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Item 1A. Risk Factors

2024-02-26 compared with 2023-02-23 · 184 added, 155 removed, 554 unchanged (38% of the section changed)

Investing in our common stock involves a high degree of risk.

Investing in our Class A common stock involves a high degree of risk.

You should consider carefully the risks and uncertainties described below, together with the other information included in this Form 10-K.

The occurrence of any of the following risks may materially and adversely affect our business, financial condition, results of operations and future prospects.

In these circumstances, the market price of our Class A common

stock could decline.

In these circumstances, the market price of our Class A common stock could decline.

Other events that we do not currently anticipate or that we currently deem immaterial may also affect our business, prospects, financial condition and results of operations.

Risks Related to Our Business

Our business model is impacted by general economic conditions in our markets, including inflation and interest rates, and ongoing economic and financial uncertainties could cause a decline in consumer spending that could adversely affect our business, financial condition and results of operations.

Our business model is impacted by general economic conditions in our markets, including inflation and interest rates, as well as the health of the RV industry, and ongoing economic and financial uncertainties could cause a decline in consumer spending that could adversely affect our business, financial condition and results of operations.

As a business that relies on consumer discretionary spending, we have in the past and may in the future be adversely affected if our customers reduce, delay or forego their purchases of our services, protection plans, products and resources as a result of:

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● other general economic conditions, including deflation and recessions.

We also rely on our retail locations to attract and retain customers and to build our customer database.

If we close retail locations, are unable to open or acquire new retail locations due to general economic conditions or otherwise, or experience declines in customer transactions in our existing retail locations due to general economic conditions or otherwise, our ability to maintain and grow our customer database and our Active Customers will be limited, which could have a material adverse effect on our business, financial condition and results of operations.

Decreases in Active Customers, average spend per customer, or retention and renewal rates for our Good Sam services and plans would negatively affect our financial performance, and a prolonged period of depressed consumer spending could have a material adverse effect on our business.

For instance, our Active Customers declined in 2022, at least in part as a result of the retail locations that were closed in 2020 relating to our 2019 Strategic Shift.

We also rely on our store locations to attract and retain customers and to build our customer database.

If we close store locations, are unable to open or acquire new store locations on the timelines we anticipate or at all due to general economic conditions or otherwise, or experience declines in customer transactions in our existing store locations due to general economic conditions or otherwise, our ability to maintain and grow our customer database and our Active Customers will be limited, which could have a material adverse effect on our business, financial condition and results of operations.

Decreases in Active Customers, average spend per customer, or retention and renewal rates for our Good Sam services and plans has, at times, negatively affected and could in the future negatively affect our financial performance, and a prolonged period of depressed consumer spending could have a material adverse effect on our business.

For instance, our Active Customers declined in 2023.

In prior years, promotional activities and decreased demand for consumer products affected our profitability and margins, and this negative impact could return or worsen in future periods.

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economy, our sales, operating and financial results for a particular period are difficult to predict, making it difficult to forecast results for future periods.

Additionally, we are subject to economic fluctuations in local

markets that may not reflect the economic conditions of the U.S.

Additionally, we are subject to economic fluctuations in local markets that may not reflect the economic conditions of the U.S.

Any of the foregoing factors could have a material adverse effect on our business, financial condition and results of operations.

In addition, the success of our recurring Good Sam services and plans depends, in part, on our customers’ use of certain RV websites and/or the purchase of services, protection plans, products and resources through participating merchants, as well as the health of the RV industry generally.

In addition, the success of our recurring Good Sam services and plans, as well as our RV and outdoor retail business, depends, in part, on our customers’ use of certain RV websites and/or the purchase of services, protection plans, products and resources through participating merchants, as well as the health of the RV industry generally.

In addition, during recent periods we have faced, and may continue to face, increased competition from other businesses with similar product and service offerings.

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Such programs have adversely impacted our gross margin, operating margin and selling, general and administrative expenses.

In addition, declines in the national economy could cause merchants who participate in our programs to go out of business.

Should the number of merchants entering bankruptcy rise, it is likely that the number of uncollectible accounts would also rise.

In addition, declines in the national economy could cause partners or advertising customers who participate in our programs to go out of business.

Should the number of partners or advertising customers entering bankruptcy rise, it is likely that the number of uncollectible accounts would also rise.

These factors could have a material adverse effect on our business, financial condition and results of operations.

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Our business is affected by the availability of financing to us and our customers.

Generally, RV dealers, including us, finance their purchases of inventory with financing provided by lending institutions.

Generally, RV dealers, including us, finance their purchases of inventory.

As of December 31, 2023, we had up to $1.85 billion in maximum borrowing capacity under our Eighth Amended and Restated Credit Agreement for floor plan financing (the “Floor Plan Facility”) (see Note 4 ─ Inventories and Floor Plan Payables to our consolidated financial statements included in Part II, Item 8 of this Form 10-K).

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There continue to be fewer lenders, more stringent underwriting and loan approval criteria, and greater down payment requirements than in the past.

Deteriorating economic conditions as a result of federal government action to control inflation, such as higher interest rates, increased unemployment, financial market uncertainty, decreases in disposable income, declines in consumer confidence, economic slowdowns or recessions may negatively impact credit conditions or credit worthiness of our customers, and adversely affect the ability of consumers to finance potential purchases at acceptable terms and interest rates.

This could result in a decrease in sales of our products and have a material adverse effect on our business, financial condition and results of operations.

Fuel shortages, or high prices for fuel, could have a negative effect on our business.

Gasoline or diesel fuel is required for the operation of RVs.

Deteriorating economic conditions as a result of federal government action to control inflation, such as higher interest rates, increased unemployment, financial market uncertainty, decreases in disposable income, declines in consumer confidence, economic slowdowns or recessions has negatively impacted and may in the future negatively impact credit conditions or credit worthiness of our customers, and adversely affect the ability of consumers to finance potential purchases at acceptable terms and interest rates.

For instance, the higher interest rates have limited the amount of financing that certain customers qualify for when purchasing a new or used RV.

This has resulted and could in the future result in a decrease in sales of our products and have a material adverse effect on our business, financial condition and results of operations.

Fuel shortages, high prices for fuel, or changes in energy sources could have a negative effect on our business.

Gasoline or diesel fuel is currently required for the operation of RVs.

There can be no assurance that the supply of these petroleum products will continue uninterrupted, that rationing will not be imposed or that the price of or tax on these petroleum products will not significantly increase in the future.

Shortages of gasoline and diesel fuel have had a material adverse effect on the RV industry as a whole in the past and any such shortages or substantial increases in the price of fuel could have a material adverse effect on our business, financial condition or results of operations.

In the future, new government regulations could require us to sell RVs that rely on alternative energy sources or require consumers to purchase vehicles that rely on alternative energy sources, such as electric vehicles.

Such alternative energy sources could be less desirable to our customers or result in reduced towing capacity, which may reduce demand or lower margins and adversely affect our business, financial condition or results of operations.

Our success depends to a significant extent on the well-being, as well as the continued popularity and reputation for quality, of our manufacturers, particularly Thor Industries, Inc.

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We depend on our manufacturers to provide us with products that compare favorably with competing products in terms of quality, performance, safety and advanced features.

Any adverse change in the production efficiency, product development efforts, technological advancement, marketplace acceptance, reputation, marketing capabilities or financial condition of our manufacturers,

particularly Thor Industries, Inc.

and Forest River, Inc., could have a substantial adverse impact on our business.

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Our supply arrangements with manufacturers are typically governed by dealer agreements, which are customary in the RV industry.

Our dealer agreements with manufacturers are generally made on a location-by-location basis, and each retail location typically enters into multiple dealer agreements with multiple manufacturers.

Our dealer agreements with manufacturers are generally made on a location-by-location basis, and each store location typically enters into multiple dealer agreements with multiple manufacturers.

These dealer agreements may contain affirmative obligations that we must comply with.

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From 2015 to 2023, new vehicle travel trailer units as a percent of total new vehicles increased from 62% to 75% of total new vehicle unit sales but from 2015 to 2023, our average selling price of a new vehicle unit increased from $39,853 to $43,866.

As a result of the lower industry supply of travel trailers and motorhomes for much of 2021, both average cost and average sales price have increased.

If supply chain costs decline over the next twelve months, average sales price may again decline and impact our same store revenue.

As a result of the lower industry supply of travel trailers and motorhomes for much of 2021, both average cost and average sales price increased in 2022 and 2021, but average selling price began to decrease in 2023.

If supply chain costs decline over the next twelve months, as expected, average sales price may continue to decline and impact our same store revenue.

We have announced a strategic review of our Good Sam business, and any resulting transaction may introduce significant risks and uncertainties.

