was $96.4 million in 2018 compared to income before income tax of $385.6 million in 2017.

Income tax expense was $30.8 million in 2018, a decrease of $124.1 million from $154.9 million in 2017.

As a result, net income was $65.6 million in 2018 compared to net income of $230.7 million in 2017.

Good Sam Services and Plans

Good Sam Services and Plans revenue was $172.7 million for 2018, an increase of $10.8 million, or 6.7%, from $161.9 million for 2017.

The increased revenue was attributable to a $5.5 million increase from our roadside assistance programs primarily due to increased file size;

a $3.9 million increase from our vehicle insurance and Good Sam TravelAssist programs primarily due to increased policies in force;

a $0.7 million increase from consumer show exhibit and admissions revenue resulting from eight new consumer shows in 2018;

and $0.7 million of other increases.

Good Sam Services and Plans gross profit was $96.6 million for 2018, an increase of $8.4 million, or 9.5%, from $88.3 million for 2017.

This increase was primarily due to increased roadside assistance contracts in force and reduced claims, together resulting in a gross profit increase of $5.6 million;

an increase from the vehicle insurance and Good Sam TravelAssist programs of $3.8 million primarily due to increased policies in force;

an increase from eight new consumer shows of $0.7 million;

and other increases of $0.2 million;

partially offset by a decrease from the extended vehicle warranty programs of $1.9 million.

RV and Outdoor Retail

New vehicle revenue was $2.5 billion for 2018, an increase of $76.9 million, or 3.2%, from $2.4 billion for 2017.

The increase was primarily due to a 7.1% increase in vehicles sold and the opening of 38 greenfield and acquired locations during 2018 and 2017, partially offset by a same store revenue decrease of 5.6% primarily due to a shift in the overall sales mix toward lower priced travel trailers, a decrease in customer

demand, a 3.7% reduction in the average selling price per unit primarily due a shift in the mix towards lower-priced towable units and promotional pricing.

New vehicle gross profit was $324.1 million for 2018, a decrease of $25.6 million, or 7.3%, from $349.7 million for 2017.

The decrease was primarily due to a decrease in average gross profit per vehicle of 13.4%, resulting primarily from a shift in the mix towards lower-priced towable units, partially offset by a 7.1% increase in vehicles sold.

Gross margin decreased 146 basis points to 12.9%.

Used Vehicles

Used vehicle revenue was $732.0 million for 2018, an increase of $63.2 million, or 9.4%, from $668.9 million for 2017.

The increase was primarily due an 8.3% increase in units sold, primarily relating to additional travel trailer units sold at our greenfield and acquired dealerships in 2018 and 2017 with an average 1.1% increase in selling price per unit, and a 0.6% increase in same store revenue.

Used vehicle gross profit was $163.6 million for 2018, an increase of $0.9 million, or 0.5%, from $162.8 million for 2017.

The increase was primarily due to an 8.3% increase in units sold partially offset by a 7.2% decrease in average gross profit per unit primarily due to a shift in the mix towards lower-priced units.

Gross margin decreased 198 basis points to 22.4%.

Products, Service and Other

Products, service and other revenue was $949.4 million for 2018, an increase of $296.6 million, or 45.4%, from $652.8 million for 2017.

The increase was primarily attributable to revenue from Gander Outdoors, relating to a net 60 Gander Outdoors locations that opened during 2017 and 2018, other incremental RV and Outdoor Retail acquisitions and new stores that opened during 2017 and 2018, and a same store revenue increase of 0.9%.

Products, service and other gross profit was $364.1 million for 2018, an increase of $76.1 million, or 26.4%, from $288.0 million for 2017.

The increase was primarily attributable to incremental gross profit from the Gander Outdoors stores, increased new and used vehicles sold, and the greenfield and acquired locations opened during 2017 and 2018.

Gross margin decreased 577 basis points to 38.4%, primarily due to the costs of operating Gander Outdoors.

Finance and Insurance, net

Finance and insurance, net revenue and gross profit were each $383.7 million for 2018, an increase of $57.1 million, or 17.5%, from $326.6 million for 2017.

The increase was primarily due to incremental vehicle finance contracts assigned due to higher vehicle unit sales, higher finance and insurance PV rates, a same store revenue increase of 7.4%, and an increased average gross profit per contract.

Finance and insurance, net revenue as a percentage of total new and used vehicle revenue increased to 11.8% for 2018 from 10.5% for 2017.

Selling, general and administrative

SG&A expenses were $1.1 billion for the 2018, an increase of $216.2 million, or 25.3%, from $853.2 million for 2017.

The increase was due to increases of $90.8 million of wage-related expenses, primarily attributable to increased vehicle unit sales and the 92 RV and Outdoor Retail locations opened over the last 24 months;

$36.5 million of variable selling expenses attributable to commissions and selling expense;

$34.4 million of additional real property expense primarily attributable to the new locations;

$26.7 million of store and corporate overhead expenses;

$15.5 million of additional occupancy expenses;

$7.4 million of additional personal property expense;

and $4.9 million of additional service and professional fees.

Included above is the incremental impact of the Gander Outdoors store openings totaling $114.8 million.

SG&A expenses as a percentage of total gross profit was 78.5% for 2018, compared to 68.8% for 2017, an increase of 971 basis points.

Debt restructure expense

Debt restructure expense was $0.4 million for 2018 resulting from the expense related to the Third Amendment to the Credit Agreement entered into in March 2018, and $0.4 million for 2017 resulting from the expense related to the Second Amendment to the Senior Secured Credit Facilities in October 2017.

Depreciation and amortization

Depreciation and amortization was $49.3 million for 2018, an increase of $17.8 million, or 56.4%, from $31.5 million for 2017.

The increase reflects additional depreciation due to capital expenditures for new and existing RV and Outdoor Retail locations.

Goodwill impairment

In the fourth quarter of 2018, the Company performed its annual goodwill impairment test, which resulted in the determination that the carrying value of the former Retail reporting unit, which was comprised of the entire Retail segment as previously reported (see Note 22 - Segment Information, for discussion of the change in the segment reporting during the year ended December 31, 2019), exceeded its estimated fair value by an amount that exceeded the reporting unit’s goodwill balance.

The Company recorded an impairment charge of $40.0 million in the fourth quarter of 2018 related to this reporting unit.

See Note 7 - Goodwill and Intangible Assets to our audited consolidated financial statements in Part II, Item 8 of this Form 10-K for additional information.

Floor plan interest expense

Floor plan interest expense was $38.3 million for 2018, an increase of $10.6 million, or 38.4%, from $27.7 million 2017.

The increase was primarily due to increased average outstanding amount payable under our Floor Plan Facility, primarily resulting from an increased inventory level due to new dealership locations, existing locations expecting higher unit sales, and a 93-basis point increase in the average floor plan borrowing rate.

Other interest expense, net

Other interest expense, net was $63.3 million for 2018, an increase of $20.4 million, or 47.4%, from $43.0 million for 2017.

The increase was primarily due to increased average debt outstanding and a 21-basis point increase in the average interest rate.

Tax Receivable Agreement liability adjustment

The Tax Receivable Agreement liability adjustment for 2018 was an expense of $1.3 million, versus a benefit of $100.8 million for 2017.

The Tax Receivable Agreement liability adjustment of $1.3 million for 2018 represented an adjustment for an increase in state income tax rates.

The Tax Receivable Agreement liability adjustment of $100.8 million for 2017 represented a gain on remeasurement in relation to the Tax Receivable Agreement primarily due to changes in our income tax rate.

The Tax Receivable Agreement liability was created upon the Company’s acquisition of CWGS, LLC interest through exchanges of its Class A shares for CWGS, LLC common units.

The 2017 U.S.

Tax Cuts and Jobs Act, (“the “2017 Tax Act’) among other things, reduced the federal statutory corporate rate in 2017 from 35% to 21%.

Upon the enactment of the 2017 Tax Act, and to a lesser extent changes in state income tax rate, the Tax Receivable Agreement liability was remeasured and lowered by $100.8 million.

Income tax expense

Income tax expense was $30.8 million for 2018, a decrease of $124.1 million, from $154.9 million for 2017.

The decrease in income tax expense for 2018 was primarily due to the non-recurring nature of the deferred income tax expense of $117.0 million recorded in 2017, which includes the tax effect of the $100.8

million Tax Receivable Liability adjustment, as a result of the 2017 Tax Act, none of which was recorded in 2018.

The remaining decrease in income tax expense was a result of the lower income tax rate charged to the current income tax provision in 2018 due to the 2017 Tax Act and the lower income before income taxes for 2018.

The goodwill impairment of $40.0 million for 2018 did not result in an income tax benefit, since the tax-deductible portion of the goodwill impairment relates to a reporting unit that has a full valuation allowance on its deferred tax assets.

Segment results

The following table sets forth a reconciliation of total segment income to consolidated income from operations before income taxes for the period presented:

Fiscal Year Ended

December 31, 2018

December 31, 2017

(Unfavorable)

($ in thousands)

Good Sam Services and Plans

RV and Outdoor Retail

Elimination of intersegment revenue

Total consolidated revenue

Segment income:

Good Sam Services and Plans

RV and Outdoor Retail

Total segment income

3 unchanged sentences

Tax Receivable Agreement liability adjustment

Loss on debt restructure

Income before income taxes

Income (loss) before income taxes

Same store revenue- RV and Outdoor Retail (2)

nm – 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 segment

Good Sam Services and Plans

Good Sam Services and Plans segment revenue was $182.8 million for 2020, an increase of $1.2 million, or 0.7%, from $181.5 million for 2019.

The increased revenue was attributable to a $5.5 million increase from our roadside assistance programs primarily due to increased file size;

a $3.9 million increase from our vehicle insurance and Good Sam TravelAssist programs primarily due to increased policies in force;

a $1.2 million increase from consumer show exhibit and admissions revenue resulting from eight new consumer shows in 2018;

and $0.7 million of other increases.

