What changed in this filing

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Item 7. Management’s Discussion and Analysis

2024-02-26 compared with 2023-02-23 · 281 added, 404 removed, 501 unchanged (58% of the section changed)

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This discussion contains forward-looking statements based upon current plans, expectations and beliefs involving risks and uncertainties.

Our actual results may differ materially from those anticipated in these

forward-looking statements as a result of various important factors, including those set forth under “Risk Factors” included in Part I, Item 1A of this Form 10-K, the “Cautionary Note Regarding Forward-Looking Statements” and in other parts of this Form 10-K.

Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various important factors, including those set forth under “Risk Factors” included in Part I, Item 1A of this Form 10-K, the “Cautionary Note Regarding Forward-Looking Statements” and in other parts of this Form 10-K.

Except to the extent that differences among reportable segments are material to an understanding of our business taken as a whole, we present the discussion in Management’s Discussion and Analysis of Financial Condition and Results of Operations on a consolidated basis.

For purposes of this Form 10-K, we define an "Active Customer"

as a customer who has transacted with us in any of the eight most recently completed fiscal quarters prior to the date of measurement.

For purposes of this Form 10-K, we define an "Active Customer" as a customer who has transacted with us in any of the eight most recently completed fiscal quarters prior to the date of measurement.

Unless otherwise indicated, the date of measurement is December 31, 2023, our most recently completed fiscal quarter.

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Camping World Holdings, Inc.

(together with its subsidiaries) is America’s largest retailer of recreational RVs and related products and services.

(together with its subsidiaries) is the world’s largest retailer of recreational RVs and related products and services.

Our vision is to build a long-term legacy business that makes RVing fun and easy, and our Camping World and Good Sam brands have been serving RV consumers since 1966.

We strive to build long-term value for our customers, employees, and shareholders by combining a unique and comprehensive assortment of RV products and services with a national network of RV dealerships, service centers and customer support centers along with the industry’s most extensive online presence and a highly-trained and knowledgeable team of associates serving our customers, the RV lifestyle, and the communities in which we operate.

We also believe that our Good Sam organization and family of programs and services uniquely enables us to connect with our customers as stewards of the RV lifestyle.

On December 31, 2022, we operated a total of 197 retail locations, with 196 of these selling and/or servicing RVs.

We strive to build long-term value for our customers, employees, and stockholders by combining a unique and comprehensive assortment of RV products and services with a national network of RV dealerships, service centers and customer support centers along with the industry’s most extensive online presence and a highly-trained and knowledgeable team of associates serving our customers, the RV lifestyle, and the communities in which we operate.

We also believe that our Good Sam organization and family of services and plans uniquely enables us to connect with our customers as stewards of the RV lifestyle.

On December 31, 2023, we operated a total of 202 store locations, with all of them selling and/or servicing RVs.

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

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Number of store locations as of December 31, 2022

Converted (1)

Temporarily closed

Achieved designation of same store (1)

Number of store locations as of December 31, 2023

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

(1) Our same store revenue and units calculations for a given period include only those stores that were open both at the end of the corresponding period and at the beginning of the preceding fiscal year.

We executed a limited rollout of our online RV sales process on our RVs.com domain in one state during the quarter ended June 30, 2022.

We plan to expand RVs.com to additional markets after implementing enhancements, with limited additional investment, based on data gathered during the test rollout.

We operate two reportable segments:

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(1) Gross profit is presented exclusive of depreciation and amortization, which is presented separately in operating expenses.

As discussed in Note 1 ─ Summary of Significant Accounting Policies ─ COVID-19 to our consolidated financial statements included in Part II, Item 8 of this Form 10-K, the COVID-19 pandemic has had a primarily favorable impact on our business beginning in May 2020.

Within a few months of the initial significant outbreaks of COVID-19 in the U.S., we experienced elevated demand for RVs and many of our related products and services.

Within a few months of the initial significant outbreaks of COVID-19 in the U.S.

in 2020, we experienced elevated demand for RVs and many of our related products and services.

We believe that consumers view RVs as a safer alternative to many other travel and recreational activities, in addition to an opportunity to enjoy the outdoors after many consumers spent much of their time at home during portions of the pandemic.

We believe this has led to an introduction of many new customers to the RV lifestyle and a greater appreciation of outdoor activities.

We believe this led to an introduction of many new customers to the RV lifestyle and a greater appreciation of outdoor activities.

For much of the COVID-19 pandemic, demand and interest in new and used vehicles outpaced vehicle supply.

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As other modes of transportation and vacation options have mostly recovered from the impact of COVID-19, the increased demand for our products has dropped from the peak levels experienced in recent years.

Historically, most of our consumer shows and events took place during the first quarter.

As a consequence of COVID-19, we held fewer consumer shows in 2021 and 2022.

Moving forward, we have shifted our consumer show strategy to focus on shows that support our own Camping World dealerships as opposed to hosting other competing dealerships.

We expect to annually host fewer than five ticketed in-person consumer shows under the Good Sam brand in future years.

We do not expect consumer shows to be material to our consolidated financial statements.

We have also held several of our virtual RV Show events, branded “the Ultimate RV Show”, beginning in 2020 and the Ultimate RV Show has evolved to be a multi-channel experience that is both online and in store locations.

Cybersecurity Incident

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

In February 2022, we announced 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”).

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.

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.

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.

We do not expect that the Cybersecurity Incident will cause future disruptions to our business or that the Cybersecurity Incident, including anticipated costs associated with pending litigation, will have a future material impact on our business, results of operations or financial condition.

Strategic Review

On January 17, 2024, we announced that we are reviewing potential strategic alternatives for 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.

Key Performance Indicators

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Same store revenue.

Same store revenue measures the performance of a retail location during the current reporting period against the performance of the same retail location in the corresponding period of the previous year.

Same store revenue measures the performance of a store location during the current reporting period against the performance of the same store location in the corresponding period of the previous year.

Our same store revenue calculations for a given period include only those stores that were open both at the end of the corresponding period and at the beginning of the preceding fiscal year.

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

From 2015 to 2022, total new vehicle travel trailer units have increased from 62% to 76% of total new vehicle unit sales but from 2015 to 2022 our average selling price of a new vehicle unit had increased from $39,853 to $45,834.

Due to lower industry supply of travel trailers and motorhomes during much of 2020 and 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.

From 2015 to 2023, total new vehicle travel trailer units have 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.

Due to lower industry supply of travel trailers and motorhomes during much of 2020 and 2021, both average cost and average sales price increased.

However, average sales price decreased in 2023 (see “Industry Trends” below), which impacted our same store revenue.

Gross Profit and Gross Margins .

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While gross margins for our RV and Outdoor Retail segment are lower than gross margins for our Good Sam Services and Plans, this segment generates significant gross profit and is our primary means of acquiring new customers, to whom we then cross sell our higher margin products and services with recurring revenue.

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

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

Plans to our Active Customer base.

Gross margin in our RV and Outdoor Retail segment was positively impacted in 2021 and, to a lesser extent, 2022 by increased demand for vehicles and reduced supply leading to higher average prices per unit.

However, gross margins in 2022 were negatively impacted by the higher cost of new vehicles that was driven largely from the reduced supply of new vehicles during much of 2021.

However, gross margins in 2023 and 2022 were negatively impacted by the higher cost of new vehicles that was driven largely from the reduced supply of new vehicles during much of 2021.

Gross margins were also negatively impacted in 2023 by the decline in average prices per unit.

Adjusted EBITDA and Adjusted EBITDA Margin.

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Industry Trends

According to the RV Industry Association’s survey of manufacturers, wholesale shipments of recreational vehicles for 2021 were 600,240 units, a new record for RV shipments for any year.

Shipments for the year ended December 31, 2021 increased 39.5% over the year ended December 31, 2020 and surpassed 2017, the previous record year, by 19.0%.

Wholesale shipments for 2022 were 493,268 units, 17.8% less than the comparable period in 2021, the all-time record year for shipments, but were still the third best year on record.

Thor Industries, our largest supplier of RVs, disclosed in its Form 10-Q for the three months ended October 31, 2022 as filed with the Securities and Exchange Commission on December 7, 2022 that its North American RV order backlog as of October 31, 2022 had declined 70% compared to October 31, 2021.

Thor Industries also disclosed that it believes that as of October 31, 2022, the North American RV independent dealer inventory levels were at historical, normalized levels for most of its towable products and generally below historical levels for its motorized products.

The per unit cost of new vehicles has been significantly higher than we experienced prior to the COVID-19 pandemic, which was largely driven by the RV manufacturers’ supply constraints described above and the strong demand for new vehicles, as well as the impact of higher inflation and interest rates.

These higher costs have been partially mitigated by the higher average selling prices on new vehicles, but we experienced a decrease in new vehicle gross margins during the year ended December 31, 2022 as a result of these higher costs.

We expect average selling prices may decrease over time as industry-wide supply continues to normalize, which would continue to reduce new vehicle gross margins.

We will continue to evaluate supplier pricing, among other criteria, as part of our vehicle procurement process.

In 2022, we experienced the impact of inflation on our operations, particularly with the increased cost of new vehicles.

According to the RV Industry Association’s survey of manufacturers, which almost entirely focuses on North America, wholesale shipments of new RVs for 2023 were 313,174 units, 36.5% less than in 2022.

RV shipments for the last two months of 2023 showed an increase over the previous year, and their projections indicate that they expect to continue to see increased shipments and retail sales in 2024, particularly in the latter half of the year.

Thor Industries, our largest supplier of RVs, disclosed in its Form 10-Q for the quarter ended October 31, 2023 as filed with the SEC on December 6, 2023 that its North American RV order backlog had declined 54% compared to October 31, 2022, primarily as a result of a reduction in orders from independent dealers.

Thor Industries also disclosed that it believes that as of July 31, 2023, the North American RV independent dealer inventory levels were generally at, or slightly higher than, the levels dealers are comfortable stocking for most of their towable products and generally aligned with desired levels for its motorized products.

The per unit cost of new vehicles has been significantly higher than we experienced prior to the COVID-19 pandemic, due to the RV manufacturers’ supply constraints during the pandemic, strong demand for new vehicles during the pandemic, higher inflation, and higher interest rates.

These higher costs had been partially mitigated by the higher average selling prices on new vehicles initially, but we experienced a decrease in new vehicle gross margins during the year ended December 31, 2022, which continued in 2023, as a result of these higher costs.

We experienced a 4.3% decrease in the average sale price of new vehicles during 2023 compared to 2022, driven by more price sensitive customers in a higher interest rate environment.

We will continue to evaluate supplier pricing and the mix of our vehicle offerings, such as lower-priced towables, among other criteria, as part of our vehicle procurement process.

Certain of our RV manufacturers have indicated that they expect new towable vehicle average selling prices to decline by up to 10% for model year 2024 vehicles.

The decrease in average selling prices for new towable vehicles has led to additional discounting on new vehicles from prior model years, beginning primarily in the fourth quarter of 2023, which has negatively impacted our near-term new vehicle gross margins as we sell through our stock of pre-2024 model year vehicles.

Additionally, these new vehicle price pressures have resulted, and may continue to result, in a decline in residual values of used vehicles, which led us to discount used vehicle pricing in order to maintain our rate of sale and inventory turns, which has negatively impacted used vehicle gross margins.

Certain finance and insurance and Good Sam services and plans revenues that are at least partially based on new and/or used vehicle pricing have been negatively impacted by new and used vehicle average selling price decreases.

Financial Institutions

The Company maintains the majority of its cash and cash equivalents in accounts with major U.S.

and multi-national financial institutions, and our deposits at certain of these institutions exceed insured limits.

Market conditions can impact the viability of these institutions.

In the event of failure of any of the financial institutions where we maintain our cash and cash equivalents, there can be no assurance that we will be able to access uninsured funds in a timely manner or at all.

During 2023 we experienced the impact of inflation on our operations, particularly with the increased cost of new vehicles.

The price risk relating to new vehicles includes the cost from the manufacturer, as well as freight and logistics costs.

Each of these costs have been impacted, to differing degrees, by factors such as high demand for product, supply chain disruptions, labor shortages, and increased fuel costs, some of which were caused, in part, by the COVID-19 pandemic.