We have initiated a strategic review of our Good Sam business, which could include a potential sale, spin off or other disposition of the business.

No decision has been made whether to proceed with any particular alternative.

We have not set a deadline for the strategic alternatives review process, and there can be no assurance that this process will result in any particular outcome.

We expect to incur substantial costs associated with the strategic review.

We are also subject to other risks in connection with the uncertainty created by the strategic review process, including stock price volatility and the ability to retain qualified employees.

We do not currently intend to disclose further developments with respect to this process, unless and until our Board of Directors approves a specific transaction or otherwise concludes the review of strategic alternatives.

A strategic transaction involving our Good Sam business could create significant risks and uncertainties that could adversely affect our business, consolidated financial position and consolidated results of operations.

These include, among others, the inability to find potential buyers on favorable terms, disruption to our business and/or diversion of management attention from other business concerns, the potential loss of key employees, difficulties in separating the operations of the divested business, and retention of certain liabilities related to the divested business.

In addition, a strategic transaction may not be successful in achieving its intended benefits and could negatively impact our remaining business, for example through the loss of cross-selling opportunities, as any ongoing relationship with Good Sam could be uncertain.

Significant time and expenses could be incurred related to any resulting transaction and such transaction may require our continued financial involvement, such as through transition service agreements, guarantees, and indemnities or other current or contingent financial obligations and liabilities.

Competition in the market for services, protection plans, products and resources targeting the RV lifestyle or RV enthusiast could reduce our revenues and profitability.

The markets for services, protection plans, products and resources targeting RV owners and enthusiasts are highly fragmented and competitive.

Major competitive factors that drive the RV, outdoor and active sports markets are price, product and service features, technology, performance, reliability, quality,

availability, variety, delivery and customer service.

Major competitive factors that drive the RV, outdoor and active sports markets are price, product and service features, technology, performance, reliability, quality, availability, variety, delivery and customer service.

We compete directly or indirectly with the following types of companies:

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Our expansion into new, unfamiliar markets, businesses, product lines or categories presents increased risks that may prevent us from being profitable in these new markets, businesses, product lines or categories.

Delays in opening or acquiring new retail locations could have a material adverse effect on our business, financial condition and results of operations.

Delays in opening or acquiring new store locations, on anticipated timelines or at all, could have a material adverse effect on our business, financial condition and results of operations.

As a result of any future expansion into new, unfamiliar markets, businesses, product lines or categories, we may have less familiarity with local consumer preferences and less business, product or category knowledge with respect to new businesses, product lines or categories, and could encounter difficulties in attracting customers due to a reduced level of consumer familiarity with our brands or reduced product or category knowledge.

Other factors that may impact our ability to open or acquire new retail locations in new markets and to operate them profitably or acquire new businesses, product lines or categories, many of which are beyond our control, include:

Other factors that may impact our ability to open or acquire new store locations in new markets and to operate them profitably or acquire new businesses, product lines or categories, many of which are beyond our control, include:

● our ability to identify suitable acquisition opportunities or new locations, including our ability to gather and assess demographic and marketing data to determine consumer demand for our products in the locations we select or accurately assess profitability;

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● our ability to secure product lines;

● delays in the entitlement process, the availability of construction materials and labor for new retail locations and significant construction delays or cost overruns;

● delays in the entitlement process, the availability of construction materials and labor for new store locations and significant construction delays or cost overruns;

● our ability to secure required third-party or governmental permits and approvals;

● our ability to hire and train skilled store operating personnel, especially management personnel;

● our ability to provide a satisfactory mix of merchandise that is responsive to the needs of our customers living in the geographic areas where new retail locations are built or acquired;

● our ability to supply new retail locations with inventory in a timely manner;

● our competitors building or leasing retail locations near our retail locations or in locations we have identified as targets;

● our ability to provide a satisfactory mix of merchandise that is responsive to the needs of our customers living in the geographic areas where new store locations are built or acquired;

● our ability to supply new store locations with inventory in a timely manner;

● our competitors building or leasing store locations near our store locations or in locations we have identified as targets;

● regional economic and other factors in the geographic areas where we expand.

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To the extent that we are not able to meet these additional challenges, our sales could decrease, and our operating expenses could increase, which could have a material adverse effect on our business, financial condition and results of operations.

Finally, the size, timing, and integration of any future new retail location openings or acquisitions or the acquisition of new businesses, product lines or categories may cause substantial fluctuations in our results of operations from quarter to quarter.

Finally, the size, timing, and integration of any future new store location openings or acquisitions or the acquisition of new businesses, product lines or categories may cause substantial fluctuations in our results of operations from quarter to quarter.

Consequently, our results of operations for any quarter may not be indicative of the results that may be achieved for any subsequent quarter or for a full fiscal year.

These fluctuations could adversely affect the market price of our common stock.

As a result of the above factors, we cannot assure you that we will be successful in operating our retail locations in new markets or acquiring new businesses, product lines or categories on a profitable basis, and our failure to do so could have a material adverse effect on our business, financial condition and results of operations.

As a result of the above factors, we cannot assure you that we will be successful in operating our store locations in new markets or acquiring new businesses, product lines or categories on a profitable basis, and our failure to do so could have a material adverse effect on our business, financial condition and results of operations.

Unforeseen expenses, difficulties, and delays encountered in connection with acquisitions could inhibit our growth and negatively impact our profitability

Our ability to continue to grow through the acquisition of additional retail locations will depend upon various factors, including the following:

Our ability to continue to grow through the acquisition of additional store locations will depend upon various factors, including the following:

● the availability of suitable acquisition candidates at attractive purchase prices;

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In connection with these discussions, we and each potential acquisition candidate exchange confidential operational and financial information, conduct due diligence inquiries, and consider the structure, terms, and conditions of the potential acquisition.

Potential acquisition discussions frequently take place over a long period of time and involve difficult business integration and other issues, including in some cases, management succession and related matters.

As a result of these and other factors, a number of potential acquisitions that from time to time appear likely to occur do not result in binding legal agreements and are not consummated.

In addition, we may have disagreements with

potential acquisition targets, which could lead to litigation.

Potential acquisition discussions frequently involve difficult business integration and other issues, including in some cases, management succession and related matters.

As a result of these and other factors, a number of potential acquisitions that from time to time have been announced or appear likely to occur do not result in binding legal agreements or are not consummated.

In addition, we may have disagreements with potential acquisition targets, which could lead to litigation.

Acquisitions that have closed may not have the intended benefit.

Any of these factors or outcomes could result in a material adverse effect on our business, financial condition and results of operations.

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The preferences of these consumers cannot be predicted with certainty and are subject to change.

Further, the retail consumer industry, by its nature, is volatile and sensitive to numerous economic factors, including consumer preferences, competition, market conditions, general economic conditions and other factors outside of our control.

Further, the retail consumer industry, by its nature, is volatile and sensitive to numerous economic factors, including

consumer preferences, competition, market conditions, general economic conditions and other factors outside of our control.

We typically order merchandise well in advance of the following selling season making it difficult for us to respond rapidly to new or changing product trends, increases or decreases in consumer demand or changes in prices.

Additionally, we may not be able to adjust proprietary pricing tools, such as the RV Valuator, to respond to changes in consumer demand or pricing until after a trend is established.

If we misjudge either the market for our merchandise or our consumers’ purchasing habits in the future, our revenues may decline significantly, and we may not have sufficient quantities of merchandise to satisfy consumer demand or sales orders, or we may be required to discount excess inventory, either of which could have a material adverse effect on our business, financial condition and results of operations.

For example, in the normal course of business, we periodically will implement discounting to reduce our excess RV inventory and, during the fourth quarter of 2022, we used clearance and discounted pricing on certain categories within our products, services, and other offerings to reduce our retail inventory levels.

For example, in the normal course of business, we periodically will implement discounting to reduce our excess RV inventory.

During 2023, we discounted 2022 and 2023 model year RVs to reduce the mix of those model years compared to incoming 2024 model year RVs that we had procured at a lower cost, which also resulted in the need for us to discount certain used RVs.

This discounting resulted in a decrease in average selling prices of new and used vehicles in 2023.

During the fourth quarter of 2022 and in connection with our Active Sports Restructuring during 2023, we used clearance and discounted pricing on certain categories within our products, services, and other offerings to reduce our retail inventory levels.

In addition, we have exited certain non-RV retail categories because we felt those categories did not have sufficient demand or sales margins to justify our inventory levels.

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In addition, unusually severe weather conditions in some geographic areas may impact demand.

On average, over the three years ended December 31, 2022, we have generated 31.0% and 29.0% of our annual revenue in the second and third fiscal quarters, respectively, which include the spring and summer months.