The $1.2 million increase was primarily attributable to $2.4 million from increased contracts in force from our roadside assistance programs, $1.8 million from increased contracts in force for our extended vehicle warranty programs, $1.6 million from increased contracts in force for our vehicle insurance products, and $1.1 million from increased RV financing loan volume, partially offset by a $2.5 million decrease from 13 fewer consumer shows, and decreases in advertising revenue, including a $1.5 million decrease from the magazine group and a $1.7 million decrease for the annual directory.

Good Sam Services and Plans segment income was $88.3 million for 2020, an increase of $4.7 million, or 5.6%, from $83.6 million for 2019.

The increase was primarily attributable to increased roadside assistance contracts in force and reduced claims, together resulting in a gross profit increase of $5.6 million;

an increase from our vehicle insurance and Good Sam TravelAssist programs of $3.8 million primarily due to increased policies in force;

and an increase from eight new consumer shows of $1.4 million;

partially offset by a decrease from the extended vehicle warranty programs of $1.9 million, an increase in SG&A expenses of $1.0 million primarily due to increased wage-related expenses;

and other decreases of $0.7 million.

Good Sam Services and Plans segment income margin increased 130 basis points to 47.0%, primarily due to the increased contracts in force for our roadside assistance and vehicle insurance products, partially offset by a $1.0 million increase in SG&A expenses.

The increase was primarily attributable to a gross profit increase of $6.6 million, which was comprised of $4.2 million from increased policies in force and reduced marketing expenses for our extended vehicle warranty programs, $3.2 million from increased policies in force and reduced program expenses in our roadside assistance programs, and $1.2 million from increased loan volume for our RV financing, partially offset by $1.1 million of reduced gross profit from reduced consumer shows, $0.8 million from the annual directory and $0.1 million from other services and plans;

and reduced loss on asset disposals of $0.6 million, partially offset by increased selling, general and administrative expenses of $2.5 million.

Segment income margin net of intersegment revenue elimination increased 220 basis points to 48.8% primarily due to increased policies in force and reduced marketing costs for our extended vehicle warranty programs, and increased policies in force reduced program costs in our roadside assistance programs.

RV and Outdoor Retail segment

RV and Outdoor Retail segment revenue was $5.3 billion for 2020, an increase of $553.8 million, or 11.7%, from $4.7 billion for 2019.

The increase was primarily due to a net increase of 92 acquired and/or opened RV and Outdoor Retail locations during 2018 and 2017, a 7.5% increase in total vehicles sold and the 38 greenfield and acquired RV locations opened during 2018 and 2017, as described above.

RV and Outdoor Retail segment income was $138.1 million for 2018, a decrease of $153.5 million, or 52.6%, from $291.6 million for 2017.

The decrease was primarily due to a $213.8 million increase in selling, general and administrative expenses, goodwill impairment $40.0 million, a $10.6 million increase in floor plan interest expense, and approximately $2.8 million of increased loss on asset disposal, partially offset by a $113.7 million increase in gross profit primarily from the Gander Outdoors locations.

RV and Outdoor Retail segment income margin decreased 409 basis points to 3.0% primarily due to the Gander Outdoors locations.

Same store revenue

Same store revenue was $3.6 billion for 2018, a decrease of $94.0 million, or 2.6%, from $3.6 billion for 2017.

The decrease was primarily due to decreased demand for new and used vehicles.

The increase was primarily due to a 17.7% increase in new vehicle units sold and a 4.4% increase in average selling price per vehicle, driven by increases in nearly all product types, led by single and double axle travel trailers.

RV and Outdoor Retail segment income was $430.0 million for 2020, an increase of $472.6 million, from segment loss of $42.6 million for 2019.

The increase was primarily due to a $408.5 million increase in gross profit primarily from higher towable and motorized gross margins resulting from lower supply from manufacturers and outsized demand from consumers turning to RVing as a vacation alternative and increased strength of the used vehicle market, a $53.9 million reduction in long-lived asset impairment, a $20.4 million decrease in floor plan interest expense, and a $9.5 million reduction in loss on disposal of assets, partially offset by an increase of approximately $14.5 million in selling, general and administrative expenses resulting from commissions on increased revenue partially offset by a reduction resulting from the 2019 Strategic Shift, and a $5.2 million increase in lease termination expense.

Segment income margin net of intersegment revenue elimination increased to 8.2% from a segment loss margin of 0.90% in 2019 primarily due to the impact of the 2019 Strategic Shift.

Corporate and other expenses

Corporate and other expenses were $6.8 million for 2018, an increase of 26.9%, from $5.4 million for 2017.

The increase was due to increased professional fees.

Corporate and other expenses were $9.8 million for 2020, a decrease of $2.7 million, or 21.7%, from $12.5 million for 2019.

The decrease was primarily due to reduced professional fees.

Tax Receivable Agreement liability adjustment

The Tax Receivable Agreement liability adjustment expense of $1.3 million for 2018 represents an adjustment for increased state tax rates.

The Tax Receivable Agreement liability adjustment of the amount of $100.8 million for 2017 represented a gain on remeasurement in relation to the Tax Receivable Agreement primarily due to changes in our income tax rate.

The Tax Receivable Agreement liability was created upon the Company’s acquisition of CWGS, LLC interest through exchanges of its Class A shares for CWGS, LLC common units.

The 2017 Tax Act, among other things, reduced the federal statutory corporate rate from 35% to 21%.

As a result of the 2017 Tax Act, and to a lesser extent changes in state income tax rates, the Tax Receivable Agreement liability was remeasured and lowered by $100.8 million.

Non-GAAP Financial Measures

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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.

These Non-GAAP Financial Measures are also frequently used by analysts, investors and other interested parties to evaluate companies in the Company’s industry.

In evaluating these non-GAAP Financial Measures, you should be aware that in the future the Company may incur expenses that are the same as or similar to some of those adjusted in this presentation.

The Non-GAAP Financial Measures that we use are not necessarily comparable to similarly titled measures used by other companies due to different methods of calculation.

EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin

We define “EBITDA” as net income before other interest expense, net (excluding floor plan interest expense), provision for income tax expense and depreciation and amortization.

We define “Adjusted EBITDA” as EBITDA further adjusted for the impact of certain non-cash and other items that we do not consider in our evaluation of ongoing operating performance.

These items include, among other things, loss and expense on debt restructure, goodwill impairment, loss (gain) on disposal of assets and other expense, net, monitoring fees, equity-based compensation, Tax Receivable Agreement liability adjustment, an adjustment to rent on right-to-use assets, transaction expenses related to acquisitions, Gander Outdoors pre-opening costs, long-lived asset impairment, restructuring costs related to the 2019 Strategic Shift, lease termination and other unusual or one-time items.

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, loss and expense on debt restructure, goodwill impairment, gains and losses on disposal of assets and other expense, net, monitoring fees, equity-based compensation, Tax Receivable Agreement liability adjustment, transaction expenses related to acquisitions, Gander Outdoors pre-opening costs, 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.

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($ in thousands)

Net (loss) income

Net income (loss)

Other interest expense, net

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Lease termination (d)

Loss on disposal of assets and other expense, net (e)

Loss (gain) on disposal of assets, net (e)

Monitoring fee (f)

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Tax Receivable Agreement liability adjustment (h)

Adjustment to normalize rent on right-to-use assets (i)

Acquisitions - transaction expense (j)

Gander Outdoors pre-opening costs (k)

Restructuring costs (l)

Acquisitions - transaction expense (i)

Gander Outdoors pre-opening costs (j)

Restructuring costs (k)

Adjusted EBITDA

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EBITDA margin:

Net (loss) income margin

Net income (loss) margin

Other interest expense, net

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Lease termination (d)

Loss on disposal of assets and other expense, net (e)

Loss (gain) on disposal of assets, net (e)

Monitoring fee (f)

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Tax Receivable Agreement liability adjustment (h)

Adjustment to normalize rent on right-to-use assets (i)

Acquisitions - transaction expense (j)

Gander Outdoors pre-opening costs (k)

Restructuring costs (l)

Acquisitions - transaction expense (i)

Gander Outdoors pre-opening costs (j)

Restructuring costs (k)

Adjusted EBITDA margin

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See Note 5 – Restructuring and Long-lived Asset Impairment to our consolidated financial statements included in Part II, Item 8 of this Form 10-K for additional information.

(d) Represents the gain on the termination of operating leases relating primarily to the 2019 Strategic Shift, net of lease termination fees (See Note 5 – Restructuring and Long-lived Asset Impairment).

(e) Represents an adjustment to eliminate (i) losses on the disposal or sale of real estate at closed RV and Outdoor Retail locations in 2019, (ii) the gains and losses on sales of various assets, (iii) aggregate non-recurring losses from two non-performing locations that were sold in 2015;

and (iv) a loss equal to the present value of the remaining net obligation under the non-cancellable operating leases in locations with no operating business, which represented $0.8 million for the year ended December 31, 2015.

(d) Represents the loss (gain) on the termination of operating leases relating primarily to the 2019 Strategic Shift, net of lease termination fees.

See Note 5 – Restructuring and Long-lived Asset Impairment to our consolidated financial statements included in Part II, Item 8 of this Form 10-K for additional information.

(e) Represents an adjustment to eliminate (i) losses on the disposal or sale of real estate at closed retail locations in 2020 and 2019 and (ii) the gains and losses on disposal and sales of various assets.

(f) 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.

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

(h) Represents an adjustment to eliminate the gains on remeasurement of the Tax Receivable Agreement primarily due to changes in our effective income tax rate.

(i) Represents an adjustment to rent expense for the periods presented for certain right-to-use assets that were derecognized in the fourth quarter of 2015 due to lease modifications that resulted in the leases meeting the requirements to be reported as operating leases.

The adjustments represent additional rent expense that would have been incurred for the periods presented had the leases previously been classified as operating leases.

See Note 10 — Lease Obligations to our audited consolidated financial statements in Part II, Item 8 of this Form 10-K for additional information.

(j) Represent transaction expenses, primarily legal costs, associated with acquisitions into new or complementary markets, including the Gander Mountain acquisition.