We expect these cost pressures to continue into 2023.

These cost pressures began to recede during the third quarter of 2023 and we expect this trend to continue into 2024.

We have increased employee compensation rates as a response to the generally higher cost of living experienced in much of the United States in recent quarters.

While we regularly review our compensation arrangements to ensure that our pay practices are competitive, we made meaningful adjustments to labor rates, largely in the fourth quarter of 2022, which were mostly offset by other cost reductions which included reduced headcount in the fourth quarter of 2022 and the elimination or reduction of underperforming assets, locations, and business lines.

Additionally, during September and October of 2023, we implemented employee headcount reductions and adjustments to employee variable compensation plans that are expected to result in approximately $60.0 million of annual cost savings, primarily for selling, general and administrative expenses.

These cost savings exclude any additional employee headcount from our expected expansion of store locations.

Inflationary factors, such as increases to our product and overhead costs, may adversely affect our operating results if the selling prices of our products and services do not increase proportionately with those increased costs or if demand for our products and services declines as a result of price increases to address inflationary costs.

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Additionally, our leases require us to pay taxes, maintenance, repairs, insurance and utilities, all of which are generally subject to inflationary increases.

Further, the cost of remodeling acquired retail locations and constructing new retail locations is subject to inflationary increases in the costs of labor and material, which results in higher rent expense on new retail locations.

Further, the cost of remodeling acquired RV dealership locations and constructing new RV dealership locations is subject to inflationary increases in the costs of labor and material, which results in higher rent expense on new RV dealership locations.

Finally, our credit agreements include interest rates that vary based on various benchmarks.

Such rates have historically increased during periods of increasing inflation.

2019 Strategic Shift

In 2019, we made a strategic decision to refocus our business around our core RV competencies.

During the year ended December 31, 2021, we completed our analysis of our retail product offerings that are not RV related as part of the 2019 Strategic Shift.

The information available at the inception of the 2019 Strategic Shift relating to these product categories was incomplete based on the relative immaturity of the locations offering these products and was further delayed by the impact of COVID-19 on consumer buying behavior (see “COVID-19” discussion in this Form 10-K).

During the year ended December 31, 2021, we recorded $15.0 million of incremental reserve charges relating to product categories that are not RV related.

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.

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.

We expect to incur lease termination costs and other associated costs of $4.4 million to $15.9 million during 2023 relating to these leases on previously closed locations under the 2019 Strategic Shift.

Any restructuring costs, other than lease termination costs, relating to the 2019 Strategic Shift recognized after December 31, 2022 will not be included as an adjustment to our Non-GAAP Financial Measures (as defined in “Non-GAAP Financial Measures” in Part II, Item 7 of this Form 10-K).

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

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

Year Ended December 31,

Restructuring costs:

One-time termination benefits (1)

Lease termination costs (2)

Incremental inventory reserve charges (3)

Other associated costs (4)

Total restructuring costs

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

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

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

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

Other associated costs primarily represent labor, lease, and other operating expenses incurred during the post-close wind-down period for the locations related to the 2019 Strategic Shift.

For the years ended December 31, 2022, 2021 and 2020, costs of approximately $0 million, $0 million and $0.4 million, respectively, were included in costs applicable to revenue – products, service and other, and $7.0 million, $10.7 million and $16.4 million, respectively, were included in selling, general, and administrative expenses in the consolidated statements of operations.

Restructuring

In 2019, we made a strategic decision to refocus our business around our core RV competencies (the “2019 Strategic Shift”).

On March 1, 2023, our management determined to implement plans (the “Active Sports Restructuring”) to exit and restructure operations of our indirect subsidiary, Active Sports, LLC, a specialty products retail business (“Active Sports”).

As of December 31, 2023, the Company had substantially completed the activities under the 2019 Strategic Shift and Active Sports Restructuring except for the remaining potential ongoing charges related to lease termination costs and other associated costs relating to the leases of certain previously closed locations and facilities.

The process of identifying subtenants and negotiating lease terminations had been delayed, which initially was 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.

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

Comparison of Certain Trends to Pre-COVID-19 Pandemic Periods

Beginning in the fourth quarter of 2021 and continuing through the fourth quarter of 2022, the Company has experienced sequential decreases in new vehicle gross margin, primarily from the higher cost of new vehicles from the lower industry supply of travel trailers and motorhomes for much of 2021.

However, fourth quarter 2022 gross margins were higher than the Company experienced in any of the pre-COVID-19 pandemic periods of 2016 to 2019, which we believe are more typical demand environments than during the COVID-19 pandemic.

Additionally, the percentage of total unit sales relating to used vehicles was significantly higher in the fourth quarter of 2022 compared to the pre-COVID-19 pandemic periods of 2016 to 2019.

The Company is continuing to execute on its used vehicle strategy, which differentiates it from the competition with proprietary tools, such as the RV Valuator, focus on the development and retention of its service technician team, and investment in its service bay infrastructure.

The following table presents vehicle gross margin and unit sale mix for the three months ended December 31, 2022 and pre-COVID-19 pandemic periods of the three months ended December 31, 2019, 2018, 2017, and 2016:

Three Months Ended December 31,

During 2023, we experienced a decrease in gross margin for new and used vehicles compared to 2022.

However, 2023 new vehicle gross margins were higher than the pre-COVID-19 pandemic periods of 2016 to 2019, which we believe are more typical demand environments than during the COVID-19 pandemic.

During 2023, as the procurement prices of model year 2024 new vehicles declined compared to model years 2022 and 2023, we actively discounted certain used vehicles to reduce inventory levels of aged used vehicles.

This discounting had a negative impact on used vehicle gross margins during 2023.

Additionally, the percentage of total unit sales relating to used vehicles was significantly higher in 2023 compared to the pre-COVID-19 pandemic periods of 2016 to 2019.

We are continuing to execute on our used vehicle strategy, which differentiates us from the competition with proprietary tools, such as the RV Valuator, a focus on the development and retention of our service technician team, and investment in our service bay infrastructure.

The following table presents vehicle gross margin and unit sale mix for the year ended December 31, 2023 and pre-COVID-19 pandemic periods of the years ended December 31, 2019, 2018, 2017, and 2016:

Year Ended December 31,

Gross margin:

Used vehicles

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(1) These periods were prior to the COVID-19 Pandemic.

Cost Reduction Initiatives in Fourth Quarter of 2022

During the fourth quarter of 2022, we began implementing a series of cost reduction initiatives, which included reduced headcount in the fourth quarter and the elimination or reduction of underperforming assets, locations, and business lines.

During the year ending December 31, 2023, the headcount reductions are expected to result in cost savings which will largely be offset by other increases in wages and benefits.

During the year ending December 31, 2023, the other cost reduction initiatives are expected to result in cost savings of between $30.0 million and $35.0 million, primarily as components of selling, general and administrative costs.

These other cost reduction amounts do not include offsets for additional expenditures for other initiatives in 2023, which we currently do not believe will be material.

Costs incurred to implement these cost reduction measures have not been, and are not expected to be, material.

While many of these cost reduction measures were completed during the fourth quarter of 2022, most of the remaining cost reduction measures will be completed by the end of the first half of 2023.

Our Corporate Structure Impact on Income Taxes

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Typically, most of our income tax expense is recorded at the CWH level, our public holding company, based on its allocation of taxable income from CWGS, LLC.

More specifically, as discussed in Note 11 — Income Taxes to our consolidated financial statements included in Part II, Item 8 of this Form 10-K, CWH is organized as a C-Corp and, as of December 31, 2022, is a 50.2% owner of CWGS, LLC (see Note 18 — Stockholders’ Equity and Note 19 — Non-Controlling Interests to our consolidated financial statements included in Part II, Item 8 of this Form 10-K).

More specifically, CWH is organized as a C-Corp and, as of December 31, 2023, is a 52.9% owner of CWGS, LLC.

CWGS, LLC is organized as a limited liability company and treated as a partnership for U.S.

federal and most applicable state and local income tax purposes and, as such is generally not subject to any U.S.

federal entity-level income taxes (“Pass-Through”), with the exception of Americas Road and Travel Club, Inc., Camping World, Inc.

(“CW”) (prior to the conversion of CW and certain other subsidiaries to limited liability companies (the “LLC Conversion”) (see Note 11 — Income Taxes to our consolidated financial statements included in Part II, Item 8 of this Form 10-K)), and FreedomRoads RV, Inc.

and their wholly-owned subsidiaries, which are C-Corps embedded within the CWGS, LLC structure.

federal and most applicable state and local income tax purposes and, as such is generally not subject to any

federal entity-level income taxes (“Pass-Through”), with the exception of Americas Road and Travel Club, Inc.

and FreedomRoads RV, Inc., and their wholly-owned subsidiaries, which are C-Corps embedded within the CWGS, LLC structure.

As discussed below, prior to 2023, Camping World, Inc.

(“CW”) and its wholly-owned subsidiaries were also C-Corps embedded within the CWGS, LLC structure.

By January 2, 2023, the “LLC Conversion” (see Note 12 — Income Taxes to our consolidated financial statements included in Part II, Item 8 of this Form 10-K) was completed.

We expect that, beginning with the year ended December 31, 2023, the LLC Conversion will allow certain losses that previously would have been confined within the C-Corp portion of CWGS, LLC to instead offset a portion of income generated by the Pass-Through portion of CWGS, LLC, which would reduce the amount of income tax expense recorded by CWH.

The LLC Conversion is also expected to reduce the amount of tax distributions required to be paid by CWGS, LLC to CWH and the non-controlling interest holders under the CWGS LLC Agreement beginning with the year ended December 31, 2023.

CWH receives an allocation of its share of the net income of CWGS, LLC based on CWH’s weighted-average ownership of CWGS, LLC for the period.

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CWGS, LLC may be liable for various other state and local taxes.

By January 2, 2023, the “LLC Conversion” (see Note 11 — Income Taxes to our consolidated financial statements included in Part II, Item 8 of this Form 10-K) was completed.

The Company expects that, beginning with the year ending December 31, 2023, the LLC Conversion allows certain losses that previously would have been confined within the C-Corp portion of CWGS, LLC to instead offset a portion of income generated by the

Pass-Through portion of CWGS, LLC, which would reduce the amount of income tax expense recorded by CWH.

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

Year Ended December 31,

($ in thousands)

C-Corp portion of CWGS, LLC net loss allocated to CWH

C-Corp portion of CWGS, LLC net income (loss) allocated to CWH

Pass-Through portion of CWGS, LLC net income allocated to CWH

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Tax Receivable Agreement liability adjustment

Income tax expense recorded by CWH

Income tax benefit (expense) recorded by CWH

Other incremental CWH net income

The following table presents further information on income tax expense:

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

Year Ended December 31,

($ in thousands)

Income tax expense recorded by CWH (1)

Income tax benefit (expense) recorded by CWH (1)

Income tax (expense) benefit recorded by CWGS, LLC (2)

Income tax expense

During the year ended December 31, 2022, this amount included $13.3 million of income tax expense relating to the LLC Conversion.

Income tax benefit (expense)

During the year ended December 31, 2023, this amount included $3.1 million of net income tax benefit related to the LLC Conversion and the realization of a portion of outside basis in CWGS, LLC, which previously had a valuation allowance.

Additionally, the Company recorded an income tax benefit of $4.1 million related to an entity classification election, which was filed in the third quarter of 2023 with an effective date of January 2, 2023.

During the year ended December 31, 2022, this amount included $13.3 million of income tax expense related to the LLC Conversion.

This income tax expense was primarily from the write-off of deferred tax assets, which was partially offset by the release of valuation allowance.

See Note 12 – Income Taxes to our consolidated financial statements included in Part II, Item 8 of this Form 10-K for additional information.

During the year ended December 31, 2022, this amount included $15.2 million of income tax expense relating to the LLC Conversion.

During the year ended December 31, 2023, this amount included $2.9 million of income tax benefit related to CW state unitary net operating losses.

During the year ended December 31, 2022, this amount included $15.2 million of income tax expense related to the LLC Conversion.

This income tax expense was primarily from the write-off of deferred tax assets, which was partially offset by the release of valuation allowance.