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

On average, over the three years ended December 31, 2023, we generated 30.5% and 27.4% of our annual revenue in the second and third fiscal quarters, respectively, which include the spring and summer

We have historically incurred additional expenses in the second and third fiscal quarters due to higher purchase volumes, increased staffing in our store locations and program costs.

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 have a material adverse effect on our business, financial condition and results of operations.

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.

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.

Additionally, SG&A expenses as a percentage of gross profit tend to be higher in the first and fourth quarters due to the seasonality of our business.

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.

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.

The operation of our business, the rate of our expansion and our ability to respond to changing business and economic conditions depend on the availability of adequate capital, which in turn depends on cash flow generated by our business and, if necessary, the availability of equity or debt capital.

We also require sufficient cash flow to meet our obligations under our existing debt agreements.

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If we incur additional indebtedness, that indebtedness may contain significant financial and other covenants that may significantly restrict our operations.

Certain of our indebtedness, such as our Senior Secured Credit Facilities (as defined below) bears interest at variable interest rates based on the London Inter-bank Offered Rate (“LIBOR”).

Although we expect that the capital and debt markets will cease to use LIBOR as a benchmark in the near future and the administrator of LIBOR announced its intention to extend the publication of most tenors of LIBOR for U.S.

dollars through June 30, 2023, we cannot predict whether or when all tenors of U.S.

dollar LIBOR will actually cease to be available, at which point the Secured Overnight Funding Rate, or SOFR, will become the market benchmark in its place or what impact such a transition may have on our interest rates, business, financial condition and results of operations.

Our Senior Secured Credit Facilities and our Floor Plan Facility contain restrictive covenants that may impair our ability to access sufficient capital and operate our business.

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In an event of default, we may not have sufficient funds available, or we may not have access to sufficient capital from other sources, to repay any accelerated debt and our lenders could foreclose on liens which cover substantially all of our assets.

The COVID-19 pandemic has had, and could have in the future, certain negative impacts on our business, and such impacts may have a material adverse effect on our results of operations, financial condition and cash flows.

COVID-19 had, and could have in the future, certain negative impacts on our business, and such impacts may have a material adverse effect on our results of operations, financial condition and cash flows.

Other future pandemics or health crises may have similar material adverse impacts on our business.

The public health crisis caused by the COVID-19 pandemic and the measures taken by governments, businesses, including us and our vendors, and the public at large to limit the impact of COVID-19 had, and could again have in the future, certain negative impacts on our business including, without limitation, the following:

The public health crisis caused by COVID-19 and the measures taken by governments, businesses, including us and our vendors, and the public at large to limit the impact of COVID-19 had, and could again have in the future, certain negative impacts on our business including, without limitation, the following:

● delays in the delivery of certain products from our vendors as a result of shipping delays;

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● increased product costs or shortages;

● traffic at our retail locations or reduced demand for our products and services;

● traffic at our store locations or reduced demand for our products and services;

● labor shortages including for key positions;

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Other future pandemics or health crises may have similar material adverse impacts on our business.

We may not successfully execute or achieve the expected benefits of our 2019 Strategic Shift or cost cutting or restructuring initiatives.

The 2019 Strategic Shift may result in further asset impairment charges and adversely affect the Company's business.

In the third fiscal quarter of 2019, we announced the 2019 Strategic Shift.

As of December 31, 2022, the activities under the 2019 Strategic Shift have been completed with the exception of certain lease termination costs and other associated costs relating to the leases of previously closed locations under the 2019 Strategic Shift.

The process of identifying subtenants and negotiating lease terminations had been delayed in part due to the COVID-19 pandemic and is expected to continue.

We may not successfully execute or achieve the expected benefits of our cost cutting or restructuring initiatives.

The restructuring initiatives may result in further asset impairment charges and adversely affect the Company's business.

In the third fiscal quarter of 2019 and the second fiscal quarter of 2023, we announced the 2019 Strategic Shift and the Active Sports Restructuring, respectively.

As of December 31, 2023, the activities under each of the 2019 Strategic Shift and Active Sports Restructuring have been completed with the exception of certain lease termination costs and other associated costs relating to the leases of previously closed locations or facilities.

The process of identifying subtenants and negotiating lease terminations was delayed initially in part due to the COVID-19 pandemic.

The timing of these negotiations will vary as both subleases and terminations are contingent on landlord approvals and the costs may be greater than expected.

In addition, the Company may need to incur further impairment charges to its long-lived assets, including its operating lease assets, as a result of the 2019 Strategic Shift.

As of December 31, 2022, the Company had 11 leases relating to the 2019 Strategic Shift that had not been terminated or sublet.

As of December 31, 2023, the Company had eight leases relating

to the 2019 Strategic Shift and one lease relating to Active Sports Restructuring that had not been terminated or sublet.

In addition, from time to time, we engage in cost cutting or restructuring initiatives to try to streamline our organizational footprint.

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Natural disasters, whether or not caused by climate change, unusual weather conditions, epidemic outbreaks, terrorist acts and political events could disrupt business and result in lower sales and otherwise adversely affect our financial performance.

The occurrence of one or more natural disasters, such as tornadoes, hurricanes, fires, droughts, floods, hail storms and earthquakes, unusual weather conditions, epidemic outbreaks such as Ebola, Zika virus, novel coronavirus or measles, terrorist attacks or disruptive political events in certain regions where our stores are located could adversely affect our business and result in lower sales, or could impact the degree to which travel and recreational activities remain attractive, either of which could have a material adverse effect on our business, financial condition, and results of operations.

Severe weather, such as heavy snowfall or extreme temperatures, may discourage or restrict customers in a particular region from traveling to our stores or utilizing our products, thereby reducing our sales and profitability.

Natural disasters including tornadoes, hurricanes, droughts, floods, hailstorms and earthquakes may damage our stores or other operations, which may materially adversely affect our consolidated financial results.

The public health crisis caused by the COVID-19 pandemic and the measures taken by governments, businesses, including us and our vendors, and the public at large to limit COVID-19's spread have had, and could again have in the future, certain negative impacts on our business including product shortages and reduced customer demand for our products.

In addition to business interruption, our retail business is subject to substantial risk of property loss due to the concentration of property at our retail locations.

Climate change may impact the frequency and/or intensity of such events as well as cause chronic changes, such as changes in temperature or precipitation patterns or sea-level rise, that may also have an adverse impact on our operations, including but not limited to a change in consumer behavior.

The public health crisis caused by COVID-19 and the measures taken by governments, businesses, including us and our vendors, and the public at large to limit COVID-19's spread had, and could again have in the future, certain negative impacts on our business including product shortages and reduced customer demand for our products.

In addition to business interruption, our retail business is subject to substantial risk of property loss due to the concentration of property at our store locations.

To the extent these events also impact one or more of our key suppliers or result in the closure of one or more of our distribution centers or our corporate headquarters, we may be unable to maintain inventory balances, maintain delivery schedules or provide other support functions to our stores.

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In addition, Comenity Capital Bank could decline to renew our services agreement or become insolvent and unable to perform our contract, and we may be unable to timely find a replacement bank to provide these services.

We depend on merchandise purchased from our vendors to obtain products for our retail locations.

We depend on merchandise purchased from our vendors to obtain products for our store locations.

We have no contractual arrangements providing for continued supply from our key vendors, and our vendors may discontinue selling to us at any time.

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We also are subject to risks, such as the price and availability of raw materials, shipping delays, labor disputes, union organizing activity, strikes, inclement weather, natural disasters, war and terrorism and adverse general economic and political conditions that might limit our vendors’ ability to provide us with quality merchandise on a timely and cost-efficient basis.

We may not be able to develop relationships with new vendors, and products from alternative sources, if any, may be of a lesser quality and more expensive than

those we currently purchase.

We may not be able to develop relationships with new vendors, and products from alternative sources, if any, may be of a lesser quality and more expensive than those we currently purchase.

Any delay or failure in offering quality products and services to our customers could have a material adverse effect on our business, financial condition and results of operations.

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We may not be able to mitigate the impacts of any future tariffs, and our business, results of operations and financial position would be materially adversely affected.

As a result, our foreign imports, in particular imports from China, subject us to the risks of changes in, or the imposition of new import tariffs, duties or quotas, new restrictions on imports, loss of “most favored nation” status with the United States for a particular foreign country, antidumping or countervailing duty orders, retaliatory actions in response to illegal trade practices, work stoppages, delays in shipment, freight expense increases, product cost increases due to foreign currency fluctuations or revaluations and economic uncertainties.