This amount excludes transaction expenses related to the acquisition of RV dealerships, consumer shows, and other RV and Outdoor Retail segment business acquisitions.

(k) Represents pre-opening store costs associated with the Gander Outdoors store openings, which is comprised of 1) Gander Outdoors-specific corporate and retail overhead, 2) distribution center expenses, and 3) store-level startup expenses.

As discussed in Note 15 - Acquisitions to our consolidated financial statements included in Part II, Item 8 of this Form 10-K, the Company incurred significant costs related to the initial rollout of Gander Outdoors locations, which was substantially complete as of December 31, 2018.

Based on the nature of the acquisition through a bankruptcy auction and the large quantity of retail locations

opened and to be opened in a very compressed timeframe, the Company does not deem the pre-opening store costs for the initial rollout of Gander Outdoors locations to be normal, recurring charges.

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

(h) Represents an adjustment to eliminate the gains on remeasurement of the Tax Receivable Agreement primarily due to changes in our effective income tax rate and the transfer of certain assets from GSS Enterprises LLC (“GSS”) to Camping World, Inc.

(i) Represent transaction expenses, primarily legal costs, associated with acquisitions into new or complementary markets, including the Gander Mountain acquisition.

This amount excludes transaction expenses related to the acquisition of RV dealerships, consumer shows, and other RV and Outdoor Retail segment business acquisitions which are considered recurring in nature.

(j) Represents pre-opening store costs associated with the Gander Outdoors store openings, which is comprised of 1) Gander Outdoors-specific corporate and retail overhead, 2) distribution center expenses, and 3) store-level startup expenses.

Based on the nature of the acquisition through a bankruptcy auction and the large quantity of retail locations opened and to be opened in a very compressed timeframe, the Company does not deem the pre-opening store costs for the initial rollout of Gander Outdoors locations to be normal, recurring charges.

The Company does not intend to adjust for pre-opening store costs other than for the initial rollout of Gander Outdoors.

(l) Represents restructuring costs relating to our 2019 Strategic Shift.

These restructuring costs include one-time employee termination benefits, incremental inventory reserve charges, and other associated costs.

(k) Represents restructuring costs relating to our 2019 Strategic Shift.

These restructuring costs include one-time employee termination benefits relating to retail store or distribution center closures/divestitures, incremental inventory reserve charges, and other associated costs.

These costs exclude lease termination costs, which are presented separately (see (d) above).

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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) and expense on debt restructure, goodwill impairment, loss (gain) on disposal of assets and other expense, net, equity-based compensation, Tax Receivable Agreement liability adjustment, transaction expenses related to acquisitions, Gander Outdoors pre-opening costs, long-lived asset impairment, restructuring costs related to the 2019 Strategic Shift, lease termination, 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.

These items include, among other things, long-lived asset impairment, lease termination costs, loss and expense on debt restructure, goodwill impairment, gains and losses on disposal of assets and other expense, net, equity-based compensation, Tax Receivable Agreement liability adjustment, transaction expenses related to acquisitions, Gander Outdoors pre-opening costs, 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.

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– Basic, Adjusted Net Income Attributable to Camping World Holdings, Inc.

Adjusted Net Income non-GAAP financial measures, and weighted-average shares of Class A common stock outstanding – basic, in the case of the Adjusted Earnings Per Share non-GAAP financial measures:

– Diluted, Adjusted Earnings Per Share – Basic, and Adjusted Earnings Per Share – Diluted to the most directly comparable GAAP financial performance measure, which is net income attributable to Camping World Holdings, Inc., in the case of the Adjusted Net Income non-GAAP financial measures, and weighted-average shares of Class A common stock outstanding – basic, in the case of the Adjusted Earnings Per Share non-GAAP financial measures:

Fiscal Year Ended

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Gross adjustment

Income tax benefit for above adjustment (b)

Loss on disposal of assets and other expense, net (f):

Income tax expense for above adjustment (b)

(Gain) loss on disposal of assets and other expense, net (f):

Gross adjustment

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Gross adjustment

Income tax (expense) benefit for above adjustment (b)

Income tax benefit for above adjustment (b)

Fiscal Year Ended

(In thousands except per share amounts)

Acquisitions - transaction expense (i):

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Gross adjustment

Income tax (expense) benefit for above adjustment (b)

Income tax expense for above adjustment (b)

Revaluation of deferred tax assets from tax reform (l)

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

Adjusted net (loss) income attributable to Camping World Holdings, Inc.

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

Adjusted net income (loss) attributable to Camping World Holdings, Inc.

Adjustments related to diluted calculation:

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

Adjusted net income attributable to Camping World Holdings, Inc.

Adjusted net income (loss) attributable to Camping World Holdings, Inc.

– basic and diluted

Weighted-average Class A common shares outstanding – basic

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Adjusted weighted average Class A common shares outstanding – diluted

Fiscal Year Ended

(In thousands except per share amounts)

Adjusted earnings per share - basic

Adjusted earnings per share - diluted

Adjusted earnings (loss) per share - basic

Adjusted earnings (loss) per share - diluted

Anti-dilutive amounts (q):

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

(a) Represents the loss and expense incurred on debt restructure and financing expense incurred from the Third Amendment to the Credit Agreement in 2018, the First and Second Amendment to the Senior Credit Facilities in 2017, the write-off of a portion of the original issue discount, capitalized finance costs from the Previous Term Loan Facilities, and rating agency fees and legal expenses related to the Previous Term Loan Facilities in 2016.

(b) Represents the current and deferred income tax expense 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 effective tax rates associated with the respective quarters of 25.0% to 25.3% for the adjustments in 2019, 25.3% to 25.5% for the adjustments in 2018, and 38.5% for the adjustments in 2017 and 2016, which represents the estimated tax rate that would apply had the above adjustments been included in the determination of our non-GAAP metric.

original issue discount, capitalized finance costs from the Previous Term Loan Facilities, and rating agency fees and legal expenses related to the Previous Term Loan Facilities in 2016.

(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 effective tax rates between 25.0% and 25.5% for the adjustments for 2020, 2019 and 2018 and 38.5% for the adjustments in 2017 and 2016, which represents the estimated tax rate that would apply had the above adjustments been included in the determination of our non-GAAP metric.

(c) Represents a goodwill impairment charge of $40.0 million related to the RV and Outdoor Retail segment in the fourth quarter of 2018.

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See Note 5 – Restructuring and Long-lived Asset Impairment to our consolidated financial statements included in Part II, Item 8 of this Form 10-K for additional information.

(e) Represents the gain on the termination of operating leases relating primarily to the 2019 Strategic Shift, net of lease termination costs (See Note 5 – Restructuring and Long-lived Asset Impairment).

(f) Represents an adjustment to eliminate the gains and losses on sales of various assets, and losses on the disposal or sale of real estate at closed RV and Outdoor Retail locations.

(e) Represents the loss (gain) on the termination of operating leases relating primarily to the 2019 Strategic Shift, net of lease termination costs.

See Note 5 – Restructuring and Long-lived Asset Impairment to our consolidated financial statements included in Part II, Item 8 of this Form 10-K for additional information.

(f) Represents an adjustment to eliminate (i) losses on the disposal or sale of real estate at closed retail locations in 2020 and 2019 and (ii) the gains and losses on disposal and sales of various assets.

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

(h) Represents an adjustment to eliminate the gains on remeasurement of the Tax Receivable Agreement primarily due to changes in our effective income tax rate.

See Note 11 – Income Taxes.

See Note 11 – Income Taxes to our consolidated financial statements included in Part II, Item 8 of this Form 10-K for additional information.

(i) Represents transaction expenses, primarily legal costs, associated with acquisitions into new or complementary markets, including the Gander Mountain acquisition.

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The Company incurred significant costs related to the initial rollout of Gander Outdoors locations, which was substantially complete as of December 31, 2018.

The Company incurred significant costs related to the initial rollout of Gander Outdoors locations.

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(k) Represents restructuring costs relating to our 2019 Strategic Shift.

These restructuring costs include one-time employee termination benefits, incremental inventory reserve charges, and other associated costs.

These costs exclude lease termination costs, which are presented separately (see (e) above).

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(l) This amount relates to the remeasurement of federal net deferred tax assets resulting from the permanent reduction in the U.S.

statutory corporate tax rate to 21% from 35% under the 2017 Tax Act.

See Note 11 – Income Taxes.

(m) Represents the adjustment to net (loss) income attributable to non-controlling interests resulting from the above adjustments that impact the net income of CWGS, LLC.

statutory corporate tax rate to 21% from 35% under the U.S.

Tax Cuts and Jobs Act of 2017 (the “2017 Tax Act”).

(m) Represents the adjustment to net (income) loss 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 55.9%, 58.1%, 58.3% and 69.3% for the years ended December 31, 2020, 2019, 2018 and 2017, respectively, and 77.6% for the post-IPO period of 2016.

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(o) Represents the income tax expense effect of the above adjustment for reallocation of net income attributable to non-controlling interests.

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

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Subsequent to the exchange of all common units in CWGS, LLC, the Company believes certain actions could be taken such that the C-corporations’ losses could offset income of other consolidated subsidiaries.

The adjustment reflects the income tax benefit assuming effective tax rates associated with the respective quarters of 25.0% to 25.3% during 2019 and 25.3% to 25.5% during 2018, for the losses experienced by the consolidated C-corporations for which valuation allowances have been recorded.

The adjustment reflects the income tax benefit assuming effective tax rates between 25.0% and 25.5% for the adjustments for 2020, 2019 and 2018 for the losses experienced by the consolidated C-corporations for which valuation allowances have been recorded.

No assumed release of valuation allowance established for previous periods are included in these amounts.

Prior to 2018, the Company did not consider the losses of these C-corporations with valuation allowances to be significant and the Company did not retroactively adjust 2017 or 2016 for these amounts, which were $4.4 million for the year ended December 31, 2017 and $2.4 million for the post-IPO period of 2016.