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Selling, general and administrative expenses

Debt restructure expense

Depreciation and amortization

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Other interest expense, net

Loss on debt restructure

Tax Receivable Agreement liability adjustment

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Income before income taxes

Income tax expense

Income tax benefit (expense)

net income attributable to non-controlling interests

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Total gross margin

Inventories ($ in 000's)

RV and Outdoor Retail inventories ($ in 000s)

Used vehicles

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Good Sam Services and Plans

Good Sam Services and Plans revenue increased primarily due to a $7.6 million increase from the roadside assistance programs primarily resulting from increased contracts in force and favorable updates to assumptions for cancellations;

a $2.4 million increase from the extended vehicle warranty programs primarily resulting from increased contracts in force;

a $2.0 million increase in Good Sam TravelAssist revenue primarily resulting from increased contracts in force;

a $1.6 million increase from the Good Sam Insurance Agency primarily resulting from increased contracts in force;

and an $0.9 million increase from the consumer shows due to no shows produced in 2021 and one show produced in 2022;

partially offset by $1.2 million reduction from the annual directory;

a $1.1 million reduction from RV financing programs;

and an $0.8 million reduction from other programs.

Good Sam Services and Plans gross profit increased primarily due to a $9.5 million increase from roadside assistance programs resulting from increased contracts in force, favorable updates to assumptions for cancellations, and reduced marketing costs;

a $2.4 million increase from the extended warranty insurance programs;

a $2.1 million increase from the Good Sam TravelAssist programs;

a $1.7 million increase from the Good Sam Insurance Agency;

and a $1.1 million increase from consumer shows;

partially offset by a $1.4 million increase in overhead support expenses;

a $2.0 million reduction from other services and plans, and a $1.1 million reduction from RV financing programs;.

The gross margin increase in Good Sam Services and Plans was primarily due to the increases from the roadside assistance programs described above.

Good Sam Services and Plans revenue increased primarily due to increased contracts in force from the Good Sam Insurance Agency, the extended vehicle warranty and roadside assistance programs, partially offset by an enrollment reduction from the Good Sam TravelAssist programs and reduced magazine ad revenue.

Good Sam Services and Plans gross profit and gross margin increased primarily due to a nonrecurring $5.5 million in savings from finalizing contract negotiations to exit an arrangement with a service partner in the current year and increased contracts in force from the roadside assistance, extended vehicle warranty, and Good Sam Insurance Agency programs, in addition to our efforts to reduce expenses.

RV and Outdoor Retail

New vehicle revenue decreased primarily due to a 9.4% decline in vehicles sold, partially offset by an 8.0% increase in average sales price.

New vehicle revenue decreased primarily due to a 16.6% decrease in new vehicles sold, and, to a lesser extent, a 4.3% decrease in the average selling price per new vehicle sold.

On a same store basis, new vehicle revenue decreased 25.7% to $2.3 billion, and new vehicle units sold decreased 22.1%.

New vehicle gross profit decreased primarily due to a 17.4% increase in the average cost of new vehicles sold, partially offset by an 8.0% increase in the average selling price per new vehicle sold.

Also, a 9.4% decrease in vehicles sold contributed to the decrease in new vehicle gross profit.

New vehicle gross profit decreased primarily due to the above mentioned factors impacting new vehicle revenue and a 1.3% increase in the average cost per new vehicle sold.

New vehicle gross margin decreased 465 basis points primarily due to compression from the higher cost per new unit sold and the lower average selling price of new vehicles (see Industry Trends in Item 7 of Part II of this Form 10-K for further discussion of new vehicle average selling prices and cost).

Used Vehicles

Used vehicle revenue increased primarily due to a 4.9% increase in vehicles sold and a 6.2% increase in average selling price per vehicle, driven by an increase in demand for used vehicles, as they are a lower-cost alternative to new vehicles.

On a same store basis, used vehicle revenue increased 6.8% to $1.7 billion and used vehicles sold increased 0.1%.

Used vehicle gross profit increased due to the above mentioned increases in units sold and average sales price per vehicle.

The decrease in used vehicle gross margin was primarily the result of compression from an 8.4% higher average cost per unit sold, partially offset by a 6.2% increase in average selling price per vehicle sold.

Used vehicle revenue increased primarily due to a 10.7% increase in used vehicles sold, driven by an increase in demand for used vehicles, as they are a lower-cost alternative to new vehicles, partially offset by a 4.8% decrease in average selling price per used vehicle sold.

On a same store basis, used vehicle revenue decreased 0.7% to $1.8 billion and used vehicle units sold increased 5.0%.

Used vehicle gross profit decreased primarily due to a 4.8% decrease in average price per used vehicle sold and a 0.3% increase in the cost per used vehicle sold, partially offset by a 10.7% increase in used vehicles sold.

Used vehicle gross margin decreased 400 basis points primarily due to the decrease in the average selling price per used vehicle and compression from the slightly higher cost per used vehicle sold.

Products, Service and Other

Products, service and other revenue decreased primarily due to our exit from certain non-RV product categories, as part of the 2019 Strategic Shift, that were sold in 2021, but not in 2022.

Products, service and other revenue decreased primarily due to lower demand and lower stocking levels of lifestyle and activities, and design and home products, as well as a reduction in demand for our RV furniture distribution business as RV manufacturers slowed RV production.

Revenues were also impacted negatively by our Active Sports Restructuring.

On a same store basis, products, service and other revenue decreased 8.0% to $635.7 million in 2023 from $691.0 million in 2022.

Products, service and other gross profit decreased primarily due to the absence of revenue resulting from our exit of certain non-RV product categories during the second half of 2021.

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

Products, service and other gross profit decreased primarily due to the demand trends noted above, discounting to reduce inventory levels, discounting of Active Sports merchandise in conjunction with the Active Sports Restructuring, and compression from higher costs.

Products, service and other gross margin increased primarily due to higher labor billing rates.

Finance and Insurance, net

Finance and insurance revenue and gross profit is recorded net, since the Company is acting as an agent in the transaction, and commission is recognized when a finance and insurance product contract payment has been received or financing has been arranged.

Finance and insurance, net revenue as a percentage of new and used vehicle revenue was 12.2% in 2022 compared to 12.0% in 2021.

On a same store basis, finance and insurance, net decreased 0.1%, to $572.9 million.

Finance and insurance, net revenue increased in total and as a percentage of new and used vehicle revenue primarily due to an increase in the products sold per used vehicle, and increased gross profit per contract for both new and used vehicles sold, partially offset by a lower volume of vehicles sold.

has been received or financing has been arranged.

Finance and insurance, net revenue decreased primarily due to the 5.1% decrease in total vehicles sold, and lower average sales prices, partially offset by $6.0 million of favorable adjustments to cancellation reserve assumptions.

Finance and insurance, net revenue as a percentage of new and used vehicle revenue was 12.3% for the year ended December 31, 2023, an increase from 12.2% for the year ended December 31, 2022.

On a same store basis, finance and insurance, net revenue decreased 15.9%, or $95.1 million, to $504.3 million versus the year ended December 31, 2022.

Good Sam Club

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

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

Good Sam Club revenue decreased 4.3% primarily due to reduced marketing fee revenue from the Good Sam Club branded credit card, and reduced Good Sam Club membership fees resulting primarily from reduced retail traffic.

Good Sam Club gross profit and gross margin increased primarily due to reduced marketing expenses.

Operating Expenses and Other

Selling, general and administrative

Selling, general and administrative expenses increased primarily due to a $26.2 million increase in selling expenses, a $12.7 million increase in insurance costs due to increased inventory levels, a $13.0 million increase in occupancy expenses due to the net increase of ten store locations over the prior year, a $7.0 million increase in professional fees, a $6.1 million increase in personal property expenses, and a $0.6 million increase in other store and corporate overhead expenses, partially offset by an $18.2 million reduction in wage-related expenses and a $14.0 million reduction in equity-based compensation expenses.

The $14.0 million decrease in equity-based compensation expenses (See Note 20 — Equity-Based Compensation to our consolidated financial statements included in Part II, Item 8 of this Form 10-K) resulted from $20.0 million of expense for a stock grant to our Chairman and Chief Executive Officer in December 2021 with no grant to that individual in 2022, which was partially offset by an increase of $2.1 million for expense related to the modification of restricted stock units to accelerate and/or continue vesting under employee separation agreements and/or post-termination consulting arrangements, more weighted-average restricted stock units outstanding, and a higher weighted-average grant date fair value of those restricted stock units.

Selling, general and administrative expenses decreased primarily due to approximately $49.2 million of reduced advertising expenses, $35.1 million of reduced commissions costs, and $10.0 million of reduced equity-based compensation, partially offset by increased facility costs related to the net six additional store locations added during the year ended December 31, 2023.

Equity-based compensation expenses decreased $10.0 million (See Note 21 — Equity-Based Compensation Plans to our consolidated financial statements included in Part II, Item 8 of this Form 10-K) resulting primarily from (i) $2.7 million less expense, compared to 2022, related to the modification of restricted stock units to accelerate and/or continue vesting under employee separation agreements, post-termination consulting arrangements, and/or transition agreements, and (ii) fewer weighted-average restricted stock units outstanding from significantly fewer restricted stock units granted in 2022 and 2023 compared to any of the years from 2017 to 2021.

Depreciation and amortization

Depreciation and amortization increased primarily due to increased capital expenditures, mainly driven by our expansion of RV dealership locations and improvements to existing RV dealerships.

Additionally, the increase was due to $8.8 million of incremental accelerated amortization during the first quarter of 2022 from

the adjustment of the useful lives of certain trademark and trade name intangible assets, associated with brands not traditionally associated with RVs, that we have effectively phased out.

The trademark and trade name intangible assets relating to the effectively phased out brands were fully amortized as of March 31, 2022.

These increases were partially offset by $7.4 million of accelerated depreciation on store fixtures in the third quarter of 2021 related to categories exited as part of the 2019 Strategic Shift.

Depreciation and amortization decreased primarily from $8.8 million of incremental accelerated amortization during the year ended December 31, 2022 from the adjustment of the useful lives of certain trademark and trade name intangible assets associated with brands not traditionally associated with RVs that we were phasing out, and reduced capital expenditures.

These trademark and trade name intangible assets were fully amortized as of March 31, 2022.

Long-lived asset impairment

As discussed in Note 5 – Restructuring and Long-Lived Asset Impairment to our consolidated financial statements included in Part II, Item 8 of this Form 10-K, we recognized $4.2 million of long-lived asset impairments in 2022, of which $1.6 million related to the 2019 Strategic Shift discussed above, and $3.0 million for 2021, of which $1.4 million related to the 2019 Strategic Shift discussed above.

Lease termination

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

As discussed in Note 5 – Restructuring and Long-Lived Asset Impairment to our consolidated financial statements included in Part II, Item 8 of this Form 10-K, we recognized $9.3 million of long-lived asset impairments in 2023 of which $6.6 million related to the 2023 Active Sports Restructuring, and $4.2 million of long-lived asset impairments in 2022, of which $1.6 million related to the 2019 Strategic Shift discussed above.

Floor plan interest expense

Floor plan interest expense increased primarily due to a 76.5% increase in average floor plan borrowings driven primarily by higher new vehicle inventory quantities from the normalization of the new travel trailer supply chain and increases in average new vehicle unit costs, a 146 basis point increase in the average floor plan borrowing rate, and, to a lesser extent, an increase in average used vehicles subject to floor plan financing.

The significant increase in floor plan interest expense was primarily due to a 345 basis point increase in the average floor plan borrowing rate.

The average interest rates for the Floor Plan Facility for the year ended December 31, 2023 and 2022 were 7.03% and 3.59%, respectively.

Other interest expense, net

Other interest expense increased primarily due to a 96 basis point increase in the Term Loan Facility average interest rate and the additional $300.0 million of term loan borrowings in December 2021, which increased the average debt outstanding in 2022.