As a result, our foreign imports, in particular imports from China, subject us to the risks of changes in, or the imposition of new import tariffs, duties or quotas, new restrictions on imports, loss of “most favored nation” status with the United States for a particular foreign country, antidumping or countervailing duty orders, retaliatory actions in response to illegal trade practices, work stoppages, delays in shipment, trade route challenges due to global political tensions, freight expense increases, product cost increases due to foreign currency fluctuations or revaluations and economic uncertainties.

If any of these or other factors were to cause a disruption of trade from the countries in which the suppliers of our vendors are located or impose additional costs in connection with the purchase of our products, we may be unable to obtain sufficient quantities of products to satisfy our requirements and our results of operations could be adversely affected.

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To the extent that any foreign manufacturers which supply products to us directly or indirectly utilize quality control standards, labor practices or other practices that vary from those legally mandated or commonly accepted in the United States, we could be hurt by a variety of adverse impacts, including but not limited to any resulting negative publicity or, in some cases, face potential liability or a denial of import for our products.

A portion of our net income is from financing, insurance and extended service contracts, which depend on third-party lenders and insurance companies.

A portion of our net income is related to financing, insurance and extended service contracts, which depend on third-party lenders and insurance companies.

We cannot assure you that third-party lending institutions will continue to provide financing for RV purchases.

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Our arrangements with lending institutions are typically governed by retail dealer agreements, which are customary in the RV industry.

Our retail dealer agreements with lenders are generally made on a location by location basis, and each retail location typically enters into multiple retail dealer agreements with multiple lending institutions.

Our retail dealer agreements with lenders are generally made on a location by location basis, and each store location typically enters into multiple retail dealer agreements with multiple lending institutions.

These retail dealer agreements may contain affirmative obligations that we must comply with.

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Retail installment sales contracts are typically assigned by us to third-party lenders simultaneously with the execution of the retail installment sales contracts.

Contracts in transit represent amounts due from third-party lenders from whom pre-arranged assignment agreements have been determined, and to whom the retail installment sales contracts have been assigned.

Contracts in transit represent amounts due from third-party lenders from whom

pre-arranged assignment agreements have been determined, and to whom the retail installment sales contracts have been assigned.

We recognize revenue from the sale of new and used vehicles upon completion of the sale to the customer.

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We have invested in our development and procurement resources and marketing efforts relating to these private brand offerings.

Although we believe that our private brand products offer value to our customers at each price point and provide us with higher gross margins than comparable third-party branded products we sell, the expansion of our private brand offerings also subjects us to certain specific risks in addition to those discussed elsewhere in this section, such as:

Although we believe that our private brand products offer value to our customers at each price point and provide us with higher gross

margins than comparable third-party branded products we sell, the expansion of our private brand offerings also subjects us to certain specific risks in addition to those discussed elsewhere in this section, such as:

● potential mandatory or voluntary product recalls;

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At least annually, we review goodwill for impairment.

Long-lived assets, operating lease assets, identifiable intangible

assets and goodwill are also reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable from future cash flows.

Long-lived assets, operating lease assets, identifiable intangible assets and goodwill are also reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable from future cash flows.

These events or circumstances could include a significant change in the business climate, legal factors, operating performance indicators, competition, sale or disposition of a significant portion of the business or other factors.

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If we redeem or repurchase shares of our stock in the future, we could be subject to a newly enacted excise tax.

The Inflation Reduction Act of 2022 was recently signed into law, which, among other things, imposed a new 1% excise tax on the fair market value of stock redeemed or repurchased by publicly traded corporations on or after January 1, 2023, subject to certain exceptions.

The Inflation Reduction Act of 2022 among other things, imposes a 1% excise tax on the fair market value of stock redeemed or repurchased by publicly traded corporations on or after January 1, 2023, subject to certain exceptions.

The Company maintains a stock repurchase program.

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Currently, all states restrict access to motor vehicle registration information.

We are subject to a number of laws and regulations relating to consumer protection, information security, data protection and privacy.

We receive, store, handle, transmit, use, and otherwise process information related to individuals, including from and about actual and prospective customers as well as our employees and service providers.

We also depend on a number of third party vendors in relation to the operation of our business, a number of which process data on our behalf.

We, and our vendors, are subject to a number of laws, regulations, industry standards, and other requirements relating to consumer protection, information security and, data protection and privacy, including those that apply generally to the handling of information about individuals, and those that are specific to certain industries, sectors, contexts, or locations.

Many of these laws and regulations are still evolving and could be interpreted in ways that could harm our business or limit the services we are able to offer.

In the area of information security and data protection, the laws in several states in the United States and most countries require companies to implement specific privacy and information security controls and legal protections to protect certain types of personally identifiable information and to collect or use it subject to disclosures and certain consent-based requirements.

Likewise, most states in the United States and most countries have laws in place requiring companies to notify users if there is a security breach that compromises certain categories of their personally identifiable information.

Any failure on our part to comply with these laws may subject us to significant liabilities.

For example, the California Consumer Privacy Act (“CCPA”) establishes a new privacy framework that expands the definition of personal information, establishes new data privacy rights for consumers residing in the State of California, imposes special rules on the collection of consumer data from minors, creates new notice obligations and new limits on the sale of personal information, and creates a new and potentially severe statutory damages framework for (i) violations of the CCPA and (ii) businesses that experience certain types of data breaches.

Additionally, as of January 1, 2023, the majority of the provisions in the California Privacy Rights Act (“CPRA”), went into effect in California.

The CPRA imposes additional data protection obligations on companies doing business in California, including additional consumer rights processes, limitations on data uses, new audit requirements for higher risk data, and opt outs for certain uses of sensitive data.

It also creates a new California data protection agency authorized to issue substantive

regulations and could result in increased privacy and information security enforcement.

Additional compliance investment and potential business process changes may continue to be required as additional provisions of the CPRA go into effect.

Several other states, including Colorado and Virginia, have enacted or are in the process of proposing legislation that mirrors may aspects of the CCPA and CPRA.

For example, the Federal Trade Commission and state regulators enforce a variety of data privacy issues, such as promises made in privacy policies or failures to appropriately protect information about individuals, as unfair or deceptive acts or practices in or affecting commerce in violation of the Federal Trade Commission Act or similar state laws.

Moreover, certain states in the United States and most countries have adopted privacy and security laws that apply to our business.

These laws generally require companies to implement specific privacy and information security controls and legal protections to protect certain types of personal information and to collect or use it subject to disclosures.

Additional compliance investment and potential business process changes may continue to be required as these laws and others go into effect.

Further, in order to comply with the varying state laws around data breaches, we must maintain adequate security measures, which require significant investments in resources and ongoing attention.

Further, laws, regulations, and standards covering marketing, advertising, and other activities conducted by telephone, email, mobile devices, and the internet may be or become applicable to our business, such as the Federal Communications Act, the Federal Wiretap Act, the Electronic Communications Privacy Act, the Telephone Consumer Protection Act (the “TCPA”), the Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003 (the “CAN-SPAM Act”), and similar state consumer protection and communication privacy laws, such as California’s Invasion of Privacy Act.

Additionally, we may be considered a “financial institution” under the Gramm-Leach Bliley Act (the “GLBA”).

The GLBA regulates, among other things, the use of certain information about individuals (“non-public personal information”) in the context of the provision of financial services, including by banks and other financial institutions.

The GLBA includes both a “Privacy Rule,” which imposes obligations on financial institutions relating to the use or disclosure of non-public personal information, and a “safeguards rule,” which imposes obligations on financial institutions and, indirectly, their service providers to implement and maintain physical, administrative and technological measures to protect the security of non-public personal financial information.

Any failure to comply with the GLBA could result in substantial financial penalties.

Even though we believe we and our vendors are generally in compliance with applicable laws, rules and regulations relating to privacy and data security, these laws are in some cases relatively new and the interpretation and application of these laws are uncertain.

Any failure or perceived failure by us to comply with data privacy laws, rules, regulations, industry standards and other requirements could result in proceedings or actions against us by individuals, consumer rights groups, governmental agencies, or others.

We could incur significant costs in investigating and defending such claims and, if found liable, pay significant damages or fines or be required to make changes to our business.

Further, these proceedings and any subsequent adverse

outcomes may subject us to significant negative publicity and an erosion of trust.

If any of these events were to occur, our business, results of operations, and financial condition could be materially adversely affected.

We are also subject to federal and numerous state consumer protection and unfair trade practice laws and regulations relating to the sale, transportation and marketing of motor vehicles, including so-called “lemon laws.” Federal, state and local laws and regulations also impose upon vehicle operators various restrictions on the length and width of motor vehicles that may be operated in certain jurisdictions or on certain roadways.