Prior to our Form 10-Q for the three months ended September 30, 2018, we had calculated adjusted earnings per share on a fully exchanged basis regardless of whether the common units in CWGS, LLC were dilutive.

That calculation will no longer be presented, however, we have provided anti-dilutive amounts in the table above, when applicable.

Uses and Limitations of Non-GAAP Financial Measures

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By providing these Non-GAAP Financial Measures, together with reconciliations, we believe we are enhancing investors’ understanding of our business and our results of operations, as well as assisting investors in evaluating how well we are executing our strategic initiatives.

In addition, our Senior Secured Credit Facilities use EBITDA to measure our compliance with covenants such as consolidated leverage ratio.

In addition, our Senior Secured Credit Facilities use EBITDA to measure our compliance with covenants such as the consolidated leverage ratio.

The Non-GAAP Financial Measures have limitations as analytical tools, and should not be considered in isolation, or as an alternative to, or a substitute for net income or other financial statement data presented in our consolidated financial statements included elsewhere in this Form 10-K as indicators of financial performance.

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We compensate for these limitations by relying primarily on our GAAP results and using these Non GAAP Financial Measures only supplementally.

As noted in the tables above, certain of the Non-GAAP Financial Measures include adjustments for loss and expense on debt restructure, goodwill impairment, loss (gain) on disposal of assets and other expense, net, equity-based compensation, Tax Receivable Agreement liability, an adjustment to rent on right-to-use assets, transaction expenses related to acquisitions, Gander Outdoors pre-opening costs, long-lived asset impairment, restructuring costs relating to the 2019 Strategic Shift, lease termination, other unusual or one-time items, and the income tax expense effect described above, as applicable.

As noted in the tables above, certain of the Non-GAAP Financial Measures include adjustments for long-lived asset impairment, lease termination costs, loss and expense on debt restructure, goodwill impairment, gains and losses on disposal of assets and other expense, net, equity-based compensation, Tax Receivable Agreement liability, transaction expenses related to acquisitions, Gander Outdoors pre-opening costs, restructuring costs relating to the 2019 Strategic Shift, other unusual or one-time items, and the income tax expense effect described above, as applicable.

It is reasonable to expect that certain of these items will occur in future periods.

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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.

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.

Liquidity and Capital Resources

Our primary requirements for liquidity and capital have been working capital, inventory management, acquiring and building new retail locations, including Gander Outdoors pre-opening expenses, 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 been met through cash provided by operating activities, cash and cash equivalents, proceeds from our IPO, May 2017 Public Offering and October 2017 Public Offering, borrowings under our Senior Secured Credit Facilities, and borrowings under our Floor Plan Facility.

As a public company, 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 exchange common units for a cash payment), payments under the Tax Receivable Agreement, and state and federal taxes to the extent not reduced as a result of the Tax Receivable Agreement.

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 below), borrowings under our Floor Plan Facility (as defined below) and borrowings under our Real Estate Facility (as defined below).

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 exchange 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 and Crestview Partners II GP, L.P.

will be significant.

Any payments made by us to Continuing Equity Owners and Crestview Partners II GP, L.P.

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;

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For a discussion of the Tax Receivable Agreement, see Note 11 — Income Taxes to our audited consolidated financial statements included in Part II, Item 8 of this Form 10-K.

CWGS, LLC intends to make a regular quarterly cash distribution to its common unit holders, including us, of approximately $0.08 per common unit, and we intend to use all of the proceeds from such distribution on our common units to pay a regular quarterly cash dividend of approximately $0.08 per share on

our Class A common stock, subject to our discretion as the sole managing member of CWGS, LLC and the discretion of our board of directors.

During each of the years ended December 31, 2019, 2018 and 2017, we paid four regular quarterly cash dividends of $0.08 per share of our Class A common stock.

CWGS, LLC is required to make cash distributions in accordance with the CWGS LLC Agreement in an amount sufficient for us to pay any expenses incurred by us in connection with the regular quarterly cash dividend, along with any of our other operating expenses and other obligations.

In addition, we currently intend to pay, a special cash dividend of all or a portion of the Excess Tax Distribution (as defined under “Dividend Policy” included in Part II, Item 5 of this Form 10-K) to the holders of our Class A common stock from time to time subject to the discretion of our board of directors as described under “Dividend Policy.” In the years ended December 31, 2019, 2018 and 2017, we paid four special cash dividends of $0.0732 per share of our Class A common stock, and in the quarter ended December 31, 2017, we also paid a one-time dividend of $0.13 per share of our Class A common stock.

Our dividend policy has certain risks and limitations, particularly with respect to liquidity, and we may not pay dividends according to our policy, or at all.

On October 30, 2020, our board of directors authorized a stock repurchase program for the repurchase of up to $100.0 million of our Class A common stock, expiring on October 31, 2022.

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 repurchase 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 our 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.

We may also, from time to time, enter into Rule 10b5-1 plans to facilitate repurchases of our shares under this authorization.

This program does not obligate us 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.

We expect to fund the repurchases using cash on hand.

During the year ended December 31, 2020, we repurchased 811,223 shares of our Class A common stock for $21.5 million, including broker commissions.

As of December 31, 2020, $78.5 million is available under the stock repurchase program to repurchase additional shares of our Class A common stock.

CWGS, LLC intends to make a regular quarterly cash distribution to its common unit holders, including us, and we intend to use all of the proceeds from such distribution on our common units to pay a regular quarterly cash dividend on our Class A common stock, subject to our discretion as the sole managing member of CWGS, LLC and the discretion of our board of directors.

During each of the three month periods during the year ended December 31, 2019 and the three months ended March 31, 2020, and June 30, 2020, we paid a regular quarterly cash dividend of $0.08 per share of our Class A common stock.

On July 20, 2020, our board of directors approved the increase of the quarterly dividend to $0.09 per share of Class A common stock from $0.08 per share.

Accordingly, during each of the three months ended September 30, 2020 and December 31, 2020, we paid a regular quarterly cash dividend of $0.09 per share of our Class A common stock.

is required to make cash distributions in accordance with the CWGS LLC Agreement in an amount sufficient for us to pay any expenses incurred by us in connection with the regular quarterly cash dividend, along with any of our other operating expenses and other obligations.

In addition, we currently intend to pay a special cash dividend of all or a portion of the Excess Tax Distribution (as defined under “Dividend Policy” included in Part II, Item 5 of this Form 10-K) to the holders of our Class A common stock from time to time subject to the discretion of our board of directors as described under “Dividend Policy” included in Part II, Item 5 of this Form 10-K.

During each of the three month periods during the year ended December 31, 2019 and the three months ended March 31, 2020 and June 30, 2020, we paid a special cash dividend of $0.0732 per share of our Class A common stock.

Additionally, on July 20, 2020, our board of directors increased the quarterly special cash dividend to $0.08 per share of Class A common stock from $0.0732 per share.

Accordingly, during the three months ended September 30, 2020, we paid a special dividend of $0.08 per share of our Class A common stock.

Moreover, on September 17, 2020, our board of directors increased the quarterly special cash dividend to $0.14 per share of Class A common stock from $0.08 per share beginning with the three months ended December 31, 2020.

Additionally, on November 18, 2020, our board of directors approved a $0.77 per share of Class A common stock one-time special cash dividend.

These special dividends are typically funded by the accumulated tax distributions received by CWH from CWGS, LLC that are in excess of the corporate income taxes payable by CWH and current payment obligations under the TRA liability.

In December 2020, CWGS, LLC paid an additional $0.20 per common unit distribution to partially fund the $0.77 per share of Class A common stock one-time special cash dividend discussed above.

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 this Form 10-K 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 this Form 10-K.

Notwithstanding our obligations under the Tax Receivable Agreement, we believe that our sources of liquidity and capital including potentially incurring additional borrowings under our Floor Plan Facility and borrowings under the Real Estate Facility will be sufficient to finance our continued operations, growth strategy, including the anticipated opening of additional RV-centric retail locations, regular quarterly cash dividends (as described above) and expenses to operate as a public company for at least the next twelve months.

We have currently identified over 20 markets that would be attractive for both acquisition and greenfield opportunities in 2021.

This expansion could require in excess of $150.0 million for a combination of business acquisitions and capital expenditures relating to land, buildings, and improvements.

Factors that could impact the quantity of 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 meet 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.

During the year ended December 31, 2020, we incurred long-lived asset impairment charges of $12.4 million, including $12.3 million primarily in connection with the 2019 Strategic Shift.

We expect that none of the foregoing charges will result in future cash expenditures.

Additionally, in connection with the 2019 Strategic Shift, we have incurred or expect to incur costs relating to one-time employee termination benefits as outlined in Note 5 ─ Restructuring and Long-Lived Asset Impairment to our consolidated financial statements included in Part II, Item 8 of this Form 10-K.

There is significant uncertainty surrounding the impact of the COVID-19 pandemic on our results of operations and cash flows.

As a result, we initially took proactive steps to increase cash available on-hand, including, but not limited to, reducing cash expenditures, including wage reductions through a combination of temporary salary reductions, layoffs, and furloughs;

negotiating payment deferrals with lessors, reducing marketing and promotional expenses;

and delaying strategic capital expenditures.

We had negotiated lease payment deferrals with numerous landlords amounting to approximately $14.0 million from 2020 into 2021.

As demand for our products accelerated and our cash position improved, we repaid these deferred lease payment amounts in full prior to June 30, 2020 and most of the temporary salary reductions ended in May 2020.

Additionally, as a result of our improved cash position, we made voluntary principal payments in June 2020 of $9.6 million on our Term Loan Facility and $20.0 million on our Revolving Credit Facility.

We are continually monitoring the COVID-19 pandemic and its potential impacts on our business.

If stay-at-home and shelter-in-place restrictions are put back into place, we may choose to re-implement cost reduction measures.

We believe that our sources of liquidity and capital including cash provided by operating activities, additional borrowings under our Floor Plan Facility, and borrowings under our Revolving Credit Facility 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 or our Floor Plan 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 or our Floor Plan Facility is not sufficient, we may have to obtain additional financing.