The increase in interest rates in 2022 did not have a proportionate impact on the increase in other interest expense, since the refinance of the Term Loan Facility in June 2021 resulted in a reduction in interest rates from the 25 basis point decrease in the applicable rate (as defined in the Credit Agreement (as defined in Note 9 – Long-Term Debt to our consolidated financial statements included in Part II, Item 8 of this Form 10-K)) and the Term Loan Facility was subject to the interest rate floor, including the 2.50% applicable rate, of 3.25% for the first four months of 2022 which negated interest rate increases during that period subject to the interest rate floor.

The applicable interest rate on the Term Loan Facility has subsequently risen above the interest rate floor and at December 31, 2022 is 6.82%.

For the Term Loan Facility, if the 6.82% interest rate was applicable for the entirety of the year 2022, other interest expense would have increased an additional $31.8 million.

We expect that interest rates and other interest expense, net will continue to increase in 2023.

Loss and expense on debt restructure

Loss and expense on debt restructure of $13.5 million in 2021 was comprised of $0.4 million in extinguishment of the original issue discount related to the Company’s prior term loan facility, $1.0 million in extinguishment of capitalized finance costs related to the Company’s prior term loan facility, and $12.1 million in legal and other expenses related to the Company’s current term loan facility.

Other interest expense, net increased primarily due to a 329 basis point increase in the Term Loan Facility average interest rate and a higher average principal balance from increased borrowings on the Company’s Real Estate Facilities (see Note 10 – Long-Term Debt to our condensed consolidated financial statements included in Part II, Item 8 of this Form 10-K).

The average interest rates for the Term Loan Facility for the years ended December 31, 2023 and 2022 were 7.60% and 4.31%, respectively.

Other expense, net

Other expense, net increased primarily as a result of a $1.3 million impairment of an equity method investment.

Tax Receivable Agreement Liability adjustment

The Tax Receivable Agreement Liability adjustment for 2022 and 2021 consisted of a benefit of $0.1 million and an expense of $2.8 million, respectively, related to a remeasurement from a decrease and increase, respectively, in state tax rates.

Income tax expense

Income tax expense increased primarily due to a $28.4 million decrease in deferred tax assets, net of release of valuation allowance, as a result of the LLC Conversion in 2022.

The Tax Receivable Agreement Liability adjustment for 2023 and 2022 consisted of $2.4 million benefit and $0.1 million benefit, respectively, related to a remeasurement from changes in blended state income tax rates.

Income tax benefit (expense)

Income tax expense decreased primarily due to lower income generated from CWGS, LLC for which the Company is subject to U.S.

federal and state taxes on its allocable share and changes in deferred tax assets, net of valuation allowance as a result of the LLC Conversion and certain entity classification elections in 2023.

Income tax increased primarily due to a $28.4 million decrease in deferred tax assets, net of release of valuation allowance, as a result of the LLC Conversion recorded in 2022.

Additionally, income tax expense for 2021 included benefits to income tax of $4.1 million for the revaluation of deferred tax assets as a result of increased state tax rates and $15.2 million for the release of valuation allowance at CW, which, in 2021 and 2022 prior to the LLC Conversion, became available to offset state combined income in certain unitary states due to the Company’s increased ownership in CWGS, LLC.

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

Fiscal Year Ended

December 31, 2023

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Tax Receivable Agreement liability adjustment

Loss and expense on debt restructure

Other income (expense), net

Other expense, net

Income before income taxes

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Good Sam Services and Plans

a $2.4 million increase from the extended vehicle warranty programs primarily resulting from increased contracts in force;

a $2.0 million increase in Good Sam TravelAssist revenue primarily resulting from increased contracts in force;

a $1.6 million increase from the Good Sam Insurance Agency primarily resulting from increased contracts in force;

and an $1.2 million increase from the consumer shows due to no shows produced in 2021 and one show produced in 2022;

partially offset by a $1.2 million reduction from the annual directory;

a $1.1 million reduction from RV financing programs;

and a $0.8 million reduction from other programs.

Good Sam Services and Plans segment income increased primarily due to a $9.5 million increase from the roadside assistance programs resulting from increased contracts in force, favorable updates to assumptions for cancellations, and reduced marketing expenses;

a $3.8 million decrease in selling, general and administrative expenses consisting mostly of a decrease in wages-related expenses;

a $2.4 million increase from the extended warranty insurance programs;

a $2.1 million increase from the Good Sam TravelAssist programs;

a $1.7 million increase from the Good Sam Insurance Agency;

and a $1.1 million increase from consumer shows;

partially offset by a $2.0 million reduction from other services and plans;

a $1.4 million increase in overhead support expenses;

and a $1.1 million reduction from the RV financing programs.

Segment income margin of 47.2% increased 585 basis points, or 14.1%, primarily due to increases from the roadside assistance programs and reduced selling, general and administrative expenses.

Good Sam Services and Plans revenue increased primarily due to increased contracts in force from the Good Sam Insurance Agency and the extended vehicle warranty and roadside assistance programs, partially offset by an enrollment reduction from the Good Sam TravelAssist programs and reduced magazine ad revenue.

Good Sam Services and Plans segment income and segment income margin increased primarily due to a nonrecurring $5.5 million savings from finalizing contract negotiations to exit an arrangement with a service partner in the current year and increased contracts in force from the roadside assistance, extended vehicle warranty, and Good Sam Insurance Agency programs, in addition to our efforts to reduce expenses.

Segment income margin increased 762 basis points to 54.8%.

RV and Outdoor Retail segment

RV and Outdoor Retail segment revenue increased primarily due to a $191.6 million, or 11.3%, increase in used vehicle revenue, and a $28.0 million, or 4.6%, increase in finance and insurance, net revenue, partially offset by a $102.2 million, or 9.3%, decrease in products, service and other revenue, a $72.0 million, or 2.2%, decrease in new vehicle revenue, and a $1.4 million, or 2.9%, reduction in Good Sam Club revenue.

RV and Outdoor Retail segment income decreased primarily due to decreased segment gross profit of $206.4 million primarily due to increased average cost per vehicle sold and reduced vehicles sold;

a $34.2 million increase in selling, general and administrative expenses (see discussion of selling, general and administrative expenses above);

a $27.9 million increase in floor plan interest expense;

a $1.2 million increase in long-lived asset impairment;

and a $1.2 million increase in loss on sale or disposal of assets;

partially offset by a $0.6 million decrease in lease termination expense.

RV and Outdoor Retail segment margin decreased 405 basis points to 7.8% primarily due to higher vehicle costs and increased selling, general and administrative expenses.

RV and Outdoor Retail segment revenue decreased primarily due to a $652.8 million, or 20.2%, decrease in new vehicles revenue, a $129.5 million, or 12.9%, decrease in products, service and other revenue, a $76.5 million, or 11.9%, decrease in finance and insurance, net revenue, and a $2.0 million, or 4.3%, decrease in Good Sam Club revenue, partially offset by a $102.4 million, or 5.4%, increase in used vehicles revenue.

RV and Outdoor Retail segment income decreased primarily due to a 5.1% reduction in total vehicles sold, and decreased segment gross profit of $395.6 million, relating to reduced vehicles sold, which also tends to result in a correlating decrease in finance and insurance, net revenue, and reduced sales price per vehicle sold, a $41.0 million increase in floor plan interest expense, a $5.0 million increase in long-lived asset impairment, partially offset by a $65.2 million decrease in selling, general and administrative expenses (see discussion of selling, general and administrative expenses above for the similar drivers of this change), a $5.8

million increase in gain on sale or disposal of assets, and a $1.7 million decrease in lease termination expense,.

RV and Outdoor Retail segment income margin decreased to 2.6% in the year ended December 31, 2023 from 7.8% in the year ended December 31, 2022 primarily due to reduced average sales prices and increased average costs per vehicle sold for the year ended December 31, 2023 versus the comparable period in 2022.

Corporate and other expenses

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

Tax Receivable Agreement Liability adjustment

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

Non-GAAP Financial Measures

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

– Diluted, Adjusted Earnings Per Share – Basic, and Adjusted Earnings Per Share – Diluted (collectively the "Non-GAAP Financial Measures").

We believe that these Non-GAAP Financial Measures, when used in conjunction with GAAP financial measures, provide useful information about operating results, enhance the overall understanding of past financial performance and future prospects, and allow for greater transparency with respect to the key metrics we use in our financial and operational decision making.

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In addition, our Senior Secured Credit Facilities use Adjusted EBITDA, as calculated for our subsidiary CWGS Group, LLC, to measure our compliance with covenants such as the consolidated leverage ratio.

The Non-GAAP Financial Measures have limitations as analytical tools, and the presentation of

this financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.

The Non-GAAP Financial Measures have limitations as analytical tools, and the presentation of this financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.

They should not be construed as an inference that the Company’s future results will be unaffected by any items adjusted for in these Non-GAAP Financial Measures.

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Each of the normal recurring adjustments and other adjustments described in this section and in the reconciliation tables below help management with a measure of our core operating performance over time by removing items that are not related to day-to-day operations.

For periods beginning after December 31, 2022, we are no longer including the other associated costs category of expenses relating to the 2019 Strategic Shift as restructuring costs for purposes of our Non-GAAP Financial Measures, since these costs are not expected to be significant in future periods.

For a discussion of the 2019 Strategic Shift, see Note 5 — Restructuring and Long-Lived Asset Impairment to our consolidated financial statements included in Part II, Item 8 of this Form 10-K.

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

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

These items include, among other things, loss and expense on debt restructure, long-lived asset impairment, lease termination costs, gains and losses on sale or disposal of

assets, net, equity-based compensation, Tax Receivable Agreement liability adjustment, restructuring costs related to the Active Sports Restructuring and the 2019 Strategic Shift, loss and impairment on investments in equity securities, and other unusual or one-time items.

We define “Adjusted EBITDA Margin” as Adjusted EBITDA as a percentage of total revenue.

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The following table reconciles EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin to the most directly comparable GAAP financial performance measures:

Fiscal Year Ended

Year Ended December 31,

($ in thousands)

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Depreciation and amortization

Income tax expense

Income tax (benefit) expense

Subtotal EBITDA

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Lease termination (b)

Loss (gain) on sale or disposal of assets, net (c)

(Gain) loss on sale or disposal of assets, net (c)

Equity-based compensation (d)

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Restructuring costs (f)

Loss and expense on debt restructure (g)

Loss and impairment on investments in equity securities (g)

Loss and expense on debt restructure (h)

Adjusted EBITDA

Fiscal Year Ended

Year Ended December 31,

(as percentage of total revenue)

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Depreciation and amortization

Income tax expense

Income tax (benefit) expense

Subtotal EBITDA margin

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Lease termination (b)

Loss (gain) on sale or disposal of assets, net (c)

(Gain) loss on sale or disposal of assets, net (c)

Equity-based compensation (d)

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Restructuring costs (f)

Loss and expense on debt restructure (g)

Loss and impairment on investments in equity securities (g)

Loss and expense on debt restructure (h)

Adjusted EBITDA margin

(a) Represents long-lived asset impairment charges related to the RV and Outdoor Retail segment, which includes locations affected by the 2019 Strategic Shift.

(a) Represents long-lived asset impairment charges related to the RV and Outdoor Retail segment.

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

(b) Represents the loss on the termination of operating leases, relating primarily to the 2019 Strategic Shift, resulting from lease termination fees and the derecognition of the operating lease assets and liabilities.

(b) Represents the loss on the termination of operating leases resulting from lease termination fees and the derecognition of the operating lease assets and liabilities.

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

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

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

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See Note 12 – Income Taxes to our consolidated financial statements included in Part II, Item 8 of this Form 10-K for additional information.

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

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

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

(f) Represents restructuring costs relating to the Active Sports Restructuring during the year ended December 31, 2023 and our 2019 Strategic Shift for periods ended on or before December 31, 2022.

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

These costs exclude lease termination costs, which are presented separately above.

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

(g) Represents the loss and expense incurred on debt restructure and financing expense, which is comprised of $0.4 million in extinguishment of the original issue discount and $1.0 million in extinguishment of capitalized finance costs related to the Previous Term Loan Facility, and $12.1 million in legal and other expenses related to the New Term Loan Facility in 2021.

(g) Represents loss and impairment on investments in equity securities and interest income relating to any notes receivables with those investments for periods beginning after December 31, 2022.

Amounts relating to periods prior to 2023 were not significant.