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Federal and state authorities also have various environmental control standards relating to air, water, noise pollution and hazardous waste generation and disposal which affect our business and operations.

Areas of our business also affected by laws and regulations include, but are not limited to, labor (including federal and state minimum wage increases), advertising, consumer protection, real estate, promotions, quality of services, intellectual property, tax, import and export, anti-corruption, anti-competition, environmental, health and safety.

Compliance with these laws and others may be onerous and costly, at times, and may be inconsistent from jurisdiction to jurisdiction which further complicates compliance efforts.

Our business is also affected by other laws and regulations including, but not limited to, labor (including federal and state minimum wage and overtime requirements), advertising, real estate, promotions, quality of services, intellectual property, tax, import and export, anti-corruption, anti-competition, environmental, health and safety.

Furthermore, our property and casualty insurance programs, and our extended service contracts that we offer through third-party insurance carriers are subject to various federal and state laws and regulations governing the business of insurance, including, without limitation, laws and regulations governing the administration, underwriting, marketing, solicitation, liability obligations or sale of insurance programs.

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We have instituted various and comprehensive policies and procedures to address compliance.

However, there can be no assurance that employees, contractors, vendors or our agents will not violate such laws and regulations or our policies and procedures.

However, there can be no assurance that we or our employees, contractors, vendors or our agents will not violate such laws and regulations or our policies and procedures.

Compliance with these laws and others may be onerous and costly, at times, and may be inconsistent from jurisdiction to jurisdiction which further complicates compliance efforts.

The Company is subject to litigation related to these laws and others and has experienced an increase in wage and hour litigation.

Any non-compliance with these laws and others could lead to further litigation or fines, which could adversely affect our business, results of operations and financial condition.

For more information on the various regulations applicable to our business, see “Item I.

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The United States Environmental Protection Agency has adopted rules under existing provisions of the federal Clean Air Act that require a reduction in emissions of greenhouse gases from motor vehicles.

California has also adopted more stringent rules in many cases, which certain other states also elected to follow.

Both EPA and California standards may become more stringent over time.

The adoption of any laws or regulations requiring significant increases in fuel economy requirements or new federal or state restrictions on vehicles and automotive fuels in the United States could adversely affect demand for those vehicles and could have a material adverse effect on our business, financial condition and results of operations.

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electricity, hydrogen, and compressed and/or renewable gas.

To the extent potential customers prefer technologies different from those used in the vehicles we offer for sale, then demand for such vehicles may not develop as quickly as we expect, or at all.

To the extent potential customers prefer technologies different from those used in the vehicles we offer for sale, or are prohibited by law in certain jurisdictions from purchasing vehicles that we sell (i.e., new vehicles that use gasoline fuel), then demand for such vehicles may not develop as quickly as we expect, or at all.

Reporting expectations for various ESG topics are also increasing, with a variety of customers, capital providers, and regulators seeking increased information on ESG-related risks.

For example, the Securities and Exchange Commission has proposed a rule that, if finalized, may require us to incur significant costs to assess and disclose on a range of climate-related data and risks.

Increased scrutiny from various parties may also result in increased compliance costs and increased legal risks, whether through enforcement actions or litigation, whether or not such claims have any merit.

For example, various policymakers, including the Securities and Exchange Commission and the State of California, have adopted (or are considering adopting) requirements for the disclosure of a range of climate-related data and risks, which may require us to incur additional costs or otherwise adversely impact our business.

While we may at times engage in voluntary initiatives (such as voluntary disclosures, certifications, or goals, among others) or commitments to improve the ESG profile of our company and/or products, such initiatives or achievements of such commitments may be costly and may not have the desired effect.

Expectations around company’s management of ESG matters continues to evolve rapidly, in many instances due to factors that are out of our control.

Expectations around the company’s management of ESG matters continues to evolve rapidly, in many instances due to factors that are out of our control.

If we do not, or are perceived to not, take sufficient action to address ESG matters and related stakeholder expectations, we may suffer reputational damage and may be subject to investor or regulator engagement, even if our efforts are currently voluntary.

Simultaneously, there are efforts by some stakeholders to reduce companies’ efforts on certain ESG-related matters.

Both advocates

and opponents to certain ESG matters are increasingly resorting to a range of activism forms, including media campaigns and litigation, to advance their perspectives.

To the extent we are subject to such activism, it may require us to incur costs or otherwise adversely impact our business.

This and other stakeholder expectations will likely lead to increased costs as well as scrutiny that could heighten all of the risks identified in this risk factor.

All of these risks may also impact our suppliers or customers, which may indirectly impact our business, financial condition, or results of operations.

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Consumers are increasingly embracing shopping online and through mobile commerce applications.

As a result, a growing portion of total consumer expenditures with retailers is occurring online and through mobile commerce applications and a declining portion of total consumer expenditures is occurring at brick and mortar retail locations.

Our e-commerce business is an important element of our brands and relationship with our customers, and we expect it to continue to grow.

In addition to changing consumer preferences and shifting traffic patterns and buying trends in e-commerce, we are vulnerable to additional risks and uncertainties associated with e-commerce sales, including rapid changes in technology, website downtime and other technical failures, security breaches, cyber-attacks, consumer privacy concerns, changes in state tax regimes and government regulation of internet activities (for additional discussion of security breaches and cyber attacks, see – “Disruptions or breaches involving our or our third-party providers’ information technology systems or network security could interrupt our operations, compromise our reputation, expose us to litigation, government enforcement actions and costly response measures and could have a material adverse effect on our business, financial condition and results of operations”).

Our failure to successfully respond to these risks and uncertainties could reduce our e-commerce sales, increase our costs, diminish our growth prospects and damage our brands, which could negatively impact our results of operations and stock price.

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Other parties also may claim that we infringe their proprietary rights.

Such claims, whether or not meritorious, may result in the expenditure of significant financial and managerial resources, injunctions against us or the payment of damages.

Such claims, whether or not meritorious, may result in the expenditure of significant financial and managerial resources, injunctions against

us or the payment of damages.

These claims could have a material adverse effect on our business, financial condition and results of operations.

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Various components of our information technology systems, including hardware, networks, and software, are licensed to us by third-party vendors.

rely extensively on our information technology systems to process transactions, summarize results and manage our business.

Additionally, because we accept debit and credit cards for payment, we are subject to the Payment Card Industry Data Security Standard (the “PCI Standard”), issued by the Payment Card Industry Security Standards Council.

We rely extensively on our information technology systems to process transactions, summarize results and manage our business.

Additionally, because we accept debit and credit cards for payment, we are subject to the Payment Card Industry Data Security Standard (“PCI-DSS”), issued by the Payment Card Industry Security Standards Council.

Costs and potential problems and interruptions associated with the implementation of new or upgraded systems and technology such as those necessary to maintain compliance with the PCI-DSS or with maintenance or adequate support of existing systems could also disrupt or reduce the efficiency of our operations (for additional discussion of risks related to PCI-DSS, see – “Disruptions or breaches involving our or our third-party providers’ information technology systems or network security could interrupt our operations, compromise our reputation, expose us to litigation, government enforcement actions and costly response measures and could have a material adverse effect on our business, financial condition and results of operations”).

Any material interruptions or failures in our payment-related systems could have a material adverse effect on our business, financial condition and results of operations.

Disruptions or breaches involving our or our third-party providers’ information technology systems or network security could interrupt our operations, compromise our reputation, expose us to litigation, government enforcement actions and costly response measures and could have a material adverse effect on our business, financial condition and results of operations.

We rely on the integrity, security and successful functioning of our information technology systems and network infrastructure (collectively, “IT Systems”) across our operations.

While we own and operate certain parts of our IT Systems, we also rely on critical third-party service providers for an array of software, technologies, tools and services.

We use IT Systems for external and internal functions, such as to support product sales, our Good Sam services and plans, manage procurement and our supply chain, track inventory information at our retail locations, communicate customer information and aggregate daily sales, margin and promotional information.

Disruptions or breaches involving our or our third-party providers’ IT Systems or Confidential Information could interrupt our operations, compromise our reputation, expose us to litigation, government enforcement actions and costly response measures and could have a material adverse effect on our business, financial condition and results of operations.

We rely on the integrity, security and successful functioning of our computer systems, hardware, software, technology infrastructure, and online sites and networks (collectively, “IT Systems”) across our operations.

While we own and operate certain parts of our IT Systems, we also rely on critical third-party service providers for an array of IT Systems and related products and services.

We use IT Systems for external and internal functions, such as to support product sales, our Good Sam services and plans, manage procurement and our supply chain, track inventory information at our store locations, and to communicate customer information, aggregate daily sales, margin and promotional information.