If we are unable to generate sufficient cash flows from operations in the future, including as a result of the impact of the COVID-19 pandemic on our business and if availability under our Revolving Credit Facility or our Floor Plan 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.

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 economic uncertainty due to the COVID-19 pandemic.

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 this Form 10-K.

As of December 31, 2020, we had working capital of $458.7 million, including $166.1 million of cash and cash equivalents.

Our working capital reflects the cash provided by deferred revenue and gains reported under current liabilities of $87.1 million as of December 31, 2019, which reduces working capital.

Deferred revenue primarily consists of cash collected for club memberships and emergency roadside protection in advance of services to be provided, which is deferred and recognized as revenue over the life of the membership or ratably over the service period.

Our working capital reflects the cash provided by deferred revenue reported under current liabilities of $88.2 million as of December 31, 2020, which reduces working capital.

Deferred revenue primarily consists of cash collected for club memberships 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 payable under the Floor Plan Facility.

The FLAIR offset account at December 31, 2020 was $133.6 million, $124.4 million of which could have been withdrawn while remaining in compliance with the financial covenants of the Floor Plan Facility.

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.

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We incur additional expenses in the second and third fiscal quarters due to higher purchase volumes, increased staffing in our retail locations and program costs.

percentage of sales, lower margins and excess inventory, which could cause our annual results of operations to suffer and our stock price to decline.

If, for any reason, we miscalculate the demand for our products or our product mix during the second and third fiscal quarters, our sales in these quarters could decline, resulting in higher labor costs as a percentage of sales, lower margins and excess inventory, which could cause our annual results of operations to suffer and our stock price to decline.

Additionally, 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 our business.

The timing of our acquisitions in the first and fourth quarters, coupled with generally lower revenue in these quarters has resulted in SG&A expenses as a percentage of gross profit being higher in these quarters.

We prefer to acquire new retail locations in the first and fourth quarters of each year in order to provide time for the location to be re-modeled and to ramp up operations ahead of the spring and summer months.

The timing of our 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 our seasonality, the possible adverse impact from other risks associated with our business, including atypical weather, consumer spending levels and general business conditions, is potentially greater if any such risks occur during our peak sales seasons.

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(In thousands)

Net cash provided by (used in) operating activities

Net cash provided by operating activities

Net cash used in investing activities

Net cash (used in) provided by financing activities

Net increase (decrease) in cash and cash equivalents

Net cash used in financing activities

Net increase in cash and cash equivalents

Operating activities.

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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 consumer services program costs.

Net cash provided by operating activities was $251.9 million for the year ended December 31, 2019, an increase of $115.6 million from net cash provided by operating activities of $136.3 million in the year ended December 31, 2018.

The increase in net cash provided by operating activities for the year ended December 31, 2019 was primarily due to $315.7 million from decreased inventory growth in 2019 due to reduced inventory purchases, a $66.3 million increase in long-lived asset impairment charges, and $24.0 million of other increases, partially offset by a $185.9 million reduction in net income, a $64.5 million reduction in accounts payable and other accrued expenses, and a $40.0 million reduction in goodwill impairment charge.

Net cash provided by operating activities was $136.3 million for the year ended December 31, 2018, an increase of $152.6 million from net cash used in operating activities of $16.3 million in the year ended December 31, 2017.

The increase in net cash provided by (used in) operating activities for the year ended December 31, 2018 was primarily due to $243.2 million from decreased inventory growth in 2018 due to timing of inventory purchases, a $102.1 million change in the Tax Receivable Agreement liability adjustment, a $40.0 million goodwill impairment charge in the RV and Outdoor Retail segment, $21.5 million from slower growth in accounts receivables and contracts in transit in 2018, and $30.5 million from other increases, partially offset by a $165.1 million decrease in net income and a $119.6 million decrease in deferred taxes.

Net cash provided by operating activities was $747.7 million for the year ended December 31, 2020, an increase of $495.7 million from $251.9 million of net cash provided in operating activities in the year ended December 31, 2019.

The increase was primarily due to a $464.5 million increase in net income, $55.2 million of increased accounts payable and other accrued expenses, a $29.2 million accrual for FICA deferral related to The Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), and $0.7 million of other increases, partially offset by a $53.9 million reduction in long-lived asset impairment.

Investing activities.

Our investment in business activities primarily consists of expanding our operations through organic growth and the acquisition of RV and Outdoor Retail locations.

Substantially all of our new RV and Outdoor Retail location acquisitions and capital expenditures have been financed using cash provided by operating activities and borrowings under our Senior Secured Credit Facilities, as applicable.

Our capital expenditures consist primarily of investing in greenfield retail locations, existing retail locations, and information technology hardware and software.

There are no material commitments for capital expenditures as of December 31, 2019.

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 location acquisitions and capital expenditures have been financed using cash provided by operating activities and borrowings under our Senior Secured Credit Facilities, as applicable.

Our capital expenditures consist primarily of investing in acquired and greenfield retail and RV dealership locations, existing retail locations, information technology, hardware and software.

There were no material commitments for capital expenditures as of December 31, 2020.

Additionally, during 2020, we entered into the non-cash activity for new finance leases for $6.5 million for IT hardware and $25.4 million for real estate.

The table below summarizes our capital expenditures for the years ended December 31, 2020 and 2019, respectively:

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Total capital expenditures

Net cash used in investing activities was $104.5 million for year ended December 31, 2019.

The $104.5 million of cash used in investing activities included capital expenditures of $56.8 million, acquisition of RV and Outdoor Retail locations of $48.4 million, and purchases of real property of $31.6 million, partially offset by proceeds from the sale and leaseback of real property and the sale of property and equipment of $28.2 million and $4.1 million, respectively.

Net cash used in investing activities was $292.7 million for year ended December 31, 2018.

The $292.7 million of cash used in investing activities included purchases of real property of $120.8 million, capital expenditures of $133.6 million, and $99.3 million for the acquisition of RV and Outdoor Retail locations, partially offset by proceeds from the sale and leaseback of real property and the sale of property and equipment of $57.0 million and $4.0 million, respectively.

Net cash used in investing activities was $125.9 million for the year ended December 31, 2020.

The $125.9 million of cash used in investing activities was comprised of $53.1 million for the purchase of real property, $47.6 million for the purchase of RV and Outdoor Retail businesses, $31.8 million of capital expenditures primarily related to retail locations, $2.5 million for investment in businesses, and $0.2 million for the purchase of intangible assets, partially offset by $7.5 million from the sale of real property, and proceeds of $1.8 million from the sale of property and equipment.

Net cash used in investing activities was $104.5 million for year ended December 31, 2019.

The $468.5 million of cash used in investing activities included $393.0 million for the acquisition of RV and Outdoor Retail locations, capital expenditures of $59.6 million, purchase of real property of $21.2 million, and the purchase of intangible assets of $1.5 million, partially offset by proceeds from the sale and leaseback of real property and property and equipment of $6.0 million and $0.8 million, respectively.

The $104.5 million of cash used in investing activities included capital expenditures of $56.8 million, acquisition of retail locations of $48.4 million, and purchases of real property of $31.6 million, partially offset by proceeds from the sale and leaseback of real property and the sale of property and equipment of $28.2 million and $4.1 million, respectively.

Financing activities.

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Our net cash used in financing activities was $603.2 million for the year ended December 31, 2020.

The $138.5 million of cash used in financing activities was primarily due to member distributions of $70.2 million, net payments under the Floor Plan Facility of $44.0 million, dividends paid on Class A common stock of $22.9 million, and net payment of debt of $13.7 million, partially offset by proceeds from long-term debt of $11.7 million, and other financing sources of $0.7 million.

Our net cash provided by financing activities was $70.8 million for the year ended December 31, 2018.

The $70.8 million of cash provided by financing activities was primarily due to proceeds from long-term debt of $329.8 million and net proceeds from the Revolving Credit Facility of $38.7 million, partially offset by member distributions of $101.8 million, net payments under the Floor Plan Facility of $85.4 million, and net payment of debt of $82.8 million, dividends paid on Class A common stock of $22.7 million, and other financing uses of $5.0 million.

Our net cash provided by financing activities was $594.7 million for the year ended December 31, 2017.

The $594.7 million of cash provided by financing activities was primarily due to net borrowing under the Floor Plan Facility of $358.5 million, proceeds from long-term debt of $299.2 million, and proceeds from issuance of Class A common stock in a primary public offering of $121.4 million, partially offset by member distributions of $149.6 million and other financing uses of $34.8 million.

Description of Senior Secured Credit Facilities and Floor Plan Facility

As of December 31, 2019, we had a credit agreement that included a $1.19 billion term loan (the ‘‘Term Loan Facility’’) and $35.0 million of commitments for revolving loans (the ‘‘Revolving Credit Facility’’ and, together with the Term Loan Facility, the ‘‘Senior Secured Credit Facilities’’).

We also had our floor plan financing facility with $1.38 billion in maximum borrowing availability, a $60.0 million revolving line of credit commitment, and a letter of credit commitment of $15.0 million (the “Floor Plan Facility”).

The maximum amount outstanding on the revolving line of credit commitment of our Floor Plan Facility will decrease by $3.0 million on the last day of each fiscal quarter, commencing with the fiscal quarter ending March 31, 2020.

The $603.2 million of cash used in financing activities was primarily due to $324.5 million of payments under the Floor Plan Facility, $137.0 million of distributions to CWGS, LLC common unit holders, $61.0 million of dividends paid on Class A common stock, $39.1 million of payments on long-term debt, $21.5 million for repurchases of Class A common stock to treasury stock, $20.0 million of payments on credit facilities, and $4.7 million of payments related to RSU shares withheld for taxes, partially offset by proceeds from exercise of stock options of $4.6 million.

Our net cash used in financing activities was $138.4 million for the year ended December 31, 2019.