These amounts are included in other expense, net in the consolidated statements of operations.

During the year ended December 31, 2023, this amount included a $1.3 million impairment on an equity method investment.

(h) Represents the loss and expense incurred on debt restructure and financing expense, which is comprised of $0.4 million in extinguishment of the original issue discount and $1.0 million in extinguishment of capitalized finance costs related to the Previous Term Loan Facility, and $12.1 million in legal and other expenses related to the New Term Loan Facility in 2021.

Adjusted Net Income Attributable to Camping World Holdings, Inc.

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adjusted for the impact of certain non-cash and other items that we do not consider in our evaluation of ongoing operating performance.

These items include, among other things, loss and expense on debt restructure, long-lived asset impairment, lease termination costs, gains and losses on sale or disposal of assets, net, equity-based compensation, Tax Receivable Agreement liability adjustment, restructuring costs related to the 2019 Strategic Shift, other unusual or one-time items, the income tax expense effect of these adjustments, income tax expense impact from the LLC Conversion, and the effect of net income attributable to non-controlling interests from these adjustments.

These items include, among other things, loss and expense on debt restructure, long-lived asset impairment, lease termination costs, gains and losses on sale or disposal of assets, net, equity-based compensation, Tax Receivable Agreement liability adjustment, restructuring costs related to the Active Sports Restructuring and the 2019 Strategic Shift, loss and impairment on investments in equity securities, other unusual or one-time items, the income tax expense effect of these adjustments, income tax expense impact from the LLC Conversion, and the effect of net income attributable to non-controlling interests from these adjustments.

We define “Adjusted Net Income Attributable to Camping World Holdings, Inc.

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– Diluted, Adjusted Earnings Per Share – Basic, and Adjusted Earnings Per Share – Diluted to the most directly comparable GAAP financial performance measure:

Fiscal Year Ended

Year Ended December 31,

(In thousands except per share amounts)

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Gross adjustment

Income tax expense for above adjustment (b)

Loss (gain) on sale or disposal of assets (e):

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

(Gain) loss on sale or disposal of assets (e):

Gross adjustment

Income tax expense for above adjustment (b)

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

Equity-based compensation (f):

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Gross adjustment

Income tax expense for above adjustment (b)

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

Restructuring costs (h):

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Income tax expense for above adjustment (b)

Income tax expense impact from LLC Conversion (i)

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

Loss and impairment on investments in equity securities (i):

Gross adjustment

Income tax expense for above adjustment (b)

Income tax (benefit) expense impact from LLC Conversion (j):

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

Adjusted net income attributable to Camping World Holdings, Inc.

Adjustments related to diluted calculation:

Reallocation of net income attributable to non-controlling interests from the dilutive effect of stock options and restricted stock units (k)

Income tax on reallocation of net income attributable to non-controlling interests from the dilutive effect of stock options and restricted stock units (l)

Reallocation of net income attributable to non-controlling interests from the dilutive redemption of common units in CWGS, LLC (k)

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

Assumed income tax expense of combining C-Corps with full or partial valuation allowances with the income of other consolidated entities after the dilutive redemption of common units in CWGS, LLC (m)

Reallocation of net income attributable to non-controlling interests from the dilutive effect of stock options and restricted stock units (l)

Income tax on reallocation of net income attributable to non-controlling interests from the dilutive effect of stock options and restricted stock units (m)

Reallocation of net income attributable to non-controlling interests from the dilutive redemption of common units in CWGS, LLC (l)

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

Assumed income tax expense of combining C-Corps with full or partial valuation allowances with the income of other consolidated entities after the dilutive redemption of common units in CWGS, LLC (n)

Adjusted net income attributable to Camping World Holdings, Inc.

Fiscal Year Ended

(In thousands except per share amounts)

Weighted-average Class A common shares outstanding – basic

Adjustments related to diluted calculation:

Dilutive redemption of common units in CWGS, LLC for shares of Class A common stock (n)

Dilutive options to purchase Class A common stock (n)

Dilutive restricted stock units (n)

Dilutive redemption of common units in CWGS, LLC for shares of Class A common stock (o)

Dilutive options to purchase Class A common stock (o)

Dilutive restricted stock units (o)

Adjusted weighted average Class A common shares outstanding – diluted

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Adjusted earnings per share - diluted

Anti-dilutive amounts (o):

Reallocation of net income attributable to non-controlling interests from the anti-dilutive redemption of common units in CWGS, LLC (k)

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

Assumed income tax benefit of combining C-Corps with full or partial valuation allowances with the income of other consolidated entities after the anti-dilutive redemption of common units in CWGS, LLC (m)

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

Year Ended December 31,

(In thousands except per share amounts)

Anti-dilutive amounts (p):

Reallocation of net income attributable to non-controlling interests from the anti-dilutive redemption of common units in CWGS, LLC (l)

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

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

Reconciliation of per share amounts:

Earnings per share of Class A common stock — basic

Non-GAAP Adjustments (p)

Non-GAAP Adjustments (q)

Adjusted earnings per share - basic

Earnings per share of Class A common stock — diluted

Non-GAAP Adjustments (p)

Dilutive redemption of common units in CWGS, LLC for shares of Class A common stock (q)

Dilutive options to purchase Class A common stock and/or restricted stock units (q)

Non-GAAP Adjustments (q)

Dilutive redemption of common units in CWGS, LLC for shares of Class A common stock (r)

Dilutive options to purchase Class A common stock and/or restricted stock units (r)

Adjusted earnings per share - diluted

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This assumption uses effective tax rates between 25.0% and 25.5% for the adjustments for 2023, 2022 and 2021, which represents the estimated tax rate that would apply had the above adjustments been included in the determination of our non-GAAP metric.

(c) Represents long-lived asset impairment charges related to the RV and Outdoor Retail segment, which includes locations affected by the 2019 Strategic Shift.

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

(d) Represents the loss on the termination of operating leases relating primarily to the 2019 Strategic Shift, resulting from lease termination costs and the derecognition of the operating lease assets and liabilities.

(d) Represents the loss on termination of operating leases resulting from lease termination fees and the derecognition of the operating lease assets and liabilities.

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

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

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

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

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

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

See Note 12 – Income Taxes to our consolidated financial statements included in Part II, Item 8 of this Form 10-K for additional information.

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

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

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

(i) For the year ended December 31, 2022, the Company recognized $28.4 million of income tax expense relating to the LLC Conversion.

This income tax expense was primarily from the write-off of deferred tax assets, which was partially offset by the release of valuation allowance.

(h) Represents restructuring costs relating to Active Sports Restructuring during the year ended December 31, 2023 and our 2019 Strategic Shift for periods that ended on or before December 31, 2022.

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

These costs exclude lease termination costs, which are presented separately above.

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

(i) Represents loss and impairment on investments in equity securities and interest income relating to any notes receivables with those investments for periods beginning after December 31, 2022.

Amounts relating to periods prior to 2023 were not significant.

These amounts are included in other expense, net in the consolidated statements of operations.

During the year ended December 31, 2023, this amount included a $1.3 million impairment on an equity method investment.

(j) Represents income tax (benefit) expense relating to the LLC Conversion, which was primarily from adjustments for certain deferred tax assets that were written off or had changes in their valuation allowance.

See Note 12 – Income Taxes to our consolidated financial statements included in Part II, Item 8 of this Form 10-K for additional information.

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

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

This adjustment uses the non-controlling interest’s weighted average ownership of CWGS, LLC of 47.3%, 49.8% and 49.1% for the years ended December 31, 2023, 2022 and 2021, respectively.

(k) Represents the reallocation of net income attributable to non-controlling interests from the impact of the assumed change in ownership of CWGS, LLC from stock options, restricted stock units, and/or common units of CWGS, LLC.

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

(l) Represents the reallocation of net income attributable to non-controlling interests from the impact of the assumed change in ownership of CWGS, LLC from stock options, restricted stock units, and/or common units of CWGS, LLC.

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

This assumption uses effective tax rates between 25.0% and 25.5% for the adjustments for 2023, 2022 and 2021.

(m) Typically represents adjustments to reflect the income tax benefit of losses of consolidated C-Corps that under the Company’s equity structure, prior to the LLC Conversion, could not be used against the income of other consolidated subsidiaries of CWGS, LLC.

(n) Typically represents adjustments to reflect the income tax benefit of losses of consolidated C-Corps that under the Company’s equity structure, prior to the LLC Conversion, could not be used against the income of other consolidated subsidiaries of CWGS, LLC.

However, for the year ended December 31, 2021, this adjustment included the reversal of $15.2 million benefit from changes in the valuation allowance for CW.

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– diluted for purposes of this calculation .

Beginning in 2023, these C-Corp losses will offset income of other consolidated subsidiaries as a result of LLC Conversion at or around December 31, 2022.

Beginning in 2023, these C-Corp losses offset income of other consolidated subsidiaries as a result of LLC Conversion at or around December 31, 2022.

See Note 12 – Income Taxes to our consolidated financial statements included in Part II, Item 8 of this Form 10-K for additional information.

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

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

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

(q) Represents the per share impact of stock options, restricted stock units, and/or common units of CWGS, LLC from the difference in their dilutive impact between the GAAP and Non-GAAP earnings per share calculations.

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

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

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

(r) Represents the per share impact of stock options, restricted stock units, and/or common units of CWGS, LLC from the difference in their dilutive impact between the GAAP and Non-GAAP earnings per share calculations.

As discussed under “Our Corporate Structure Impact on Income Taxes” in Part II, Item 7 of this Form 10-K, our “Up-C” corporate structure may make it difficult to compare our results with those of companies with a more traditional corporate structure.

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To improve comparability of our financial results, users of our financial statements may find it useful to review our earnings per share assuming the full redemption of common units in CWGS, LLC for all periods, even when those common units would be anti-dilutive.

The relevant numerator and denominator adjustments have been provided under “Anti-dilutive amounts” in the table above (see (o) above).

The relevant numerator and denominator adjustments have been provided under “Anti-dilutive amounts” in the table above (see (p) above).

Liquidity and Capital Resources

Our primary requirements for liquidity and capital have been working capital, inventory management, acquiring and building new retail locations, the improvement and expansion of existing retail locations, debt service, distributions to holders of equity interests in CWGS, LLC and our Class A common stock, and general corporate needs.

These cash requirements have historically been met through cash provided by operating activities, cash and cash equivalents, proceeds from registered offerings of our Class A common stock, borrowings under our Senior Secured Credit Facilities (as defined below), borrowings under our Floor Plan Facility (as defined below), and borrowings under our Real Estate Facilities (as defined below).

As a public company, our additional liquidity needs include public company costs, payment of regular and special cash dividends, any exercise of the redemption right by the Continuing Equity Owners from time to time (should we elect to redeem common units for a cash payment), our stock repurchase program as described below, payments under the Tax Receivable Agreement, and state and federal taxes to the extent not reduced

as a result of the Tax Receivable Agreement.

Our primary requirements for liquidity and capital have been working capital, inventory management, acquiring and building new store locations, the improvement and expansion of existing store locations, debt service, distributions to holders of equity interests in CWGS, LLC and our Class A common stock, and general corporate needs.

These cash requirements have historically been met through cash provided by operating activities, cash and cash equivalents, proceeds from registered offerings of our Class A common stock, borrowings under our Senior Secured Credit Facilities (as defined in Part II, Item 8 of this Form 10-K), borrowings under our Floor Plan Facility (as defined in Part II, Item 8 of this Form 10-K), and borrowings under our Real Estate Facilities (as defined in Part II, Item 8 of this Form 10-K).

Our additional liquidity needs are expected to include public company costs, payment of cash dividends, any exercise of the redemption right by the Continuing Equity Owners from time to time (should we elect to redeem common units for a cash payment), our stock repurchase program as described below, payments under the Tax Receivable Agreement, and state and federal taxes to the extent not reduced as a result of the Tax Receivable Agreement.

The Continuing Equity Owners may exercise such redemption right for as long as their common units remain outstanding.