We also use IT Systems to report and audit our operational results.

In addition, we and our third-party providers have access to, collect, process and maintain private or confidential information regarding our customers, club members, associates and suppliers, as well as our business.

For example, we have over 28 million unique contacts in our database as of December 31, 2022.

This customer database includes information about our approximately 2.0 million club members and our 5.3 million Active Customers as of December 31, 2022.

We and our third-party providers experience cyberattacks and security incidents from time to time.

For example, in February 2022, we announced the occurrence of a cybersecurity incident that resulted in the encryption of certain IT Systems and theft of certain data and information (the “Cybersecurity Incident”).

In addition, we and our third-party providers have access to, collect, process, use and maintain personal and confidential information regarding our customers, club members, associates, employees and suppliers, as well as proprietary information belonging to our business or to our business partners (collectively, “Confidential Information”).

We and our third-party providers experience cyberattacks and security incidents.

The Cybersecurity Incident resulted in our temporary inability to access certain of our IT Systems, caused by the disabling of some of our IT Systems by the threat actor and our temporarily taking certain other IT Systems offline as a precautionary measure.

We engaged leading outside forensics and cybersecurity experts, launched containment and remediation efforts and a forensic investigation, which was completed as of September 30, 2022.

We are continuing to take measures to enhance our IT Systems.

We engaged outside forensics and cybersecurity experts, and launched containment and remediation efforts and a forensic investigation, which was completed as of September 30, 2022.

Through our investigation, we identified that personal information of approximately 30,000 individuals was acquired without authorization, including, depending on the individual, dates of birth, Social Security numbers, and driver’s license numbers.

We complied with notification obligations in accordance with relevant law and are continuing to cooperate with law enforcement.

We have incurred costs related to investigation, containment, and remediation and expect to continue to incur incremental costs for the remediation of the Cybersecurity Incident, including legal and other professional fees, and investments to enhance the security of our IT Systems.

We have incurred and expect to continue to incur costs related to the Cybersecurity Incident, including legal and other professional fees, and investments related to the security of our IT Systems.

Other actual and potential consequences include, but are not limited to, negative publicity, reputational damage, lost trust with customers, and regulatory enforcement action.

In December 2022, three putative class action complaints were filed against us and certain of our subsidiaries arising out of the Cybersecurity Incident.

This litigation could result in financial judgments or the payment of settlement amounts and disputes with insurance carriers concerning coverage.

Despite our security controls and measures, we are vulnerable to threats resulting from malware (for example, ransomware), viruses, misconduct by external or inside actors, social engineering, human error by associates and contractors, as well as from bugs, misconfigurations and vulnerabilities in our software code.

We are also vulnerable to further successful cyberattacks, security breaches and disruptions to our IT Systems and our electronic data and information assets, in addition to damage or interruption from earthquakes, acts of war or terrorist attacks, floods, fires, tornadoes, hurricanes, power loss and outages, computer and telecommunications failures and similar incidents.

Some of our systems are not fully redundant, and our

disaster recovery planning cannot account for all eventualities.

The Company and

plaintiffs executed a settlement agreement to resolve the putative class action complaints for an immaterial amount subject to court approval.

As such, we expect to pay a settlement amount, and this litigation could also result in other financial judgments or disputes with insurance carriers concerning coverage.

We continue to face numerous and evolving cybersecurity risks that threaten the confidentiality, integrity, and availability of our IT Systems and Confidential Information.

We are vulnerable to cybersecurity risks from diverse threat actors such as state sponsored organizations and opportunistic hackers and hacktivists, as well as through diverse attack vectors, (for example, ransomware, viruses, advanced persistent threats, misconduct by external or inside actors, social engineering/phishing, human error by associates and contractors, and malicious code embedded in open source software), as well as from bugs, misconfigurations and vulnerabilities in commercial software that is integrated into our (or our suppliers’ or service providers’) IT Systems, products, or services.

Thus, we remain vulnerable to further successful cyberattacks, security breaches and disruptions to our IT Systems and our Confidential Information, in addition to damage or interruption to our IT Systems and Confidential Information from earthquakes, acts of war or terrorist attacks, floods, fires, tornadoes, hurricanes, power loss and outages, computer and telecommunications failures and similar incidents.

Some of our systems are not fully redundant, and our disaster recovery planning cannot account for all eventualities.

The COVID-19 pandemic also presented additional operational and cybersecurity risks due to the prevalence of work-from-home arrangements.

We expect cyberattacks to accelerate going forward.

Threat actors are becoming more sophisticated and difficult to anticipate or deflect as they increasingly use tools and techniques designed to circumvent security controls, to avoid detection, and to remove forensic evidence that may be needed to effectively identify, investigate and remediate attacks.

Any errors or vulnerabilities in our IT Systems, damage to or failure of our IT Systems, or significant breach of club member, customer, employee, supplier, or company data, could result in interruptions in our services, noncompliance with certain regulations, substantial negative media attention, damage to our club member, customer and supplier relationships and our reputation, exposure to litigation (including class actions), regulatory investigations, and lost sales, fines, penalties, lawsuits, and increased remediation costs, any or all of which could have a material adverse effect on our business, financial condition and results of operations.

Any remediation measures that we have taken or that we may undertake in the future in response to the Cybersecurity Incident or other security breaches may be insufficient to prevent future attacks.

In addition, the regulatory environment surrounding information security and privacy is increasingly demanding, with the frequent imposition of new and constantly changing requirements across our business.

For example, recent amendments to the Safeguards Rule of the Gramm-Leach-Bliley Act will require covered financial institutions to adopt specific data security measures effective as of June 9, 2023.

Threat actors are becoming more sophisticated and difficult to anticipate or deflect as they increasingly use tools and techniques, including artificial intelligence designed to circumvent security controls, to avoid detection, and to remove forensic evidence that may be needed to effectively identify, investigate and remediate attacks.

As a result, we may be unable to detect, investigate, remediate or recover from future attacks or incidents, or to avoid a material adverse impact to our IT Systems, Confidential Information, or business.

There can also be no assurance that our cybersecurity risk management program and processes, including our policies, controls or procedures, will be fully implemented, complied with or effective in protecting our IT Systems and Confidential Information.

Because we make extensive use of third party suppliers and service providers, such as cloud services that support our internal and customer-facing operations, successful cyberattacks that disrupt or result in unauthorized access to third party IT Systems can materially impact our operations and financial results.

Any adverse impact to the availability, integrity, or confidentiality of our IT Systems, or Confidential Information could result in interruptions in our services, noncompliance with certain laws and regulations, substantial negative media attention, damage to our club member, customer and supplier relationships and our reputation, exposure to litigation (including class actions), regulatory investigations, and lost sales, fines, penalties, lawsuits, and increased remediation costs, any or all of which could have a material adverse effect on our business, financial condition and results of operations.

We cannot guarantee that any costs and liabilities incurred in relation to an attack or incident will be covered by our existing insurance policies or that applicable insurance will be available to us in the future on economically reasonable terms or at all.

Finally, there can be no assurance that our cybersecurity risk management program and processes, including our policies, controls or procedures, will be fully implemented, complied with or effective in protecting our systems and information.

In addition, we may be subject to specific data security frameworks and/or laws that require us to maintain a certain level of security, and the regulatory environment surrounding information security and privacy is increasingly demanding, with the frequent imposition of new and constantly changing requirements across our business.

For example, amendments to the Safeguards Rule of the Gramm-Leach-Bliley Act require covered financial institutions to adopt specific data security measures as of June 9, 2023.

In addition, customers have a high expectation that we will adequately protect their personal information from cyberattack or other security breaches.

A significant breach of club member, customer, employee, supplier, or company data could attract a substantial amount of negative media attention, damage our club member, customer and supplier relationships and our reputation, and result in lost sales, fines and/or lawsuits, and new laws such as the CCPA impose statutory damages for certain types of data breaches that affect the personal information of consumers.

We maintain insurance to cover costs in the event of a breach, interruption of service, or other cyber-security event.

Our insurance coverage may be insufficient to cover all losses.

A significant breach of Confidential Information, including personal information, could attract a substantial amount of negative media attention, damage our club member, customer and supplier relationships and our reputation, and result in lost sales, fines and/or lawsuits, and new laws such as the CCPA impose statutory damages for certain types of data breaches that affect the personal information of consumers.

Moreover, as we accept debit and credit cards for payment, we are subject to the PCI-DSS, issued by the Payment Card Industry Security Standards Council.

PCI-DSS contains compliance guidelines with regard to our security surrounding the physical and electronic storage, processing and transmission of cardholder data.