The $138.4 million of cash used in financing activities was primarily due to distributions to CWGS, LLC common unit holders of $70.2 million, net payments under the Floor Plan Facility of $44.0 million, dividends paid on Class A common stock of $22.9 million, and net payment of debt of $13.7 million, partially offset by proceeds from long-term debt of $11.7 million, and other financing sources of $0.7 million.

Description of Senior Secured Credit Facilities, Floor Plan Facility and Real Estate Facility

As of December 31, 2020 and 2019, we had outstanding debt in the form of our Senior Secured Credit Facilities (as defined below), our Floor Plan Facility (as defined below), and our Real Estate Facility (as defined below).

We may from time to time seek to refinance, retire or exchange our outstanding debt.

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The amounts involved may be material.

In the past, we have used interest rate swap derivatives to diversify our debt portfolio between fixed and variable rate instruments.

For additional information regarding our interest rate risk and interest rate hedging instruments, see “Quantitative and Qualitative Disclosures About Market Risk” in Part II, Item 7A of this Form 10-K.

Senior Secured Credit Facilities

On November 8, 2016, CWGS Group, LLC, a wholly-owned subsidiary of CWGS, LLC (the “Borrower”) and CWGS, LLC (as parent guarantor) entered into a credit agreement (as amended, the “Credit Agreement”) for the $680.0 million Senior Secured Credit Facilities with Goldman Sachs Bank USA, as administrative agent, and the other lenders party thereto, and used the proceeds to repay the Company’s then-existing credit facilities.

The Senior Secured Credit Facilities have subsequently been amended to provide for the $1.19 billion Term Loan Facility and the $35.0 million Revolving Credit Facility.

See Note 9 — Long-Term Debt to our consolidated financial statements more information on the Senior Secured Credit Facilities.

Borrowings under the Term Loan Facility bear interest at a rate per annum equal to, at our option, either:

(a) the LIBOR multiplied by the statutory reserve rate (such product, the ‘‘Adjusted LIBOR Rate’’), subject to a 0.75% floor, plus an applicable margin of 2.75%, in the case of Eurocurrency loans or (b) an alternate base rate (determined by reference to the greatest of (i) the prime rate published by The Wall Street Journal (the ‘‘WSJ Prime Rate’’), (ii) the federal funds effective rate plus 0.50% and (iii) the one-month Adjusted LIBOR Rate plus 1.00%), subject to a 1.75% floor, plus an applicable margin of 1.75%, in the case of alternate base rate loans.

Borrowings under the Revolving Credit Facility bear interest at a rate per annum equal to, at our option, either:

(a) the Adjusted LIBOR Rate plus an applicable margin based on the total leverage ratio, as set forth in the table below, in the case of Eurocurrency borrowings or (b) an alternate base rate (determined by reference to the greatest of (i) the WSJ Prime Rate, (ii) the federal funds effective rate plus 0.50% and (iii) the one-month Adjusted LIBOR Rate plus 1.00%), plus an applicable margin based on the total leverage ratio, as set forth in the table below, in the case of alternate base rate borrowings.

Pricing Level

Total Leverage Ratio

Alternate Base Rate

In addition to paying interest on outstanding principal under the Senior Secured Credit Facilities, we are required to pay a commitment fee to the lenders under the Revolving Credit Facility in respect of the unutilized commitments thereunder at a rate of 0.50% per annum.

We also pay customary letter of credit and agency fees.

Quarterly payments of $3.0 million are due under the Term Loan Facility on the last day of each fiscal quarter.

The remaining unpaid principal balance of the Term Loan Facility along with all accrued and unpaid interest is due and payable on November 8, 2023.

As of December 31, 2019, we had $1.1 billion of term loans outstanding, net of $4.3 million of unamortized original issue discount and $10.7 million of finance costs.

The Term Loan Facility also provides for an excess cash flow payment following the end of each fiscal year, such that the Borrower is required to prepay the term loan borrowings in an aggregate amount equal to

50% of excess cash flow for such fiscal year if the total leverage ratio is greater than 2.00 to 1.00.

The required percentage of excess cash flow prepayment is reduced to 25% if the total leverage ratio is 1.50 to 1.00 or greater, but less than 2.00 to 1.00, and 0% if the total leverage ratio is less than 1.50 to 1.00.

As of December 31, 2019, CWGS Group, LLC had no excess cash flow, as defined.

The principal amount outstanding of loans under the Revolving Credit Facility becomes due and payable on November 8, 2021.

The Credit Agreement for our Senior Secured Credit Facilities requires the Borrower, an indirect subsidiary of the Company, and its subsidiaries to comply on a quarterly basis with a maximum Total 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 (minus the lesser of (a) $5.0 million and (b) letters of credit outstanding) is greater than 30% of the aggregate amount of the Revolving Lenders’ Revolving Commitments (minus the lesser of (a) $5.0 million and (b) letters of credit outstanding), as defined in the Credit Agreement.

The Total Leverage Ratio was 3.75 to 1 for the period from December 31, 2016 to December 31, 2019 and will be 3.50 to 1 for the period beginning on March 31, 2020 and on the last day of each fiscal quarter ending thereafter.

As of December 31, 2020 and 2019, CWGS Group, LLC (the “Borrower”), an indirect subsidiary of the Company, was party to a credit agreement (as amended from time to time, the “Credit Agreement”) for a senior secured credit facility (the “Senior Secured Credit Facilities”).

The Senior Secured Credit Facilities consist of a $1.19 billion term loan facility (the “Term Loan Facility”) and a $35.0 million revolving credit facility (the “Revolving Credit Facility”).

The Term Loan Facility requires mandatory principal payments in equal quarterly installments of $3.0 million.

The Revolving Credit Facility matures on November 8, 2021, and the Term Loan Facility matures on November 8, 2023.

As of December 31, 2020, the average interest rate on the Term Loan Facility was 3.5%.

The Credit Agreement for our Senior Secured Credit Facilities requires the “Borrower” and its subsidiaries to comply on a quarterly basis with a maximum Total 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 (minus the lesser of (a) $5.0 million and (b) letters of credit outstanding) is greater than 30% of the aggregate amount of the Revolving Lenders’ Revolving Commitments (minus the lesser of (a) $5.0 million and (b) letters of credit outstanding), as defined in the Credit Agreement.

As of December 31, 2020, we were not subject to this covenant as borrowings under the Revolving Credit Facility did not exceed the 30% threshold.

At December 31, 2019, we would not have met this covenant if we had exceeded the 30% threshold.

As such, our borrowing capacity under the Revolving Credit Facility at December 31, 2019 was limited to $9.3 million of additional borrowings.

We were in compliance with all applicable debt covenants at December 31, 2019.

To the extent that we are unable to comply with the maximum Total Leverage Ratio in the future, we would be unable to borrow under the Revolving Credit Facility and may need to seek alternative sources of financing in order to operate and finance our business as we deem appropriate.

There is no guarantee that we would be able to incur additional indebtedness on acceptable terms or at all.

The following table details the outstanding amounts and available borrowings under our Senior Secured Credit Facilities as of December 31, 2019 (in thousands):

Senior Secured Credit Facility

Term Loan Facility

Principal amount of borrowings

cumulative principal payments

unamortized original issue discount

unamortized finance costs

current portion

Long-term debt, net of current portion

Credit Facility

Total commitment

outstanding letters of credit

availability reduction due to Total Leverage Ratio

Additional borrowing capacity

The Senior Secured Credit Facilities are collateralized by substantially all of the assets and equity of the Borrower and the subsidiary guarantors, which excludes FreedomRoads Intermediate Holdco, LLC and its subsidiaries, and contain financial covenants and certain business covenants, including restrictions on dividend payments.

The Senior Secured Credit Facilities restrict the ability of the Borrower and its subsidiaries to pay distributions or make other restricted payments.

The Borrower is generally permitted to

pay distributions (1) in an amount not to exceed a specified available amount (as defined in the Credit Agreement), and calculated as the sum of, among other things, $40.0 million, plus net proceeds received by the Borrower in connection with the issuance of, or contribution of cash in respect of, certain existing equity interests, plus, if the total leverage ratio is not greater than 2.50 to 1, cumulative excess cash flow not otherwise applied, minus distributions, prepayments of debt and investments made in reliance of the available amount) as long as (A) after giving pro forma effect to the contemplated distribution, the Borrower would be in compliance with the maximum total leverage ratio covenant (as described below) and (B) no default or event of default has occurred or would result from the contemplated distribution;

and (2) in an amount up to $30.0 million during any calendar year, with unused amounts in any calendar year carried over to the succeeding calendar year, to provide funds that are used by CWGS, LLC to pay regular quarterly distributions to its common unit holders, including us.

Floor Plan Facility

On December 12, 2017, FreedomRoads, LLC (the “Floor Plan Borrower”), an indirect subsidiary of the Company, Bank of America, N.A., as administrative agent and letter of credit issuer, and the other lenders party thereto, entered into a seventh amended and restated credit agreement (the “Floor Plan Facility Amendment”), which amended the previous credit agreement governing our floor plan facility (as amended, the “Floor Plan Facility”) entered into with Bank of America, N.A., as administrative agent, and other lenders party thereto, as amended from time to time.

Pursuant to the Floor Plan Facility Amendment, the Floor Plan Facility allowed the Floor Plan Borrower to borrow (a) up to $1.415 billion under a floor plan facility, (b) up to $15.0 million under a letter of credit facility and (c) up to a maximum amount outstanding of $35.0 million under the revolving line of credit.

In addition, the maturity of the Floor Plan Facility was extended to December 12, 2020.

On December 4, 2018, the Floor Plan Borrower entered into a First Amendment to the Floor Plan Facility Amendment which increased the maximum amount outstanding under the revolving line of credit to $60.0 million from $35.0 million.

The maximum amount outstanding will decrease by $3.0 million on the last day of each fiscal quarter, commencing with the quarter ending March 31, 2020.

On October 8, 2019, Floor Plan Borrower entered into a Second Amendment to the Seventh Amended and Restated Credit Agreement that reduces the total commitment under the Floor Plan Facility to $1.38 billion and extends the maturity date of the Floor Plan Facility from December 12, 2020 to March 15, 2023, among other immaterial changes.