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

under the Tax Receivable Agreement will generally reduce the amount of overall cash flow that might have otherwise been available to us or to CWGS, LLC and, to the extent that we are unable to make payments under the Tax Receivable Agreement for any reason, the unpaid amounts generally will be deferred and will accrue interest until paid by us;

under the Tax Receivable Agreement will generally reduce

the amount of overall cash flow that might have otherwise been available to us or to CWGS, LLC and, to the extent that we are unable to make payments under the Tax Receivable Agreement for any reason, the unpaid amounts generally will be deferred and will accrue interest until paid by us;

provided, however, that nonpayment for a specified period may constitute a material breach of a material obligation under the Tax Receivable Agreement and therefore may accelerate payments due under the Tax Receivable Agreement.

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We expect to fund the repurchases using cash on hand.

During the years ended December 31, 2022 and 2021, we repurchased 2,592,524 and 3,988,881 shares of our Class A common stock, respectively, for $79.8 million and $156.3 million, respectively, including broker commissions.

During the year ended December 31, 2023, we did not repurchase shares of Class A common stock.

During the year ended December 31, 2022, we repurchased 2,592,524 shares of our Class A common stock for $79.8 million, including broker commissions.

As of December 31, 2023, $120.2 million was available under the stock repurchase program to repurchase additional shares of our Class A common stock.

On February 18, 2022, our Board of Directors approved the increase of the portion of the quarterly cash dividend relating to all or a portion of the Excess Tax Distribution (as defined under “Dividend Policy” included in Part II, Item 5 of this Form 10-K) to $0.475 per share of Class A common stock from $0.35 per share, which increased the total quarterly cash dividend to $0.625 per share of Class A common stock from $0.50 per share beginning in March 2022.

For each of the four quarters of 2022, we paid a regular quarterly cash dividend on our Class A common stock of $0.625 per share, which was funded with a $0.15 per common unit cash distribution from CWGS, LLC and the remainder funded with all or a portion of the Excess Tax Distribution.

Prior to February 18, 2022, our quarterly cash dividend on our Class A common stock was raised in several incremental steps from our first cash dividend of $0.08 per share on December 20, 2016.

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

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

Additionally, as described above, we currently intend to pay a portion of our regular quarterly cash dividend with all or a portion of the Excess Tax Distribution to the holders of our Class A common stock subject to the discretion of our Board of Directors.

The LLC Conversion is expected to

decrease future Excess Tax Distributions by allowing losses at those subsidiaries to offset taxable income allocated to the members of CWGS, LLC instead of the losses being confined within embedded C-Corps (see Note 11 – Income Taxes to our consolidated financial statements included in Part II, Item 8 of this Form 10-K).

As a result of the LLC Conversion which will generate significant capital losses in 2023 that will be allocated to each member of CWGS, LLC, it is expected that we will not receive any Excess Tax Distribution in 2023.

These significant capital losses relate to the LLC Conversion transaction itself and not the ongoing benefits that we expect from offsetting losses generated by these converted subsidiaries against income from other subsidiaries of CWGS, LLC.

However, even with no Excess Tax Distribution in 2023, we expect to have the ability to continue to pay the regular quarterly cash dividend on our Class A common stock of $0.625 per share during 2023, which is subject to the discretion of our Board of Directors.

On May 24, 2023, in conjunction with the announcement of the declaration of the second quarter 2023 dividend to holders of Class A common stock, we announced that we had initiated an analysis of our capital allocation strategy as part of our commitment to driving long-term growth and maintaining a competitive dividend.

After completing the capital allocation strategy analysis during July 2023, we announced on August 1, 2023, that the Board of Directors approved a decrease of the quarterly cash dividend to $0.125 per share of Class A common stock from $0.625 per share, beginning with the quarterly cash dividend to be paid in September 2023.

The quarterly cash dividends paid in September and December of 2023 were funded entirely from the Excess Tax Distribution (as defined under “Dividend Policy” included in Part II, Item 5 of this Form 10-K), with no portion funded by common unit cash distributions from CWGS, LLC.

We believe that this decrease in the quarterly cash dividend will help us utilize that capital to continue to execute our expansion plans through accretive RV dealership acquisitions.

For each of the quarters from the three months ended March 31, 2022 to the three months ended June 30, 2023, we paid a quarterly cash dividend on our Class A common stock of $0.625 per share, which was funded with a $0.15 per common unit cash distribution from CWGS, LLC and the remaining $0.475 per share of Class A common stock funded with all or a portion of the Excess Tax Distribution.

Our ability to pay cash dividends on our Class A common stock depends on, among other things, our results of operations, financial condition, level of indebtedness, capital requirements, contractual restrictions, restrictions in our debt agreements and in any preferred stock, restrictions under applicable law, the extent to which such distributions would render CWGS, LLC insolvent, our business prospects and other factors that our Board of Directors may deem relevant.

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

See “Dividend Policy” included in Part II, Item 5 of this Form 10-K and “Risk Factors ─ Risks Relating to Ownership of Our Class A Common Stock ─ “Our ability to pay regular and special dividends on our Class A common stock is subject to the discretion of our Board of Directors and may be limited by our structure and statutory restrictions” included in Part I, Item 1A of this Form 10-K.

the discretion of our Board of Directors and may be limited by our structure and statutory restrictions” included in Part I, Item 1A of this Form 10-K.

Acquisitions and Capital Expenditures

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

We had also announced a number of land acquisitions in anticipation of constructing new stores in 2022.

During the year ended December 31, 2022, the RV and Outdoor Retail segment acquired the assets of various RV dealerships and one RV service center comprised of 11 locations for an aggregate purchase price of approximately $153.7 million (see Note 15 – Acquisitions to our consolidated financial statements included in Part II, Item 8 of this Form 10-K) and purchased real property of $55.7 million, of which $19.7 million was from parties related to the sellers of the businesses.

Also, in 2022, the Good Sam Services and Plans segment acquired the assets of an outdoor publication for $3.4 million.

We have plans to slow dealership expansion in 2023.

We have seven greenfield locations at or near construction completion which we may delay opening until market conditions improve.

At this time, we expect our acquisition spend may be up to $25.0 million in 2023, but we may increase this range as other acquisition opportunities arise.

During the year ended December 31, 2023, the RV and Outdoor Retail segment purchased real property for an aggregate purchase price of $67.2 million.

Over the next twelve months, our expansion of dealerships through acquisition and construction is expected to cost between $71.5 million and $114.9 million from a combination of business acquisitions and capital expenditures relating to land, buildings, and improvements.

Included in this range is $71.5 million related to business acquisitions where, at a minimum, we have already signed a letter of intent with the seller.

These cost estimates exclude amounts for acquired inventories, which are primarily financed through our Floor Plan Facility.

Additionally, the cost estimates do not consider potential funding received through sale leaseback transactions or other means for real estate and construction activities.

We are in the early stages of evaluating additional dealership acquisition opportunities and will update our cost estimates in future periodic reports, if necessary, as there are further developments.

Factors that could impact the quantity of future locations or the cost to acquire or open those locations include, but are not limited to, our ability to locate potential acquisition targets or greenfield locations in a geographic area and at a cost that meets our success criteria;

continued strong cash flow generation from our operations to fund these acquisitions and new locations;

and availability of financing under our Floor Plan Facility.

and availability of financing on our Floor Plan Facility.

We expect the additional cash requirements of the other announced initiatives to be immaterial.

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2019 Strategic Shift

In connection with the 2019 Strategic Shift during the year ended December 31, 2022, we have paid or otherwise settled $6.1 million of lease termination costs and $7.1 million of other associated costs, which excludes gains from the derecognition of the related operating lease assets and liabilities for these terminated leases.

We expect that approximately $2.8 million to $6.3 million of other associated costs and $1.6 million to $9.6 million of lease termination costs will result in future cash expenditures during 2023.

For a discussion of the 2019 Strategic Shift, see Note 5 ─ Restructuring and Long-Lived Asset Impairment to our consolidated financial statements included in Part II, Item 8 of this Form 10-K.

In connection with the 2019 Strategic Shift during the year ended December 31, 2023, we incurred $4.0 million of other associated costs.

The process of identifying subtenants and negotiating lease terminations has been delayed, which initially was in part due to the COVID-19 pandemic, and these delays are expected to continue.

The timing of these negotiations will vary as both subleases and terminations are contingent on landlord approvals.

We expect that the ongoing lease-related costs relating to the 2019 Strategic Shift, net of associated sublease income, will be less than $4.0 million per year.

For a discussion of the 2019 Strategic Shift and other restructuring activities, see Note 5 ─ Restructuring and Long-Lived Asset Impairment to our consolidated financial statements included in Part II, Item 8 of this Form 10-K.

Other Cash Requirements or Commitments

Substantially all of our new RV inventory and, at times, certain of our used RV inventory is financed under our Floor Plan Facility (defined in Note 4 – Inventories and Floor Plan Payables to our consolidated financial statements included in Part II, Item 8 of this Form 10-K).

See “Description of Credit Facilities, Other Long-Term Debt, and Finance Lease Arrangements” for a summary of the cash requirements related to our indebtedness.

See “Summary of Credit Facilities, Other

Long-Term Debt, and Finance Lease Arrangements” for a summary of the cash requirements related to our indebtedness.

See Note 11 ─ Lease Obligations to our consolidated financial statements included in Part II, Item 8 of this Form 10-K for a discussion of cash requirements relating to operating and finance lease obligations.

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Sources of Liquidity and Capital

We believe that our sources of liquidity and capital including cash provided by operating activities and borrowings under our various credit facilities, other long-term debt, and finance lease arrangements (see Liquidity and Capital Resources — Description of Credit Facilities, Other Long-Term Debt, and Finance Lease Arrangements in Part II, Item 7 of this Form 10-K), including additional borrowing capacity where applicable, will be sufficient to finance our continued operations, growth strategy, including the opening of any additional retail locations, regular and special quarterly cash dividends (as described above), required payments for our obligations under the Tax Receivable Agreement, and additional expenses we expect to incur for at least the next twelve months.

We believe that our sources of liquidity and capital including cash provided by operating activities and borrowings under our various credit facilities, other long-term debt, and finance lease arrangements (see Liquidity and Capital Resources — Summary of Credit Facilities, Other Long-Term Debt, and Finance Lease Arrangements in Part II, Item 7 of this Form 10-K), including additional borrowing capacity where applicable, will be sufficient to finance our continued operations, growth strategy, including the opening of any additional store locations, quarterly cash dividends (as described above), required payments for our obligations under the Tax Receivable Agreement, and additional expenses we expect to incur for at least the next twelve months.

However, we cannot assure you that our cash provided by operating activities, cash and cash equivalents or cash available under our Revolving Credit Facility, our Floor Plan Facility, and our Real Estate Facilities, will be sufficient to meet our future needs.

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Net cash used in investing activities

Net cash provided by financing activities

Net (decrease) increase in cash and cash equivalents

Net cash (used in) provided by financing activities

Net decrease in cash and cash equivalents

Operating activities.

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Net cash provided by operating activities was $310.8 million for the year ended December 31, 2023, an increase of $121.0 million from $189.8 million of net cash provided by operating activities for the year ended December 31, 2022.

The increase was primarily due to a $375.5 million decrease in the working capital adjustment for inventory, a $49.2 million increase in deferred income taxes, a $24.7 million decrease in the working capital adjustment for accounts receivable and contracts in transit, and a $13.9 million increase in depreciation and amortization, partially offset by a $291.0 million reduction in net income, a $95.0 million decrease in the working capital adjustment for accounts payable and other accrued expenses, a $13.3 million decrease in the working capital adjustment for deferred revenue, a $14.1 million decrease in equity-based compensation, and a $14.1 million reduction in other operating activities.

The increase was primarily due to a $455.3 million increase in the working capital adjustment for inventory, a $42.6 million increase in the working capital adjustment for accounts payable and accrued expenses, a $21.2 million increase in the working capital adjustment for prepaid expenses and other assets, a $7.1 million increase in the working capital adjustment for operating lease liabilities, and a $5.0 million increase in long-lived asset impairment, partially offset by a $300.4 million reduction in net income, a $55.2 million decrease in deferred income taxes, a $19.8 million decrease in the working capital adjustment for accounts receivable and contracts in transit, an $11.7 million decrease in depreciation and amortization, a $9.8 million decrease in equity-based compensation, an $8.2 million decrease in deferred revenue, a $5.8 million increase in gain on sale or disposal of assets, and a $1.7 million increase in gain on lease termination.