If we or our service providers are unable to comply with the security standards established by banks and the

payment card industry, we may be subject to fines, restrictions and expulsion from card acceptance programs, which could materially and adversely affect our business.

We may be subject to product liability claims if people or property are harmed by the products we sell.

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We have been named in the past, are currently named and may be named in the future as defendants of class action lawsuits.

We have been subject to securities class action litigation and may be subject to similar

or other litigation in the future.

We have been subject to securities class action litigation and may be subject to similar or other litigation in the future.

For information regarding these lawsuits, refer to Note 14, Commitments and Contingencies – Litigation of our consolidated financial statements included in Part II, Item 8 of this Form 10-K.

The results of the securities class action lawsuits, shareholder derivative lawsuits, and any other future legal proceedings cannot be predicted with certainty.

The results of the securities class action lawsuits, stockholder derivative lawsuits, and any other future legal proceedings cannot be predicted with certainty.

Regardless of their subject matter or merits, such legal proceedings have resulted in and are likely to continue to result in significant cost to us, which may not be covered by insurance, may divert the attention of management or may otherwise have an adverse effect on our business, financial condition and results of operations.

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As discussed in Note 19 ─ Stockholders’ Equity to our consolidated financial statements included in Item 8 of Part II of this Form 10-K, we entered into a voting agreement in connection with our IPO with ML Acquisition Company, LLC, a Delaware limited liability company, which is indirectly owned by each of Stephen Adams and our Chairman and Chief Executive Officer, Marcus Lemonis (“ML Acquisition”), ML RV Group, LLC, a Delaware limited liability company, wholly owned by our Chairman and Chief Executive Officer, Marcus Lemonis (“ML RV Group”), CVRV Acquisition LLC and CVRV Acquisition II LLC (the “Voting Agreement”).

Subject to the Voting Agreement, Marcus Lemonis, through his beneficial ownership of our shares directly or indirectly held by ML Acquisition and ML RV Group, may approve or disapprove substantially all transactions and other matters requiring approval by our stockholders, such as a merger, consolidation, dissolution or sale of all or substantially all of our assets, the issuance or redemption of certain additional equity interests, and the election of directors including transactions that may not be in the best interests of holders of our Class A common stock or, conversely, prevent the consummation of transactions that may be in the best interests of holders of our Class A common stock.

and other matters requiring approval by our stockholders, such as a merger, consolidation, dissolution or sale of all or substantially all of our assets, the issuance or redemption of certain additional equity interests, and the election of directors including transactions that may not be in the best interests of holders of our Class A common stock or, conversely, prevent the consummation of transactions that may be in the best interests of holders of our Class A common stock.

In addition, pursuant to the Voting Agreement, Crestview Advisors, L.L.C., a registered investment adviser to private equity funds, including funds affiliated with Crestview Partners II GP, L.P.

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and (iv) a ML Acquisition Director or the ML RV Director to be the chairperson of the Board of Directors (as defined in our amended and restated bylaws).

Board of Directors’ fiduciary duties to the Company’s stockholders or does not otherwise comply with any requirements of our amended and restated certificate of incorporation or our amended and restated bylaws or the charter for, or related guidelines of, the Board of Directors’ Nominating and Corporate Governance Committee.

The Voting Agreement allows for the Board of Directors to reject the nomination, appointment or election of a particular director if such nomination, appointment or election would constitute a breach of the Board of Directors’ fiduciary duties to the Company’s stockholders or does not otherwise comply with any requirements of our amended and restated certificate of incorporation or our amended and restated bylaws or the charter for, or related guidelines of, the Board of Directors’ Nominating and Corporate Governance Committee.

The Voting Agreement further provides that, for so long as the ML Related Parties, directly or indirectly, beneficially own, in the aggregate, 22.5% or more of our Class A common stock (assuming that all outstanding common units in CWGS, LLC are redeemed for newly-issued shares of our Class A common stock on a one-for-one basis), the approval of the ML Related Parties will be required for certain corporate actions.

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Our amended and restated certificate of incorporation provides that the doctrine of “corporate opportunity” does not apply with respect to any director or stockholder who is not employed by us or our affiliates.

The doctrine of corporate opportunity generally provides that a corporate fiduciary may not develop an opportunity using corporate resources, acquire an interest adverse to that of the corporation or acquire property that is reasonably incident to the present or prospective business of the corporation or in which the corporation has a present or expectancy interest, unless that opportunity is first presented to the corporation and the corporation chooses not to pursue that opportunity.

that is reasonably incident to the present or prospective business of the corporation or in which the corporation has a present or expectancy interest, unless that opportunity is first presented to the corporation and the corporation chooses not to pursue that opportunity.

The doctrine of corporate opportunity is intended to preclude officers or directors or other fiduciaries from personally benefiting from opportunities that belong to the corporation.

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Pursuant to the terms of the Voting Agreement, Marcus Lemonis, through his beneficial ownership of our shares directly or indirectly held by ML Acquisition and ML RV Group, and certain funds controlled by Crestview Partners II GP, L.P., in the aggregate, have more than 50% of the voting power for the election of directors, and, as a result, we are considered a “controlled company” for the purposes of the New York Stock Exchange (the “NYSE”) listing requirements.

independent Compensation Committee or to perform an annual performance evaluation of the Nominating and Corporate Governance and Compensation Committees.

As such, we qualify for, and rely on, exemptions from certain corporate governance requirements, including the requirements to have a majority of independent directors on our Board of Directors, an entirely independent Nominating and Corporate Governance Committee, an entirely independent Compensation Committee or to perform an annual performance evaluation of the Nominating and Corporate Governance and Compensation Committees.

The corporate governance requirements and specifically the independence standards are intended to ensure that directors who are considered independent are free of any conflicting interest that could influence their actions as directors.

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CWGS, LLC’s ability to make such distributions may be subject to various limitations and restrictions.

We are a holding company and had no material assets as of December 31, 2022, other than our ownership of 42,440,940 common units, representing a 50.2% economic interest in the business of CWGS, LLC, and cash of $70.3 million.

We are a holding company and had no material assets as of December 31, 2023, other than our ownership of 45,020,116 common units, representing a 52.9% economic interest in the business of CWGS, LLC, an affiliate loan receivable with CWGS Group, LLC of $30.0 million, and cash of $1.9 million.

We have no independent means of generating revenue or cash flow, and our ability to pay dividends in the future, if any, will be dependent upon the financial results and cash flows of CWGS, LLC and its subsidiaries and distributions we receive from CWGS, LLC.

There can be no assurance that our subsidiaries will generate sufficient cash flow to dividend or distribute funds to us or that applicable state law and contractual restrictions, including negative covenants in our debt instruments, will permit such dividends or distributions.

There can be no assurance that our subsidiaries will generate

sufficient cash flow to dividend or distribute funds to us or that applicable state law and contractual restrictions, including negative covenants in our debt instruments, will permit such dividends or distributions.

CWGS, LLC is treated as a partnership for U.S.

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or redemption of common units and (ii) certain other tax benefits attributable to payments under the Tax Receivable Agreement.

The payment obligation is an obligation of us and not of CWGS, LLC.

The amount of the cash payments that we may be required to make under the Tax Receivable Agreement could be significant.

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Nonpayment for a specified period may constitute a material breach of a material obligation under the Tax Receivable Agreement and therefore may accelerate payments due under the Tax Receivable Agreement.

Furthermore, our future obligation to make payments under the Tax Receivable Agreement could make us a less attractive target for an acquisition, particularly in the case of an acquirer that cannot use some or all of the tax benefits that may be deemed realized under the Tax Receivable Agreement.

The payments under the Tax Receivable Agreement are also not conditioned upon the Continuing Equity Owners or Crestview Partners II GP, L.P.

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As a result of the foregoing, (i) we could be required to make cash payments to the Continuing Equity Owners and Crestview Partners II GP, L.P.

that are greater than the specified percentage of the actual benefits we ultimately realize in respect of the tax benefits that are subject to the Tax Receivable Agreement and (ii) we

would be required to make an immediate cash payment equal to the present value of the anticipated future tax benefits that are the subject of the Tax Receivable Agreement, which payment may be made significantly in advance of the actual realization, if any, of such future tax benefits.

that are greater than the specified percentage of the actual benefits we ultimately realize in respect of the tax benefits that are subject to the Tax Receivable Agreement and (ii) we would be required to make an immediate cash payment equal to the present value of the anticipated future tax benefits that are the subject of the Tax Receivable Agreement, which payment may be made significantly in advance of the actual realization, if any, of such future tax benefits.

In these situations, our obligations under the Tax Receivable Agreement could have a substantial negative impact on our liquidity and could have the effect of delaying, deferring or preventing certain mergers, asset sales, other forms of business combination, or other changes of control.

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At December 31, 2023, we had an aggregate of 202,428,913 shares of Class A common stock authorized but unissued, including 40,044,536 shares of Class A common stock issuable, at our election, upon redemption of CWGS, LLC common units held by the Continuing Equity Owners.

the NYSE) who are disinterested), newly-issued shares of our Class A common stock on a one-for-one basis or a cash payment equal to a volume weighted average market price of one share of Class A common stock for each common unit redeemed, in each case in accordance with the terms of the CWGS LLC Agreement;

In connection with our IPO, CWGS, LLC entered into the CWGS LLC Agreement, and subject to certain restrictions set forth therein, the Continuing Equity Owners are entitled to have their common units redeemed from time to time at each of their options for, at our election (determined solely by our independent directors (within the meaning of the rules of the NYSE) who are disinterested), newly-issued shares of our Class A common stock on a one-for-one basis or a cash payment equal to a volume weighted average market price of one share of Class A common stock for each common unit redeemed, in each case in accordance with the terms of the CWGS LLC Agreement;

provided that, at our election (determined solely by our independent directors (within the meaning of the rules of the NYSE) who are disinterested), we may effect a direct exchange of such Class A common stock or such cash, as applicable, for such common units.

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We have reserved shares for issuance under our 2016 Incentive Award Plan (the “2016 Plan”) in an amount equal to 9,216,232 shares of Class A common stock as of December 31, 2023, including shares of Class A common stock issuable pursuant to 192,507 stock options and 1,874,558 restricted stock units that were granted to certain of our directors and certain of our employees.

Any Class A common stock that we issue, including under our 2016 Plan or other equity incentive plans that we may adopt in the future, would dilute the percentage ownership of holders of our Class A common stock.

Any Class A common stock that we issue,

including under our 2016 Plan or other equity incentive plans that we may adopt in the future, would dilute the percentage ownership of holders of our Class A common stock.

In the future, we may also issue additional securities if we need to raise capital, including, but not limited to, in connection with acquisitions, which could constitute a material portion of our then-outstanding shares of Class A common stock.

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Additionally, any change in the level of our dividends or the suspension of the payment thereof could adversely affect the market price of our Class A common stock.

For additional information on our payments of dividends, see "Item 5.

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities—Dividend Policy"

under Part II of this Form 10-K.

For additional information on our payments of dividends, see "Item 5.

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities—Dividend Policy" under Part II of this Form 10-K.

Delaware law and certain provisions in our amended and restated certificate of incorporation may prevent efforts by our stockholders to change the direction or management of our company.

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● our Board of Directors is classified into three classes, each of which serves for a staggered three-year term;

● a majority of our stockholders or a majority of our Board of Directors may call special meetings of our stockholders, and at such time as the ML Related Parties, directly or indirectly, beneficially own in the aggregate, less than 27.5% of all of the outstanding common units of CWGS, LLC, only the chairperson of our Board of Directors or a majority of our Board of Directors may call special meetings of our stockholders;

● a majority of our stockholders or a majority of our Board of Directors may call special meetings of our stockholders, and until such time as the ML Related Parties, directly or indirectly, beneficially own in the aggregate, less than 27.5% of all of the outstanding common units of CWGS, LLC, only the chairperson of our Board of Directors or a majority of our Board of Directors may call special meetings of our stockholders;

● we have authorized undesignated preferred stock, the terms of which may be established and shares of which may be issued without stockholder approval;

● any action required or permitted to be taken by our stockholders at an annual meeting or special meeting of stockholders may be taken without a meeting, without prior notice and without a vote, if a written consent is signed by the holders of our outstanding shares of common stock representing not less than the minimum number of votes that would be necessary to authorize such action at a meeting at which all outstanding shares of common stock entitled to vote thereon, and at such time as the ML Related Parties, directly or indirectly, beneficially own in the aggregate, less than 27.5% of all of the outstanding common units of CWGS, LLC, any action required or permitted to be taken by our stockholders at an annual meeting or special meeting of stockholders may not be taken by written consent in lieu of a meeting;

by our stockholders at an annual meeting or special meeting of stockholders may not be taken by written consent in lieu of a meeting;

● our amended and restated certificate of incorporation may be amended or repealed by the affirmative vote of a majority of the votes which all our stockholders would be eligible to cast in an election of directors and our amended and restated bylaws may be amended or repealed by a majority vote of our Board of Directors or by the affirmative vote of a majority of the votes which all our stockholders would be eligible to cast in an election of directors, and at such time as the ML Related Parties, directly or indirectly, beneficially own in the aggregate, less than 27.5% of all of the outstanding common units of CWGS, LLC, our amended and restated certificate of incorporation and our amended and restated bylaws may be amended or repealed by the affirmative vote of the holders of at least 66 2 / 3 % of the votes which all our stockholders would be entitled to cast in any annual election of directors and our amended and restated bylaws may also be amended or repealed by a majority vote of our Board of Directors;

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These provisions could also discourage proxy contests and make it more difficult for you and other stockholders to elect directors of your choosing and cause us to take other corporate actions you desire, including actions that you may deem advantageous, or negatively affect the trading price of our Class A common stock.

In addition, because our Board of Directors is responsible for appointing the members of our

management team, these provisions could in turn affect any attempt by our stockholders to replace current members of our management team.

In addition, because our Board of Directors is responsible for appointing the members of our management team, these provisions could in turn affect any attempt by our stockholders to replace current members of our management team.

Please see “— Risks Relating to Our Organizational Structure — Marcus Lemonis, through his beneficial ownership of our shares directly or indirectly held by ML Acquisition and ML RV Group, has substantial control over us, including over decisions that require the approval of stockholders, and his interests, along with the interests of our other Continuing Equity Owners, in our business may conflict with yours.”

Our amended and restated certificate of incorporation provides, subject to certain exceptions, that the Court of Chancery of the State of Delaware will be the sole and exclusive forum for certain stockholder litigation matters, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, employees or stockholders.

Our amended and restated certificate of incorporation provides, subject to certain exceptions, that the Court of Chancery of the State of Delaware will be the sole and exclusive forum for certain stockholder litigation matters, and our amended and restated bylaws designate the federal district courts of the United States as the exclusive forum for actions arising under the Securities Act of 1933, as amended, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, employees or stockholders.

Our amended and restated certificate of incorporation provides, subject to limited exceptions, that the Court of Chancery of the State of Delaware will, to the fullest extent permitted by law, be the sole and exclusive forum for (i) any derivative action or proceeding brought on our behalf;

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Any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock are deemed to have notice of and to have consented to the provisions of our amended and restated certificate of incorporation described above.

This choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or any of our directors, officers, other employees or stockholders which may discourage lawsuits with respect to such claims.

Alternatively, if a court were to find the choice of forum provision in our amended and restated certificate of incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could materially adversely affect our business, financial condition and results of operations.

In addition, our amended and restated bylaws provide that the federal district courts of the United States are the exclusive forum for any complaint raising a cause of action arising under the Securities Act of 1933, as amended.

These choice of forum provisions may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or any of our directors, officers, other employees or stockholders which may discourage lawsuits with respect to such claims.

Alternatively, if a court were to find the choice of forum provisions in our amended and restated certificate of incorporation or our amended and restated bylaws to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could materially adversely affect our business, financial condition and results of operations.

We may issue shares of preferred stock in the future, which could make it difficult for another company to acquire us or could otherwise adversely affect holders of our Class A common stock, which could depress the price of our Class A common stock.

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In addition, if we do not maintain adequate financial and management personnel, processes and controls, we may not be able to manage our business effectively or accurately report our financial performance on a timely basis, which could cause a decline in our common stock price and adversely affect our results of operations and financial condition.

Failure to comply with the Sarbanes-Oxley Act could potentially subject us

to sanctions or investigations by the SEC, the NYSE or other regulatory authorities, which would require additional financial and management resources.

Failure to comply with the Sarbanes-Oxley Act could potentially subject us to sanctions or investigations by the SEC, the NYSE or other regulatory authorities, which would require additional financial and management resources.

General Risk Factors

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federal and state authorities.

Certain subsidiaries are currently under U.S.

federal audit (see Note 11 – Income Taxes to our consolidated financial statements included in Part II, Item 8 of this Form 10-K).

We are currently under California state audit (see Note 12 – Income Taxes to our consolidated financial statements included in Part II, Item 8 of this Form 10-K).

Outcomes from these audits could have an adverse effect on our operating results and financial condition.

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As a result of one or more of these factors, the trading price of our Class A common stock could decline.

UNRESOLVED STAFF COMMENTS

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 1A. Risk Factors