Borrowings under our Floor Plan Facility for revolving credit loans bear interest at a rate per annum equal to, at our option, either:

(a) a floating rate tied to the LIBOR (a “Floating LIBOR Rate”) plus 2.40% , in the case of Floating LIBOR 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 LIBOR Rate plus 1.75%, plus 0.90%, in the case of base rate loans.

As of December 31, 2019, $848.0 million in floor plan notes payable, $40.9 million under the revolving line of credit, and $11.2 million of letters of credit were outstanding under the Floor Plan Facility.

The following table details the outstanding amounts and available borrowings under our Floor Plan Facility as of December 31, 2019 (in thousands):

The Company’s borrowing capacity under the Revolving Credit Facility at December 31, 2020 was limited to $29.1 million of borrowings.

We were in compliance with all applicable debt covenants at December

31, 2020 and 2019.

On June 30, 2020, the Borrower made a $9.6 million voluntary principal payment on the Term Loan Facility.

Additionally, the Borrower 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 of December 31, 2020, we were not required to make an additional excess cash flow payment.

See Note 9 — Long-Term Debt to our consolidated financial statements included in Part II, Item 8 of this Form 10-K for a further discussion of the terms of the Senior Secured Credit Facilities.

Floor Plan Facility

Notes payable - floor plan:

Total commitment

borrowings, net

flooring line aggregate interest reduction account

Additional borrowing capacity

accounts payable for sold inventory

purchase commitments

Unencumbered borrowing capacity

Revolving line of credit:

Less borrowings

Additional borrowing capacity

Letters of credit:

Total commitment

outstanding letters of credit

Additional letters of credit capacity

Floor plan notes payable under our Floor Plan Facility bear interest at a rate per annum equal to, at our option, either:

(a) a Floating LIBOR Rate plus an applicable margin as set forth in the table below, in the case of Floating LIBOR 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.

(the ‘‘Boa Prime Rate’’), in the case of Floating LIBOR Rate borrowings and (iii) the Floating LIBOR Rate plus 1.75%, plus an applicable margin as set forth in the table below, in the case of base rate loans.

Pricing Level

Consolidated Current Ratio

Floating LIBOR Rate Loans

Base Rate Loans

1.000 but ≤ 1.250 :

1.000 but ≤ 1.220 :

Borrowings under our Floor Plan Facility for letters of credit bear interest at a rate per annum equal to, at our option, either:

(a) the Floating LIBOR Rate, plus 1.50%, in the case of Floating LIBOR Rate loans or (b) a base rate determined by reference to the greatest of:

(i) the federal funds rate plus 0.50%, (ii) the Boa Prime Rate and (iii) the Floating LIBOR Rate plus 1.75%, plus 1.50%, in the case of base rate loans.

The Floor Plan Borrower and its subsidiary guarantors are required to pay commitment fees equal to:

(i) 0.200% per annum times the actual daily amount by which the letter of credit facility exceeds the sum of the letter of credit obligations, and (ii) 0.200% per annum times the actual daily amount by which the Floor Plan Facility exceeds the sum of the outstanding amount of all floor plan loans.

Letter of credit fees for each of letter of credit are equal to the higher of:

(a) 2.25% times the daily amount available to be drawn under such letter of credit;

and (b) $2,000 per annum.

In addition to other customary covenants, the credit agreement governing our Floor Plan Facility requires the Floor Plan Borrower and the subsidiary guarantors to comply on a monthly basis with a minimum consolidated current ratio of 1.180 to 1.000 and a minimum fixed charge coverage ratio of 1.250 to 1.000.

As of December 31, 2019, the Floor Plan Borrower and the subsidiary guarantors were in compliance with each of these covenants.

Borrowings under the Floor Plan Facility are guaranteed by FreedomRoads Intermediate Holdco, LLC (the direct parent of the Floor Plan Borrower) and certain subsidiary guarantors (collectively, the ‘‘Guarantors’’).

These floor plan arrangements grant the administrative agent a first priority security interest in all property of the floor plan Borrower and the Guarantors, the financed RVs and the related sales proceeds.

As of December 31, 2020 and 2019, FreedomRoads, LLC (“FR”), an indirect subsidiary of the Company, maintained floor plan financing through the Seventh Amended and Restated Credit Agreement (as amended, the “Floor Plan Facility”).

On October 8, 2019, FR entered into a Second Amendment to the Seventh Amended and Restated Credit Agreement, (the “Second Amendment’).

The applicable borrowing rate margin on LIBOR and base rate loans ranges from 2.05% to 2.50% and 0.55% and 1.00%, respectively, based on the consolidated current ratio at FR.

At December 31, 2020, the Floor Plan Facility allowed FR to borrow (a) up to $1.38 billion under a floor plan facility, (b) up to $15.0 million under a letter of credit facility and (c) up to a maximum amount outstanding of $48.0 million under the revolving line of credit, which maximum amount outstanding decreases by $3.0 million on the last day of each fiscal quarter.

The maturity date of the Floor Plan Facility is March 15, 2023.

On May 12, 2020, FR entered into a Third Amendment to the Seventh Amended and Restated Credit Agreement (“Third Amendment”) that provides FR with a one-time option to request a temporary four-month reduction (“Current Ratio Reduction Period”) of the minimum Consolidated Current Ratio (as defined in the Floor Plan Facility) at any time during 2020 and the first seven days of 2021.

FR did not exercise that option.

During the Current Ratio Reduction Period, the applicable borrowing rate margin on LIBOR and base rate loans ranges from 2.05% to 3.00% and 0.55% and 1.50%, respectively, based on the Consolidated Current Ratio at FR.

From May 12, 2020 through July 31, 2020, FR was not allowed to draw further Revolving Credit Loans (as defined in the Floor Plan Facility).

On June 29, 2020, FR made a voluntary $20.0 million principal payment on the revolving line of credit.

The borrowings under the floor plan credit agreement bear interest at one-month LIBOR plus 2.05% as of December 31, 2020 and at one-month LIBOR plus 2.15% for the years ended December 31, 2019 and December 31, 2018.

LIBOR was 0.15%, 1.71% and 2.35% as of December 31, 2020, 2019, and 2018, respectively.

The credit agreement governing the Floor Plan Facility contains certain financial covenants, which we were in compliance with at December 31, 2020 and 2019.

See Note 4 – Inventories, net and Notes Payable — Floor Plan, net to our consolidated financial statements included in Part II, Item 8 of this Form 10-K for a further discussion of the terms of the Floor Plan Facility.

Real Estate Facility

On November 2, 2018, Camping World Property, Inc.

(the ‘‘Real Estate Borrower’’), an indirect wholly-owned subsidiary of CWGS, LLC, and CIBC Bank USA (“Lender”), entered into a loan and security agreement for a real estate credit facility with an aggregate maximum principal amount of $21.525 million (“Real Estate Facility”).

Borrowings under the Real Estate Facility are guaranteed by CWGS Group, LLC, a wholly-owned subsidiary of CWGS, LLC (“Real Estate Facility Guarantor”).

The Real Estate Facility may be used to finance the acquisition of real estate assets.

As of December 31, 2019, $19.7 million was outstanding under the Real Estate Facility.

The Real Estate Facility is secured by first priority security interest on the real estate assets acquired with the proceeds of the Real Estate Facility (“Real Estate Facility Properties”).

The Real Estate Facility matures on October 31, 2023.

The borrowings under the Real Estate Facility bear interest at a rate per annum equal to, at our option, either:

(a) a floating rate tied to the London Interbank Eurodollar market (the “Floating LIBO Rate “) plus 2.75%, in the case of Floating LIBO Rate loans or (b) a base rate determined by reference to the greater of:

(i) the federal funds rate plus 0.50%, and (ii) the prime rate published by Lender, plus 0.75%, in the case of base rate loans.

The Real Estate Borrower was required to pay a commitment fee equal to the product of:

(i) 0.50%, and (ii) the aggregate principal amount of the Real Estate Facility.

The Real Estate Facility includes cross default provisions including a) a default under the terms applicable to any debt of any loan party in an aggregate amount exceeding $100,000, and such default shall i) consist of the failure to pay such Debt when due, whether by acceleration or otherwise, or ii) accelerate the maturity of such Debt or permit the holder or holders thereof to cause such Debt to become due and payable, or b) the occurrence of any event of default under the Senior Secured Credit Agreement, in each case after the expiration of any applicable grace or cure period.

In addition to other customary covenants, the loan and security agreement governing our Real Estate Facility requires the Real Estate Borrower and the Real Estate Guarantor to comply on a quarterly basis with a debt service ratio of not less than 1.25 to 1.00.

As of December 31, 2019, the Real Estate Borrower and the Real Estate Guarantor were in compliance with these covenants.

As of December 31, 2020 and 2019, Camping World Property, Inc.

(the ‘‘Real Estate Borrower’’), an indirect wholly-owned subsidiary of CWGS, LLC, and CIBC Bank USA (“Lender”), was party to a loan and security agreement for a real estate credit facility with an aggregate maximum principal amount of $21.5 million (“Real Estate Facility”).

The Real Estate Facility is subject to certain cross default provisions, a debt service coverage ratio, and other customary covenants which we were in compliance with at December 31, 2020 and 2019.

The outstanding principal of the Real Estate Facility was $4.5 million and $19.7 million as of December 31, 2020 and 2019, respectively.

As of December 31, 2020, the interest rate on the Real Estate Facility was 3.00% with a commitment fee of 0.50% of the aggregate unused principal amount of the Real Estate Facility.

As of December 31, 2020, the Company had zero additional capacity under the Real Estate Facility.

In August 2020, we entered into an agreement to lease an owned property for a former distribution center in Greenville, North Carolina to a third party.

By entering into this lease, we were required to pay down $10.3 million of the Real Estate Facility, which we paid in August 2020.

Additionally, in September 2020, the Company sold an owned property relating to the other former distribution center in Greenville, North Carolina to a third party.