Investing activities.

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

Substantially all of our new retail locations and capital expenditures have been financed using cash provided by operating activities and borrowings under our various credit facilities, other long-term debt, and finance lease arrangements, as applicable (see Liquidity and Capital Resources — Description of Credit Facilities, Other Long-Term Debt, and Finance Lease Arrangements in Item 7 of Part II of this Form 10-K).

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

Substantially all of our new store locations and capital expenditures have been financed using cash provided by operating activities and borrowings under our various credit facilities, other long-term debt, and finance lease arrangements, as applicable (see Liquidity and Capital Resources — Summary of Credit Facilities, Other Long-Term Debt, and Finance Lease Arrangements in Item 7 of Part II of this Form 10-K).

The table below summarizes our capital expenditures for the years ended December 31, 2023 and 2022, respectively:

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Greenfield and acquired dealership locations

Existing retail locations

Existing store locations

Corporate and other

Total capital expenditures

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

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

The expected capital expenditures relating to new dealerships and real estate purchases for the year ending December 31, 2024 are discussed above.

As of December 31, 2022, we had entered into contracts for construction of new dealership buildings for an aggregate future commitment of $8.8 million.

As of December 31, 2023, we had entered into contracts for construction of new and existing dealership buildings for an aggregate future commitment of $25.6 million.

There were no other material commitments for capital expenditure.

Net cash used in investing activities was $369.4 million for the year ended December 31, 2023.

The $422.5 million of cash used in investing activities was comprised of $154.9 million of capital expenditures primarily related to retail locations, $217.0 million for the purchase of RV and outdoor retail businesses and a publication business, $55.7 million for the purchase of real property, $3.0 million for purchase of other investments, and $0.9 million for the purchase of intangible assets, partially offset by proceeds from the sale of real property of $7.4 million and proceeds of $1.6 million from the sale of property and equipment.

The $369.4 million of cash used in investing activities was comprised of $209.5 million for the acquisition of RV dealerships, net of cash acquired, $131.1 million of capital expenditures primarily related to store locations, $67.2 million for the purchase of real property, $3.4 million for purchase of and loans to other investments, and $2.2 million for the purchase of intangible assets, partially offset by proceeds from the sale of real property of $40.8 million and proceeds of $3.2 million from the sale of property and equipment.

See Note 16 – Acquisitions to our consolidated financial statements included in Part II, Item 8 of this Form 10-K.

Net cash used in investing activities was $422.5 million for the year ended December 31, 2022.

The $355.8 million of cash used in investing activities was comprised of $129.2 million for the purchase of real property, $118.7 million of capital expenditures primarily related to retail locations, $100.1 million for purchases of RV and outdoor retail businesses, $8.0 million for purchases of other investments and $5.7 million for purchases of intangible assets, partially offset by proceeds of $3.6 million from the sale of real property, and $2.2 million from the sale of property and equipment.

The $422.5 million of cash used in investing activities was comprised of $154.9 million of capital expenditures primarily related to store locations, $217.0 million for the purchase of RV and outdoor retail businesses and a publication business, $55.7 million for the purchase of real property, $3.0 million for purchase of other investments, and $0.9 million for the purchase of intangible assets, partially offset by proceeds from the sale of real property of $7.4 million and proceeds of $1.6 million from the sale of property and equipment.

See Note 16 – Acquisitions to our consolidated financial statements included in Part II, Item 8 of this Form 10-K.

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

Our net cash used in financing activities was $ 31.9 million for the year ended December 3 1 , 202 3 .

The $ 31.9 million of cash used in financing activities was primarily due to $66.8 million of dividends paid on Class A common stock, $39.0 million of payments on long-term debt, $31.5 million of member distributions, $6.9 million of withholding taxes paid upon the vesting of restricted stock units (“RSU”), $5.5 million of payments on finance leases, $0.9 million for debt issuance costs payments and $0.2 million of payments on sale-leaseback arrangement, partially offset by $ 59.3 million of net proceeds from borrowings under the Floor Plan Facility , $59.2 million of proceeds from long-term debt and $0.4 million of proceeds from exercise of stock options.

Our net cash provided by financing activities was $ 95.6 million for the year ended December 3 1 , 2022.

The $ 95.6 million of cash provided by financing activities was primarily due to $ 314.1 million of net proceeds from borrowings under the Floor Plan Facility (as defined below), $127.8 million of proceeds from long-term debt under our Real Estate Facilities (as defined below), $28.0 million of proceeds from a sale-leaseback arrangement, $6.0 million of proceeds from landlord funded construction on finance leases, and $0.5 million of proceeds from exercise of stock options, partially offset by $163.0 million of member distributions, $105.4 million of dividends paid on Class A common stock, $79.8 million for the repurchase of Class A common stock, $ 12.3 million of payments on long-term debt, $ 11.1 million of withholding taxes paid upon the vesting of restricted stock units (“RSUs”), $6.0 million for finance lease payments, and $3.2 million of debt issuance costs.

Our net cash provided by financing activities was $ 303.0 million for the year ended December 31, 2021 .

The $ 303.0 million of cash provided by financing activities was primarily due to $ 487.9 million of net proceeds from borrowings under the Floor Plan Facility , $430.7 million of proceeds from long-term debt, and $4.1 million of proceeds from exercise of stock options, partially offset by $193.7 million of member distributions, $177.9 million of payments on long-term debt, $156.3 million for the repurchase of Class A common stock, $67.2 million of dividends paid on Class A common stock, $12.1 million of withholding taxes paid upon vesting of RSUs, $7.7 million stock award shares withheld for tax, $2.9 million for finance lease payments, and $1.9 million of debt issuance costs.

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

As of December 31, 202 2 and 202 1 , we had outstanding debt in the form of our Senior Secured Credit Facilit ies (as defined below), our Floor Plan Facility (as defined below), our Real Estate Facilities (as defined below), other long-term debt , and finance lease obligations .

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

As of December 31, 202 3 and 202 2 , we had outstanding debt in the form of our Senior Secured Credit Facilit ies , our Floor Plan Facility, our Real Estate Facilities, other long-term debt , and finance lease obligations .

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

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

The following table shows a summary of the outstanding balances, current portion, and remaining available borrowings under our credit facilities , other long-term debt and finance lease arrangements at December 31, 2022 :

S ee definitions and further details in Note 4 – Inventories and Floor Plan Payables, Note 10 – Long-Term Debt, and Note 11 – Lease Obligation s to our consolidated financial statements included in Part I I, Item 8 of this Form 10- K) at December 31, 202 3:

(In thousands)

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Additional borrowings are subject to the vehicle collateral requirements under the Floor Plan Facility.

In July 2023, an amendment to the Floor Plan Facility increased the borrowing capacity under the floor plan notes payable by $150.0 million.

(2) The revolving line of credit borrowings are subject to a borrowing base calculation but were not limited as of December 31, 2023 .

(3) The Revolving Credit Facility remaining available balance was reduced by outstanding undrawn letters of credit.

The Credit Agreement requires compliance with a Total Net Leverage Ratio covenant when borrowings on the Revolving Credit Facility (excluding certain amounts relating to letters of credit) is over a 35%, or $22.8 million, threshold (Note 10 – Long-Term Debt to our consolidated financial statements included in Part II, Item 8 of this Form 10-K).

The otherwise remaining available borrowings of $60.1 million were reduced by $37.3 million to $22.8 million in light of this financial covenant at December 31, 2023.

(4) Includes $17.3 million outstanding and $0.9 million current portion that are classified as liabilities related to assets held for sale (see Note 6 – Assets Held for Sale).

(5) Additional borrowings on the Real Estate Facilities are subject to a debt service coverage ratio covenant and to the property collateral requirements under the Real Estate Facilities.

Floor Plan Facility

As of December 31, 2022 and 2021, FreedomRoads, LLC (“FR”) maintained floor plan financing through the Eighth Amended and Restated Credit Agreement (“Floor Plan Facility”) entered into in September 2021, which amended the Seventh Amended and Restated Credit Agreement that was previously entered into in December 2017.

The Floor Plan Facility at December 31, 2022 allowed FR to borrow (a) up to $1.70 billion under a floor plan facility, (b) up to $30.0 million under a letter of credit facility and (c) up to a maximum amount outstanding of $70.0 million under the revolving line of credit.

The Floor Plan Facility also includes an accordion feature allowing FR, at its option, to request to increase the aggregate amount of the floor plan notes payable in $50 million increments up to a maximum amount of $200 million.

The lenders under the Floor Plan Facility are not under any obligation to provide commitments in respect of any such increase.

The maturity date of the Floor Plan Facility is September 30, 2026.

During the first quarter of 2024, we expect to complete approximately $55.0 million of additional borrowings in aggregate on the Real Estate Facilities.

We have experienced an increase in interest rates, which are expected to remain elevated into 2024.

As of December 31, 2023 and 2022, the applicable interest rate for the floor plan notes payable under the Floor Plan Facility was 7.28% and 6.01%, respectively.

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

As of December 31, 2022 and 2021, the applicable interest rate for revolving line of credit borrowings under the Floor Plan Facility was 6.21% and 2.31%, respectively.

Under the Floor Plan Facility, revolving line of credit borrowings bear interest at a rate per annum equal to, at our option, either:

(a) a floating BSBY rate, plus 2.25%, in the case of floating BSBY rate loans, or (b) a base rate determined by reference to the greatest of:

(i) the federal funds rate plus 0.50%, (ii) the prime rate published by Bank of America, N.A.

and (iii) the floating BSBY rate plus 1.75%, plus 0.75%, in the case of base rate loans.

Additionally, under the Floor Plan Facility, the revolving line of credit borrowings are limited by a borrowing base calculation, which did not limit the borrowing capacity at December 31, 2022.

The Floor Plan Facility includes a flooring line aggregate interest reduction (“FLAIR”) offset account that allows us to transfer cash as an offset to the payables under the Floor Plan Facility.

These transfers reduce the amount of liability outstanding under the floor plan borrowings that would otherwise accrue interest, while retaining the ability to withdraw amounts from the FLAIR offset account subject to the financial covenants under the Floor Plan Facility.

As a result of using the FLAIR offset account, we experience a reduction in floor plan interest expense in our consolidated statements of operations.

As of December 31, 2022 and 2021, FR had $217.7 million and $92.1 million, respectively, in the FLAIR offset account.

The maximum FLAIR percentage of outstanding floor plan borrowings is 35% under the Floor Plan Facility.

The FLAIR offset account does not reduce the outstanding amount of loans under the Floor Plan Facility for purposes of determining the unencumbered borrowing capacity under the Floor Plan Facility.

We have determined that the credit agreements governing the Floor Plan Facility include subjective acceleration clauses, which could impact debt classification.

We believe that no events have occurred at December 31, 2022 that would trigger a subjective acceleration clause.

Additionally, the credit agreements governing the Floor Plan Facility contain certain financial covenants.

FR was in compliance with all debt covenants at December 31, 2022 and 2021.

See Note 4 – Inventories and Floor Plan Payables to our consolidated financial statements included in Part II, Item 8 of this Form 10-K.

Senior Secured Credit Facilities

As of December 31, 2022 and 2021, CWGS Group, LLC (the “Borrower”), a wholly-owned subsidiary of CWGS, LLC, was party to a credit agreement (the “Credit Agreement”) for a senior secured credit facility (the “Senior Secured Credit Facilities”).

The Senior Secured Credit Facilities consist of a $1.4 billion term loan facility (the “Term Loan Facility”) and a $65.0 million revolving credit facility (the “Revolving Credit Facility”).

The funds available under the Revolving Credit Facility may be utilized for borrowings or letters of credit;

however, a maximum of $25.0 million may be allocated to such letters of credit.

The Revolving Credit Facility matures in June 2026, and the Term Loan Facility matures in June 2028.

The Term Loan Facility requires mandatory principal payments in equal quarterly installments of $3.5 million.

Additionally, we are required to prepay the term loan borrowings in an aggregate amount up to 50% of excess cash flow, as defined in the Credit Agreement, for such fiscal year depending on the Total Leverage Ratio (as defined by the Credit Agreement) beginning with the year ended December 31, 2022.

No additional excess cash flow payment was required relating to 2022 and we do not expect an additional excess cash flow payment to be required relating to 2023.

Under the Senior Secured Credit Facilities, we have the ability to request to increase the amount of term loans or revolving loans in an aggregate amount not to exceed the greater of (a) a “fixed” amount set at $725.0 million and (b) 100% of consolidated EBITDA for the most recent four consecutive fiscal quarters on a pro forma basis (as defined in the Credit Agreement).

We requested and received an increase in the Term Loan Facility of $300.0 million in December 2021.

The lenders under the Senior Secured Credit Facilities are not under any obligation to provide commitments in respect of any such increase.

The Senior Secured Credit Facilities are fully and unconditionally guaranteed, jointly and severally, on a senior secured basis by each of our existing and future domestic restricted subsidiaries with the exception of FreedomRoads Intermediate Holdco, LLC, the direct parent of FR, and FR, and its subsidiaries.

The Credit Agreement contains certain restrictive covenants pertaining to, but not limited to, mergers, changes in the nature of the business, acquisitions, additional indebtedness, sales of assets, investments, and the payment of dividends subject to certain limitations and minimum operating covenants.

Additionally, we have determined that the Senior Secured Credit Facilities include subjective acceleration clauses, which could impact debt classification.

We believe that no events have occurred at December 31, 2022 that would trigger a subjective acceleration clause.

The Credit Agreement requires the Borrower and its subsidiaries to comply on a quarterly basis with a maximum Total Net Leverage Ratio (as defined in the Credit Agreement), which covenant is in effect only if, as of the end of each calendar quarter, the aggregate amount of borrowings under the revolving credit facility (including swingline loans), letters of credit and unreimbursed letter of credit disbursements outstanding at such time is greater than 35% of the total commitment on the Revolving Credit Facility (excluding (i) up to $15.0 million attributable to any outstanding undrawn letters of credit and (ii) any cash collateralized or backstopped letters of credit), as defined in the Credit Agreement.

As of December 31, 2022, we were not subject to this covenant as borrowings under the Revolving Credit Facility did not exceed the 35% threshold and it did not limit our borrowing capacity.

We were in compliance with all applicable debt covenants at December 31, 2022 and 2021.

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

Real Estate Facilities

On October 27, 2022, subsidiaries of FRHP Lincolnshire, LLC (“FRHP”), an indirect wholly-owned subsidiary of CWGS, LLC, entered into a credit agreement with a syndication of banks for a real estate credit facility (the “M&T Real Estate Facility”) with aggregate maximum principal capacity of $250.0 million with an option that allows FRHP to request an additional $100.0 million of principal capacity.

The lenders under the M&T Real Estate Facility are not under any obligation to provide commitments in respect of any such increase.

The M&T Real Estate Facility bears interest at FRHP’s option, based on applicable rates as of December 31, 2022, of either (as defined in the credit agreement for the M&T Real Estate Facility):

(a) the Secured Overnight Financing Rate (“SOFR”) plus 2.30% or (b) the highest of (i) the Federal Funds Rate plus 1.80%, (ii) the Prime Rate plus 1.30%, or (iii) SOFR plus 2.30%.

The M&T Real Estate Facility has an unused commitment fee of 0.20% of the aggregate unused principal amount and it matures in October 2027.

Additionally, the M&T Real Estate Facility is subject to a covenant to comply with a minimum debt service coverage ratio of greater than 1.10 to 1.00.

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

In November 2018, September 2021, and December 2021, Camping World Property, Inc.

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

Borrowings under the CIBC Real Estate Facilities are guaranteed by CWGS Group, LLC, a wholly-owned subsidiary of CWGS, LLC.

The CIBC Real Estate Facilities may be used to finance the acquisition of real estate assets and are secured by first priority security interest on the real estate assets acquired with the proceeds of the CIBC Real Estate Facilities.

The First CIBC Real Estate Facility, the CIBC Second Real Estate Facility, and Third CIBC Real Estate Facility mature in October 2023, September 2026, and December 2026, respectively.

The following table shows a summary of the outstanding balances, remaining available borrowings, and weighted average interest rate under the M&T Real Estate Facility and the CIBC Real Estate Facilities (collectively the “Real Estate Facilities”) at December 31, 2022:

As of December 31, 2022

(In thousands)

Outstanding (1)

Available (2)

Interest Rate

Real Estate Facilities

M&T Real Estate Facility

First CIBC Real Estate Facility

Second CIBC Real Estate Facility

Third CIBC Real Estate Facility

(1) Outstanding principal amounts are net of unamortized finance costs.

(2) Amounts cannot be reborrowed.

(3) Additional borrowings on the M&T Real Estate Facility are subject to a debt service coverage ratio covenant and the property collateral requirements under the M&T Real Estate Facility

We determined that the credit agreements governing the Real Estate Facilities include subjective acceleration clauses, which could impact debt classification.

We believe that no events have occurred at December 31, 2022 that would trigger a subjective acceleration clause.

Additionally, the Real Estate Facilities are subject to certain cross default provisions, a debt service coverage ratio, and other customary covenants.

We were in compliance with all debt covenants at December 31, 2022 and 2021.

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

As of December 31, 2023 and 2022, the average interest rate for the Term Loan Facility was 7.97% and 6.80%, respectively.

The increase in interest rates and, to a lesser extent, higher average principal balances on our Real Estate Facilities have resulted in a combined year-over-year increase in our floor plan interest expense and other interest expense, net of $100.6 million for 2023 compared to 2022.

Other Long-Term Debt

Other long-term debt is comprised of a mortgage on a property, which matures in December 2026.

Other long-term debt is comprised of a mortgage on a property, which matures in December 2026, and a promissory note assumed as part of a real estate purchase.

See Note 10 – Long-Term Debt to our consolidated financial statements included in Part II, Item 8 of this Form 10-K.

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Sale/Leaseback Arrangements

We have in the past and may in the future enter into sale-leaseback transactions to finance certain property acquisitions and capital expenditures, pursuant to which we sell property and/or leasehold

improvements to third parties and agree to lease those assets back for a certain period of time.

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

Such sales generate proceeds which vary from period to period.

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This transaction is accounted for as a financing transaction.

We recorded a liability for the amount received, will continue to depreciate the non-land portion of the assets, and have imputed an interest rate so that the net carrying amount of the financial liability and remaining assets will be zero at the end of the initial lease terms.

We recorded a liability for the amount received, will continue to depreciate the non-land portion of the assets, and have imputed an interest rate so that the net carrying amount of the financial liability and remaining non-land assets will be zero at the end of the initial lease terms.

The financial liability is included in other long-term liabilities in the consolidated balance sheet as of December 31, 2023.

Deferred Revenue

Deferred revenue consists of sales for products and services not yet recognized as revenue at the end of a given period.

Deferred revenue consists of our sales for products and services not yet recognized as revenue at the end of a given period.

Our deferred revenue as of December 31, 2023 was $159.1 million.

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Revenue Recognition — Finance and Insurance Chargebacks

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

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

Finance and insurance revenue is recorded net, since we are acting as an agent in the transaction, and is recognized when a finance and insurance product contract payment has been received or financing has

been arranged.

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

In the case of insurance products and extended service contracts, the stated period typically extends from one to seven years with the refundable revenue declining over the contract term.

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

Chargebacks are estimated based on ultimate future cancellation rates by product type and year sold using a combination of actuarial methods and

leveraging our historical experience using data extending back to 2013, adjusted for new consumer trends.

The chargeback liabilities included in the estimate of variable consideration totaled $76.4 million and $68.8 million as of December 31, 2022 and December 31, 2021, respectively.

If cancellation rates on products sold during 2022 and 2021 were to increase by 100 basis points, our chargeback liabilities would have increased by $5.9 million as of December 31, 2022.

Chargebacks are estimated based on ultimate future cancellation rates by product type and year sold using a combination of actuarial methods and leveraging our historical experience using data extending back to 2014, adjusted for new consumer trends.

The chargeback liabilities included in the estimate of variable consideration totaled $68.2 million and $76.4 million as of December 31, 2023 and December 31, 2022, respectively, which are recorded as part of other current liabilities and other long-term liabilities on our consolidated balance sheets.

If cancellation rates on products sold during 2023 and 2022 were to increase by 100 basis points, our chargeback liabilities would have increased by $5.9 million as of December 31, 2023 and finance and insurance, net revenue for the year ended December 31, 2023, would have decreased by the same amount.

Long-Lived Assets — Impairment

Our long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

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

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

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

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

We believe our estimated cash flows are sufficient to support the carrying value of our long-lived assets.

If estimated cash flows significantly differ in the future, we may be required to record additional asset impairments.

For the years ended December 31, 2023, 2022, and 2021, we recorded long-lived asset impairment of $9.3 million, $4.2 million, and $3.0 million, respectively (see Note 5 – Restructuring and Long-lived Asset Impairment to our consolidated financial statements included in Part II, Item 8 of this Form 10-K).

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(i) days of supply in our inventory, and (ii) average selling price if sold at less than original cost.

We then determine the appropriate level of reserve required to reduce our inventory to the lower of cost or net realizable value and record the resulting adjustment in the period in which we determine a loss has occurred.

We then determine the appropriate level of inventory cost adjustment required to reduce our inventory to the lower of cost or net realizable value and record the resulting adjustment in the period in which we determine a loss has occurred.

If future demand or market conditions for our products are less favorable than forecasted or if unforeseen circumstances negatively impact the utility of inventory, we may be required to record additional write-downs, which would negatively affect the results of operations in the period when the write-downs are recorded.

For the years ended December 31, 2021 and 2020, we recorded incremental inventory reserve charges of $15.0 million and $0.5 million, respectively relating to our 2019 Strategic Shift (see Note 5 – Restructuring and Long-lived Asset Impairment to our consolidated financial statements included in Part II, Item 8 of this Form 10-K).

For the year ended December 31, 2023, we recorded incremental inventory reserve charges of $4.3 million relating to the Active Sports Restructuring and, for the year ended December 31, 2021, we recorded incremental inventory reserve charges of $15.0 million relating to our 2019 Strategic Shift (see Note 5 – Restructuring and Long-lived Asset Impairment to our consolidated financial statements included in Part II, Item 8 of this Form 10-K).

If there was a decrease in net realizable value of our products, parts, accessories and other inventory that resulted in a 100 basis point decrease in the cost of that inventory at December 31, 2023, the resulting inventory cost adjustment would be $2.0 million.

Deferred Tax Assets and Tax Receivable Agreement Liability — Valuation

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Given the magnitude of the deferred tax assets and complexity of the calculations, small adjustments to our model used to calculate these deferred tax assets can result in material changes to the amounts recognized, especially in years that include redemptions by Continuing Equity Owners.

If more common units of CWGS, LLC are redeemed by Continuing Equity Owners, the percentage of

CWH’s ownership of CWGS, LLC will increase, and additional deferred tax assets will be created as additional tax basis step-ups occur and such amounts are likely to be material.

If more common units of CWGS, LLC are redeemed by Continuing Equity Owners, the percentage of CWH’s ownership of CWGS, LLC will increase, and additional deferred tax assets will be created as additional tax basis step-ups occur and such amounts are likely to be material.

Pursuant to the Tax Receivable Agreement, CWH makes annual payments to the Original Equity Owners that had previously redeemed common units in CWGS, LLC equivalent to 85% of any tax benefits CWH realizes on each year’s tax return from the additional tax deductions arising from the step-up in tax basis.

A Tax Receivable Agreement liability of $170.6 million existed as of December 31, 2022 for the future cash obligations expected to be paid under the Tax Receivable Agreement and was not discounted.

As of December 31, 2023 and 2022, we had recorded Tax Receivable Agreement liabilities of $162.8 million and $170.6 million, respectively, for the future cash obligations expected to be paid under the Tax Receivable Agreement, which were not discounted.

The calculation of this liability is a function of the step-up described above and, therefore, has the same complexities and estimates.

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

What changed 10-K

Item 7. Management’s Discussion and Analysis