By selling this property, the Company was required to pay down $3.4 million of the Real Estate Facility in September 2020.

See Note 9 — Long-Term Debt to our consolidated financial statements included in Part II, Item 8 of this Form 10-K for a further discussion of the terms of the Real Estate Facility.

Sale/Leaseback Arrangements

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The following table sets forth our contractual obligations and commercial commitments as of December 31, 2020 (in thousands):

Long-term debt, including current maturities

Long-term debt (1)

Interest on long-term debt (2)

Finance lease obligations (3)

Floor plan notes payable, net (4)

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Marketing sponsorships (8)

(1) Amounts exclude finance lease obligations.

(2) We estimated interest payments through the maturity of our Senior Secured Credit Facilities by applying the interest rate in effect as of December 31, 2020.

See Note 9 — Long-Term Debt to our audited consolidated financial statements included in Part II, Item 8 of this Form 10-K for additional information.

(3) Amounts represent undiscounted cash flows for property and equipment finance leases.

See Note 10 — Lease Obligations to our audited consolidated financial statements included in Part II, Item 8 of this Form 10-K for additional information.

(4) Floor plan notes payable, net are revolving financing arrangements and the Floor Plan Facility matures on March 15, 2023.

Payments are generally made as required pursuant to the Floor Plan Facility discussed above under “— Description of Senior Secured Credit Facilities and Floor Plan Facility — Floor Plan Facility.”

(3) Amount primarily represents purchase commitments relating to the procurement of RV inventories that have been approved by the Floor Plan Facility.

(5) Amounts primarily represent purchase commitments relating to the procurement of RV inventories that have been approved by the Floor Plan Facility.

See Note 4 — Inventories, net and Notes Payable — Floorplan to our audited consolidated financial statements included in Part II, Item 8 of this Form 10-K for additional information.

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As of December 31, 2020, we did not have any off-balance sheet arrangements other than short-term leases not included in our lease obligation.

We do not have transactions with unconsolidated entities, such as entities often referred to as structured finance or special purpose entities, whereby we have financial guarantees, subordinated retained interests, derivative instruments, or other contingent arrangements that expose us to material continuing risks, contingent liabilities, or any other obligation under a variable interest in an unconsolidated entity that provides financing, liquidity, market risk, or credit risk support to us.

Recent Accounting Pronouncements

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Critical accounting policies are those that management believes are both most important to the portrayal of our financial condition and operating results, and require management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.

We base our estimates on historical experience, outside advice from

parties believed to be experts in such matters, and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources.

We base our estimates on historical experience, outside advice from parties believed to be experts in such matters, and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources.

Judgments and uncertainties affecting the application of those policies may result in materially different amounts being reported under different conditions or using different assumptions.

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Incidental items that are immaterial in the context of the contract are recognized as expense.

The Company’s contracts with customers may include multiple performance obligations.

The Company’s contracts with customers may include multiple

performance obligations.

For such arrangements, the Company allocates revenue to each performance obligation based on its relative stand-alone selling price.

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Revenue and related expenses for consumer shows are recognized when the show occurs.

RV and Outdoor Retail revenue consists of sales of new and used RVs, sales of RV products, parts and service and other products, and commissions on the related finance and insurance contracts.

RV and Outdoor Retail revenue consists of sales of new and used RVs, sales of RV products, parts and service and other products, distribution of RV furniture, and commissions on the related finance and insurance contracts.

Revenue from the sale of recreational vehicles is recognized upon completion of the sale to the customer.

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The proceeds the Company receives for arranging financing contracts, and selling insurance and service contracts, are subject to chargebacks if the customer terminates the respective contract earlier than a stated period.

In the case of insurance and service contracts, the stated period typically extends from one to five years with the refundable commission balance declining over the contract term.

These proceeds are recorded as variable consideration, net of estimated chargebacks.

Chargebacks are estimated by product type and year sold using a combination of actuarial methods and leveraging our historical experience from the past eight years, adjusted for new consumer trends.

Chargebacks are estimated based on ultimate future cancellation rates by product type and year sold using a combination of actuarial methods and leveraging our historical experience from the past eight years, adjusted for new consumer trends.

The chargeback liabilities included in the estimate of variable consideration totaled $58.9 million and $48.3 million as of December 31, 2020 and December 31, 2019, respectively.

Good Sam Club revenue consists of revenue club membership fees and royalty fees from co-branded credit cards.

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Retail parts, accessories and other inventories primarily consist of retail travel and leisure specialty merchandise and are stated at lower of cost or net realizable value.

RV furniture for distribution are stated at lower of cost or net realizable value.

In assessing lower of cost or net realizable value for inventory, we typically consider (i) the aging of the inventory item, (ii) historical sales experience of the inventory item, and (iii) current market conditions and trends for the inventory item.

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The fair value of our reporting units significantly exceeded the carrying value of its net assets.

As a result, we were not required to conduct the second step of the impairment test for goodwill relating to our reporting units.

See Note 7 — Goodwill and Intangible Assets to our audited consolidated financial statements included in Part II, Item 8 of this Form 10-K.

As a result, we were not required to record an impairment of goodwill relating to our reporting units.

See Note 7 — Goodwill and Intangible Assets to our consolidated financial statements included in Part II, Item 8 of this Form 10-K.

Finite-lived intangibles are recorded at cost, net of accumulated amortization and, if applicable, impairment charges.

Finite lived intangible assets consist of membership and customer lists with weighted average useful lives of approximately 5.2 years, trademarks and trade names with weighted average useful lives of approximately 15.0 years, and websites with weighted-average useful lives of

approximately 8.4 years.

Finite-lived intangible assets consist of membership and customer lists with weighted average useful lives of approximately 5.3 years, trademarks and trade names with weighted average useful lives of approximately 15.0 years, supplier lists with weighted-average useful lives of 5.0 years, and websites with weighted-average useful lives of approximately 8.3 years.

The weighted-average useful life of all our finite-lived intangible assists is approximately 12.8 years.

Long-Lived Assets

Long-lived assets included in property and equipment, including capitalized software costs to be held and used, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

Impairment is recognized to the extent the sum of the discounted estimated future cash flows from the use of the asset is less than the carrying value.

Long lived assets are included in property and equipment, which also includes capitalized software costs to be held and used.

For our major software systems, such as our accounting and membership systems, our capitalized costs may include some internal or external costs to configure, install and test the software during the application development stage.

We do not capitalize preliminary project costs, nor do we capitalize training, data conversion costs, maintenance or post development stage costs.

We include the carrying value of our operating lease assets in our review for long-lived asset impairment as outlined under ASC-360, Property, Plant, and Equipment.

To the extent indicators of impairment are identified at the asset group level, we assess the individual fair value of the related operating lease assets using market comparable data provided by a third party.

Long-lived impairment charges recorded in the current year include impairments of operating lease assets down to their individual fair values.

Our long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an

asset may not be recoverable.

Our long-lived asset groups exist predominantly at the individual location level and the associated impairment analysis involves the comparison of an asset group’s estimated future undiscounted cash flows over its remaining useful life to its respective carrying value, which primarily includes furniture, equipment, leasehold improvements, and operating lease assets.

For long-lived asset groups identified with carrying values not recoverable by future undiscounted cash flows, impairment charges are recognized to the extent the sum of the discounted future cash flows from the use of the asset group is less than the carrying value.

The impairment charge is allocated to the individual long-lived assets within an asset group;

however, an individual long-lived asset is not impaired below its individual fair value, if readily determinable.

The measurement of any impairment loss includes estimation of the fair value of the asset group’s respective operating lease assets, which includes estimates of market rental rates based on comparable lease transactions.

We apply the provisions of ASC No.

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Tax laws, regulations, and administrative practices in various jurisdictions may be subject to significant change, with or without notice, due to economic, political, and other conditions, and significant judgment is required in evaluating and estimating our provision and accruals for these taxes.

In addition, a number of jurisdictions in which we are subject to tax are actively pursuing changes to their tax laws applicable to corporate taxpayers, such as the recently enacted Tax Cuts and Jobs Act (“2017 Tax Act”).

In addition, a number of jurisdictions in which we are subject to tax have pursued or are actively pursuing changes to their tax laws applicable to corporate taxpayers, such as the 2017 Tax Act.

The 2017 Tax Act was signed into law on December 22, 2017.

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corporate income tax by, among other things, lowering the statutory corporate tax rate from 35% to 21% and eliminating certain deductions.

The Company has completed its accounting under ASC Topic 740, Income Taxes, as it pertains to estimating the effects of the 2017 Tax Act.

Pursuant to the SEC Staff Accounting Bulletin No.

118, the Company's measurement period for implementing the accounting changes required by the 2017 Tax Act closed on December 22, 2018.

For the year ended December 31, 2019, there was no incremental impact on estimated values of the Tax Receivable Agreement liability and the Company’s deferred tax assets as a result of the 2017 Tax Act.

For the year ended December 31, 2020, there were no significant impacts on estimated values of the Tax Receivable Agreement liability and the Company’s deferred tax assets as a result of any recent tax law changes.

We are subject to U.S.

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In projecting future taxable income, we consider our historical results and incorporate certain assumptions, including projected retail location openings, revenue growth, and operating margins, among others.

As of December 31, 2019, our Tax Receivable Agreement liability was recorded at $114.8 million after decreasing the liability by $10.0 million in the year ended December 31, 2019 to reflect our future tax benefit primarily as a result of the reduction in enacted state income tax rates and the transfer of certain assets relating to its Good Sam Club and co-branded credit card from its indirect wholly-owned subsidiary, GSS, an LLC, to its indirect wholly-owned subsidiary, CWI, a corporation.

As of December 31, 2020, our Tax Receivable Agreement liability was recorded at $145.9 million after decreasing the liability by $0.1 million in the year ended December 31, 2020 to reflect our future tax benefit primarily as a result of the reduction in enacted state income tax rates.

During the year ended December 31, 2020, the Tax Receivable Agreement liability was further adjusted to reflect new transactions, net of cash payments made.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis