Document and Entity Information - shares |
9 Months Ended | |
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Sep. 30, 2018 |
Nov. 05, 2018 |
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Entity Registrant Name | Camping World Holdings, Inc. | |
Entity Central Index Key | 0001669779 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2018 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Document Fiscal Year Focus | 2018 | |
Document Fiscal Period Focus | Q3 | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Class A common stock | ||
Entity Common Stock, Shares Outstanding | 37,080,756 | |
Class B common stock | ||
Entity Common Stock, Shares Outstanding | 50,706,629 | |
Class C common stock | ||
Entity Common Stock, Shares Outstanding | 1 |
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares |
Sep. 30, 2018 |
Dec. 31, 2017 |
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Stockholders' equity (deficit) | ||
Preferred stock, par value | $ 0.01 | $ 0.01 |
Preferred stock, authorized | 20,000,000 | 20,000,000 |
Preferred stock, issued | 0 | 0 |
Preferred stock, outstanding | 0 | 0 |
Class A common stock | ||
Stockholders' equity (deficit) | ||
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, authorized | 250,000,000 | 250,000,000 |
Common stock, issued | 37,069,230 | 36,758,233 |
Common stock, outstanding | 37,056,971 | 36,749,072 |
Class B common stock | ||
Stockholders' equity (deficit) | ||
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, authorized | 75,000,000 | 75,000,000 |
Common stock, issued | 69,066,445 | 69,066,445 |
Common stock, outstanding | 50,706,629 | 50,836,629 |
Class C common stock | ||
Stockholders' equity (deficit) | ||
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, authorized | 1 | 1 |
Common stock, issued | 1 | 1 |
Common stock, outstanding | 1 | 1 |
Summary of Significant Accounting Policies |
9 Months Ended |
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Sep. 30, 2018 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | 1. Summary of Significant Accounting Policies Principles of Consolidation and Basis of Presentation The consolidated financial statements include the accounts of Camping World Holdings, Inc. (“CWH”) and its subsidiaries (collectively, the “Company”), and are presented in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Accordingly, these interim financial statements do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) necessary for fair presentation of the results of operations, financial position and cash flows for the periods presented have been reflected. All significant intercompany accounts and transactions of the Company and its subsidiaries have been eliminated in consolidation. The condensed consolidated financial statements as of and for the three and nine months ended September 30, 2018 are unaudited. The condensed consolidated balance sheet as of December 31, 2017 has been derived from the audited financial statements at that date but does not include all of the disclosures required by GAAP. These interim condensed consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2017 (the “Annual Report”) filed with the SEC on March 13, 2018. Operating results for the interim periods are not necessarily indicative of the results that may be expected for the full year. CWH was formed on March 8, 2016 as a Delaware corporation for the purpose of facilitating an initial public offering (the “IPO”) and other related transactions in order to carry on the business of CWGS Enterprises, LLC (“CWGS, LLC”). CWGS, LLC was formed in March 2011 when it received, through contribution from its then parent company, all of the membership interests of Affinity Group Holding, LLC and FreedomRoads Holding Company, LLC (“FreedomRoads”). The IPO and related reorganization transactions (the “Reorganization Transactions”) that occurred on October 6, 2016 resulted in CWH as the sole managing member of CWGS, LLC, with CWH having sole voting power in and control of the management of CWGS, LLC. Despite its position as sole managing member of CWGS, LLC, CWH has a minority economic interest in CWGS, LLC. As of September 30, 2018, CWH owned 41.8% of CWGS, LLC. Accordingly, the Company consolidates the financial results of CWGS, LLC and reports a non-controlling interest in its consolidated financial statements. The Company does not have any components of other comprehensive income recorded within its consolidated financial statements, and, therefore, does not separately present a statement of comprehensive income in its consolidated financial statements. Description of the Business CWGS, LLC is a holding company and operates through its subsidiaries. The Company realigned the structure of its internal organization during the three months ended September 30, 2018 in a manner that caused the composition of its reportable segments to change to the following three segments: (i) Consumer Services and Plans, (ii) Dealership, and (iii) Retail. The Company reportable segment financial information has been recasted to reflect the updated reportable segment structure for all periods presented. See Note 18 to Consolidated Financial Statements for further information about the Company’s segments. The Company provides consumer services and plans offerings under its Good Sam brand, its Dealership offerings under its Camping World brand, and its Retail products primarily under the Camping World and Gander Outdoors brands. Within the Consumer Services and Plans segment, the Company primarily derives revenue from the sale of the following offerings: emergency roadside assistance; property and casualty insurance programs; travel assist programs; extended vehicle service contracts; co-branded credit cards; vehicle financing and refinancing; club memberships; and publications and directories. Within the Dealership segment, the Company primarily derives revenue from the sale of new and used recreational vehicles (“RV’s”), sale of RV parts, services and other, and commissions on the related finance and insurance contracts. Within the Retail segment, the Company primarily derives revenue from the sale of the following: products, parts, accessories, supplies and service for RVs, and equipment, gear and supplies for camping, hunting, fishing, skiing, snowboarding, bicycling, skateboarding, marine and watersport and other outdoor activities. As noted above, both the Dealership and Retail segments derive revenue from the sale of parts, services and other revenues since certain retail locations without associated dealerships have the capability to perform RV repair and maintenance services. Additionally, certain RV parts and accessories can be sold to customers at a dealership or retail location. The revenues and related costs of revenues for these parts and services are recorded in the segment that enters into the transaction with the customer, either Dealership or Retail. The Company primarily operates in various regions throughout the United States and markets its products and services to RV owners and outdoor enthusiasts. At September 30, 2018, the Company operated 227 retail locations, of which 136 locations sold new and used RVs and offered RV financing and insurance; 129 locations offered RV products, parts and services; 55 Gander Outdoors locations offered outdoor products and services; one Overton’s location offered marine and watersports products; two TheHouse.com locations offered skiing, snowboarding, bicycling, and skateboarding products; two W82 locations offered skiing, snowboarding, and skateboarding products; and six Uncle Dan’s locations offered outdoor products and services. In addition, on January 30, 2018 the Company acquired certain assets of EARTH SPORTS LLC, dba Erehwon Mountain Outfitter (“Erehwon”), a leading Midwest specialty retailer of outdoor gear and apparel with four retail locations. On April 19, 2018 the Company acquired Rock Creek Outfitters (“Rock Creek”), a specialty outdoor retailer of outdoor gear for kayaking, rock climbing, camping and hiking with seven retail locations. In the first nine months of 2018, the Company converted three RV products, parts and services locations from the Camping World nameplate to the Gander nameplate (Bowling Green, Kentucky, Madison, Wisconsin and Roanoke, Virginia), converted one RV products, parts and services location from a Camping World nameplate to an Overton’s nameplate (Rogers, Minnesota), closed two RV products, parts and services locations from the Camping World nameplate (Winter Garden, FL; and Cleburne, TX), closed two Overton’s locations (Greenville, North Carolina and Raleigh, North Carolina), closed one Gander Outdoors location (Florence, Alabama), and acquired a dealership in Worthing, South Dakota and subsequently merged the operations of the acquired dealership into our existing dealership within the same market. Use of Estimates The preparation of these unaudited condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results may differ from those estimates. In preparing these financial statements, management has made its best estimates and judgments of certain amounts included in the financial statements, giving due consideration to materiality. The Company bases its estimates and judgments on historical experience and other assumptions that management believes are reasonable. However, application of these accounting policies involves the exercise of judgment and use of assumptions as to future uncertainties and, as a result, actual results could differ materially from these estimates. The Company periodically evaluates estimates and assumptions used in the preparation of the financial statements and makes changes on a prospective basis when adjustments are necessary. Significant estimates made in the accompanying unaudited condensed consolidated financial statements include certain assumptions related to accounts receivable, inventory, goodwill, intangible assets, long lived assets, program cancellation reserves, and accruals related to self-insurance programs, estimated tax liabilities and other liabilities. Recently Adopted Accounting Pronouncements In May 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”). The FASB has subsequently issued several related ASUs that clarified the implementation guidance for certain aspects of ASU 2014-09, which are effective upon the adoption of ASU 2014-09. This ASU sets forth a five-step model for determining when and how revenue is recognized. Under the model, an entity is required to recognize revenue to depict the transfer of goods or services to a customer at an amount reflecting the consideration it expects to receive in exchange for those goods or services. The Company adopted the amendments of this ASU on January 1, 2018, and the adoption did not materially impact its consolidated financial statements or results of operations (see Note 2 — Revenue for further details). In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”). This ASU addresses several specific cash flow issues with the objective of reducing the diversity in practice of how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The Company adopted the amendments of this ASU on January 1, 2018, and the adoption did not materially impact its consolidated financial statements or results of operations. Recently Issued Accounting Pronouncements In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02”). The FASB has subsequently issued several related ASUs that clarified the implementation guidance for certain aspects of ASU 2016-02, which are effective upon the adoption of ASU 2016-02. The amendments in this ASU relate to the accounting for leasing transactions. This standard requires a lessee to record on the balance sheet the assets and liabilities for the rights and obligations created by leases with lease terms of more than 12 months. In addition, this standard requires both lessees and lessors to disclose certain key information about lease transactions. In July 2018, the FASB made targeted improvements to the standard, including providing an additional and optional transition method. Under this method, an entity initially applies the standard at the adoption date, including the election of certain transition reliefs, and recognizes a cumulative effect adjustment to the opening balance of retained earnings in the period of adoption. This standard will be effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company is executing against its project plan, which includes implementing a software solution, designing and implementing new controls, evaluating new disclosure requirements, and finalizing accounting policies and practical expedients. The Company is in the process of evaluating the impact that the adoption will have on its consolidated balance sheet and statement of income. However, the Company expects that the adoption of the provisions of this ASU will have a significant impact on its consolidated balance sheet by reporting a right-to-use lease asset and corresponding lease obligation, as currently most of its real estate is leased via operating leases. In August 2018, the FASB issued ASU No. 2018-13, Changes to the Disclosure Requirements for Fair Value Measurement (Topic 820) (“ASU 2018-13”). This standard eliminates, amends, and adds disclosure requirements for fair value measurements. The amended and new disclosure requirements primarily relate to Level 3 fair value measurements. The standard will be effective for fiscal years beginning after December 15, 2019. The removal and amendment of certain disclosures may be early adopted with retrospective application while the new disclosure requirements are to be applied prospectively. The Company plans to early adopt this standard as of October 1, 2018. The Company currently does not expect this ASU, which relates only to disclosures, to have a material impact to the Company’s consolidated financial statements. In August 2018, the FASB issued ASU No. 2018-15, Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (“ASU 2018-15”). This standard aligns the accounting for implementation costs incurred in a cloud computing arrangement that is a service arrangement (i.e., hosting arrangement) with the guidance on capitalizing costs in ASC 350-40, Internal-Use Software. The ASU permits either a prospective or retrospective transition approach. The standard will be effective for fiscal years beginning after December 15, 2019. The Company is currently evaluating the impact that the adoption of the provisions of the ASU will have on its consolidated financial statements. Immaterial Corrections Certain immaterial corrections have been made to the statements of cash flows, which reduced net cash provided by operating activities and decreased net cash used in investing activities by $3.8 million for the nine months ended September 30, 2017. As part of these immaterial corrections, the Company increased the Accounts Payable and Other Accrued Expenses line item and decreased the Other, Net line item within cash provided by operating activities for the nine months ended September 30, 2017. These corrections had no impact on the previously-reported consolidated balance sheets, statements of operations, or statements of stockholders' equity. |
Revenue |
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Revenue | 2. Revenue Adoption of Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers On January 1, 2018, the Company adopted ASC 606, Revenue from Contracts with Customers (“ASC 606”) using the modified retrospective method applied to those contracts that were not completed as of January 1, 2018. Results for reporting periods beginning after January 1, 2018 are presented under ASC 606, while prior period amounts are not adjusted and continue to be reported in accordance with the Company’s historical accounting under ASC 605. The following table details the cumulative effect of the changes made to the consolidated January 1, 2018 balance sheet for the adoption of ASC 606 (in thousands):
The adjustments above related primarily to i) the deferral of sales commissions expenses relating to multiyear consumer services and plans and the recording of such expenses over the same period as the recognition of the related revenues, ii) adjustment of recognition period of RV service revenue from point-in-time to over time, iii) adjustment of capitalized direct-response advertising to expense when the advertising is mailed instead of over the expected benefit period, iv) reclassification of estimated product returns from inventory to prepaid expenses and other assets, v) reclassification of expected refunds previously included in deferred revenues and gains to accrued liabilities, and vi) reclassification and adjustment of the point obligation for the Coast to Coast service from accrued liabilities to deferred revenues and gains. The following table details the impact of the adoption of ASC 606 on the consolidated balance sheet as of September 30, 2018 (in thousands):
The following table details the impact of the adoption of ASC 606 on the consolidated statement of operations for the three and nine months ended September 30, 2018 (in thousands):
For the three and nine months ended September 30, 2018, basic earnings per share of Class A common stock would have been $0.37 and $1.21 per share, respectively, without the adoption of ASC 606 compared to the as-reported amount of $0.38 and $1.22 per share, respectively. For the three and nine months ended September 30, 2018, diluted earnings per share of Class A common stock would have been $0.37 and $1.20 per share, respectively, without the adoption of ASC 606 compared to the as-reported amount of $0.38 and $1.20 per share, respectively. Revenue Recognition Revenues are recognized by the Company when control of the promised goods or services is transferred to its customers in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. Sales and other taxes collected from the customer concurrent with revenue-producing activities are excluded from revenue. Incidental items that are immaterial in the context of the contract are recognized as expense. The Company presents disaggregated revenue on its consolidated statements of operations. Consumer Services and Plans revenue consists of revenue from club memberships, publications, consumer shows, and marketing and royalty fees from various consumer services and plans. Certain Consumer Services and Plans revenue is generated from annual, multiyear and lifetime memberships. The revenue and expenses associated with these memberships are deferred and amortized over the membership period. Unearned revenue and profit are subject to revisions as the membership progresses to completion. Revisions to membership period estimates would change the amount of income and expense amortized in future accounting periods. For lifetime memberships, an 18 year period is used, which is the actuarially determined estimated fulfillment period. Roadside Assistance (“RA”) revenues are deferred and recognized over the contractual life of the membership. RA claim expenses are recognized when incurred. Royalty revenue is earned under the terms of an arrangement with a third-party credit card provider based on a percentage of the Company’s co-branded credit card portfolio retail spending with such third-party credit card provider and for acquiring new cardholders. Marketing fees for finance, insurance, extended service and other similar products are recognized as variable consideration, net of estimated cancellations, if applicable, when a product contract payment has been received or financing has been arranged. Promotional expenses consist primarily of direct mail advertising expenses and renewal expenses and are expensed at the time related materials are mailed. Newsstand sales of publications and related expenses are recorded as variable consideration at the time of delivery, net of estimated returns. Subscription sales of publications are reflected in income over the lives of the subscriptions. The related selling expenses are expensed as incurred. Advertising revenues and related expenses are recorded at the time of delivery. Revenue and related expenses for consumer shows are recognized when the show occurs. Dealership revenue consists of sales of new and used recreational vehicles, sales of RV parts and services, and commissions on the related finance and insurance contracts. Revenue from the sale of recreational vehicles is recognized upon completion of the sale to the customer. Conditions to completing a sale include having an agreement with the customer, including pricing, whereby the sales price must be reasonably expected to be collected and having control transferred to the customer. Revenue from Dealership parts, services and other products sales is recognized over time as work is completed, and when parts are delivered to our customers. For service and parts revenues recorded over time, the Company utilizes a method that considers total costs incurred to date and the applicable margin in relation to total expected efforts to complete our performance obligation in order to determine the appropriate amount of revenue to recognize over time. Finance and insurance revenue is recorded net, since the Company is 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 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. These proceeds are recorded as variable consideration, net of estimated chargebacks. Retail revenue consists of sales of products, parts and services and other products, including RV accessories and supplies, and camping, hunting, fishing, skiing, snowboarding, bicycling, skateboarding, marine and watersport equipment and supplies. Revenue from products, parts, and services sales is recognized over time as work is completed, and when parts are delivered to our customers. For service and parts revenues recorded over time, the Company utilizes a method that considers total costs incurred to date and the applicable margin in relation to total expected efforts to complete our performance obligation in order to determine the appropriate amount of revenue to recognize over time. E-commerce sales are recognized when the product is shipped. Finance and insurance revenue is recognized when a finance and insurance product contract payment has been received or financing has been arranged. 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. These proceeds are recorded as variable consideration, net of estimated chargebacks. The Company’s contracts with customers may include multiple performance obligations. For such arrangements, the Company allocates revenue to each performance obligation based on its relative standalone selling price. The Company generally determines standalone selling prices based on the prices charged to customers or using the adjusted market assessment approach. As of September 30, 2018 and January 1, 2018, a contract asset of $6.8 million and $6.3 million, respectively, relating to RV service revenues was included in accounts receivable in the accompanying unaudited condensed consolidated balance sheet. As of September 30, 2018 and January 1, 2018, the Company had capitalized costs to acquire a contract, consisting of sale commissions, of $5.8 million and $4.4 million, respectively. Deferred Revenues The Company records deferred revenues when cash payments are received or due in advance of the Company’s performance, net of estimated refunds that are presented separately as a component of accrued liabilities. The increase in the deferred revenue balance for the nine months ended September 30, 2018 was primarily driven by cash payments received or due in advance of satisfying the Company’s performance obligations, partially offset by $64.8 million of revenues recognized that were included in the deferred revenue balance at the beginning of the period. As of September 30, 2018, the Company has unsatisfied performance obligations relating to multiyear plans for its Good Sam Club, RA, Coast to Coast memberships, and magazine publication revenue streams. The total unsatisfied performance obligation for these revenue streams at September 30, 2018 and the periods during which the Company expects to recognize the amounts as revenue are presented as follows (in thousands):
The Company’s payment terms vary by the type and location of its customer and the products or services offered. The term between invoicing and when payment is due is not significant. For certain products or services and customer types, the Company requires payment before the products or services are delivered to the customer. Practical Expedients and Exemptions The Company does not adjust the promised amount of consideration for the effects of a significant financing component if the Company expects, at contract inception, that the period of time between payment and transfer of the promised goods or services will be one year or less. The Company expenses sales commissions when incurred in cases where the amortization period of those otherwise capitalized sales commissions would have been one year or less. The Company does not disclose the value of unsatisfied performance obligations for revenue streams for (i) contracts with an original expected length of one year or less and (ii) contracts for which the Company recognizes revenue at the amount to which it has the right to invoice for services performed. |
Inventories and Floor Plan Payable |
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Inventories and Floor Plan Payable | 3. Inventories and Floor Plan Payable Inventories consisted of the following (in thousands):
New and used vehicles included in retail inventories are primarily financed by floor plan arrangements through a syndication of banks. The arrangements are collateralized by substantially all of the assets of FreedomRoads, LLC (“FR”), a wholly owned subsidiary of FreedomRoads, which operates the Camping World dealerships, and bore interest at one-month London Interbank Offered Rate (“LIBOR”) plus 2.05% as of September 30, 2018 and 2.15% as of December 31, 2017. LIBOR, as defined, was 2.10% at September 30, 2018 and 1.36% as of December 31, 2017. Borrowings are tied to specific vehicles and principal is due upon the sale of the related vehicle. In August 2015, FR entered into a Sixth Amended and Restated Credit Agreement for floor plan financing (as further amended, “Floor Plan Facility”) to extend the maturity date to August 2018. On July 1, 2016, FR entered into Amendment No. 1 to the Sixth Amended and Restated Credit Agreement for the Floor Plan Facility to, among other things, increase the available amount under the Floor Plan Facility from $880.0 million to $1.18 billion, amend the applicable borrowing rate margin on LIBOR and base rate loans ranging from 2.05% to 2.50% and 0.55% and 1.00%, respectively, based on the consolidated current ratio at FR, and extend the maturity date to June 30, 2019. On December 12, 2017, FR entered into a Seventh Amended and Restated Credit Agreement (the “Floor Plan Facility Amendment”), which amended the previous credit agreement governing our Floor Plan Facility and allows FR to borrow (a) up to $1.415 billion under a floor plan facility, (b) up to $15.0 million under a letter of credit facility and (c) up to a maximum amount outstanding of $35.0 million under the revolving line of credit, which maximum amount outstanding will decrease by $1.75 million on the last day of each fiscal quarter, commencing with the fiscal quarter ending March 31, 2019. In addition, the maturity of the Floor Plan Facility was extended to December 12, 2020. The Floor Plan Facility includes an offset account that allows the Company to transfer cash as an offset to the payable under the Floor Plan Facility. These transfers reduce the amount of liability outstanding under the floor plan notes payable that would otherwise accrue interest, while retaining the ability to transfer amounts from the offset account into the Company’s operating cash accounts. As a result of using the floor plan offset account, the Company experiences a reduction in floor plan interest expense in its consolidated statements of income. The credit agreement governing the Floor Plan Facility contains certain financial covenants. FR was in compliance with all debt covenants at September 30, 2018 and December 31, 2017. The following table details the outstanding amounts and available borrowings under the Floor Plan Facility as of September 30, 2018 and December 31, 2017 (in thousands):
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Property and Equipment, net |
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Property and Equipment, net | 4. Property and Equipment, net Property and equipment consisted of the following at (in thousands):
The Company reclassified the categories of property and equipment, net and made an immaterial correction of the cost categories and accumulated depreciation amounts by increasing both items by approximately $10.2 million as of December 31, 2017. These changes had no impact on total property and equipment, net. |
Goodwill and Intangible Assets |
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Goodwill and Intangible Assets | 5. Goodwill and Intangible Assets Goodwill The following is a summary of changes in the Company’s goodwill by reportable segments for the nine months ended September 30, 2018 (in thousands):
The Company evaluates goodwill for impairment on an annual basis during the fourth quarter, or more frequently if events or changes in circumstances indicate that the Company’s goodwill or indefinite-lived intangible assets might be impaired. The Company assesses qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If the Company determines it is more likely than not that the fair value of a reporting unit is less than its carrying amount, then it is required to perform the quantitative impairment test by calculating the fair value of the reporting unit and comparing the fair value with the carrying amount of the reporting unit. If the carrying amount of a reporting unit exceeds its fair value, then the Company records an impairment of goodwill equal to the amount that the carrying amount of a reporting unit exceeds its fair value. The Company did not record any impairments of goodwill during the nine months ended September 30, 2018 and 2017. Intangible Assets Finite-lived intangible assets and related accumulated amortization consisted of the following at September 30, 2018 and December 31, 2017 (in thousands):
The trademarks and trade names have useful lives of fifteen years. The membership and customer lists have weighted-average useful lives of approximately five years. The websites have useful lives of ten years. The Company reclassed the categories of intangible assets and made immaterial correcting adjustments to the previously recorded balances for the categories of intangibles assets as of December 31, 2017. These changes had no impact on total intangible assets. |
Long-Term Debt |
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Long-Term Debt | 6. Long-Term Debt Long-term debt consists of the following (in thousands):
Senior Secured Credit Facilities On November 8, 2016, CWGS Group, LLC (the “Borrower”), a wholly owned subsidiary of CWGS, LLC, entered into a credit agreement (as amended from time to time, the “Credit Agreement”) for a new $680.0 million senior secured credit facility (the “Senior Secured Credit Facilities”) and used the proceeds to repay its previous senior secured credit facilities. The Senior Secured Credit Facilities, prior to the amendments described below, consisted of a seven-year $645.0 million Term Loan Facility (the “Term Loan Facility”) and a five-year $35.0 million revolving credit facility (the “Revolving Credit Facility”). On March 17, 2017, the borrower entered into a First Amendment to the Credit Agreement to increase the Term Loan Facility by $95.0 million to $740.0 million. The Term Loan Facility included mandatory amortization at 1.00% per annum in equal quarterly installments. On October 6, 2017, the Borrower entered into a Second Amendment (the “Second Amendment”) to the Credit Agreement. The Second Amendment, among other things, (i) increased the Borrower’s Term Loan Facility by $205.0 million to an outstanding principal amount of $939.5 million, (ii) amended the applicable margin to 2.00% from 2.75% per annum, in the case of base rate loans, and to 3.00% from 3.75% per annum, in the case of LIBOR loans, and (iii) increased the quarterly amortization payment to $2.4 million. On March 28, 2018, the Borrower entered into a Third Amendment (the “Third Amendment”) to the Credit Agreement. The Third Amendment, among other things, (i) reduced the applicable interest margin by 25 basis points to 1.75% from 2.00% per annum, in the case of base rate loans, and to 2.75% from 3.00% per annum, in the case of LIBOR loans, effective on April 6, 2018, (ii) increased the Borrower’s term loan facility by $250 million to a principal amount of $1.19 billion outstanding as of March 28, 2018, and (iii) increased the quarterly amortization payment to $3.0 million. The Credit Agreement requires the Borrower and its subsidiaries to comply on a quarterly basis with a maximum Total Leverage Ratio (as defined in the Credit Agreement), which covenant is only for the benefit of the revolving credit facility, during certain periods in which the aggregate amount of borrowings under the revolving credit facility (including swingline loans), letters of credit and unreimbursed letter of credit disbursements outstanding at such time (minus the lesser of (a) $5.0 million and (b) letters of credit outstanding) is greater than 30% of the aggregate amount of the Revolving Lenders’ Revolving Commitments, as defined in the Credit Agreement. On September 27, 2018, the Borrower entered into a Fourth Amendment (the “Fourth Amendment”) to the Credit Agreement. The Fourth Amendment increases the quarterly Total Leverage Ratio, from “3.00 to 1” to “3.75 to 1” for the period from December 31, 2016 to December 31, 2019 and from “2.75 to 1” to “3.50 to 1” for the period beginning March 31, 2020 and on the last day of each fiscal quarter ending thereafter. The Term Loan Facility includes mandatory amortization at 1.01% per annum in equal quarterly installments. Interest on the Term Loan Facility effective April 6, 2018 floats at the Company’s option at a) LIBOR multiplied by the statutory reserve rate (such product, the “Adjusted LIBOR Rate”), subject to a 0.75% floor, plus an applicable margin of 2.75%, or b) an Alternate Base Rate (“ABR”) equal to 1.75% per annum plus the greater of: (i) the prime rate published by The Wall Street Journal (the “WSJ Prime Rate”), (ii) federal funds effective rate plus 0.50%, or (iii) one-month Adjusted LIBOR Rate plus 1.00%, subject to a 1.75% floor. Interest on borrowings under the Revolving Credit Facility is, at the Company’s option, of a) 3.25% to 3.50% per annum subject to a 0.75% floor in the case of a Eurocurrency loan, or b) 2.25% to 2.50% per annum plus the greater of the WSJ Prime Rate, federal funds effective rate plus 0.50%, or one-month Adjusted LIBOR Rate plus 1.00% in the case of an ABR loan, based on the Company’s Total Leverage Ratio. The Company also pays a commitment fee of 0.5% per annum on the unused amount of the Senior Secured Credit Facility. Reborrowings under the Term Loan Facility are not permitted. The Term Loan Facility requires mandatory principal payments in equal quarterly installments of $1.9 million starting March 31, 2017 through September 30, 2017, $2.4 million on December 31, 2017 and $3.0 million thereafter. The September 30, 2018 payment was paid on October 1, 2018, per the Credit Agreement. Following the end of each fiscal year, commencing with the fiscal year ending December 31, 2017, the Company is required to prepay the term loan borrowings in an aggregate amount equal to 50% of excess cash flow, as defined in the Credit Agreement, for such fiscal year. The required percentage prepayment of excess cash flow is reduced to 25% if the Total Leverage Ratio is 1.50 to 1.00 or greater but less than 2.00 to 1.00. If the Total Leverage Ratio is less than 1.50 to 1.00, no prepayment of excess cash flow is required. The Revolving Credit Facility matures on November 8, 2021, and the Term Loan Facility matures on November 8, 2023. The funds available under the Revolving Credit Facility may be utilized for borrowings or letters of credit; however, a maximum of $15.0 million may be allocated to such letters of credit. As of September 30, 2018, the average interest rate on the term loan debt was 4.87%. As of September 30, 2018 and December 31, 2017, the Company had available borrowings of $32.2 million and $31.8 million, respectively, and letters of credit in the aggregate amount of $2.8 million and $3.2 million outstanding, respectively, under the Revolving Credit Facility. As of September 30, 2018 and December 31, 2017, the principal balance of $1,181.1 million and $937.1 million, respectively, was outstanding under the Term Loan Facility and no amounts were outstanding on the Revolving Credit Facility in either period. CWGS, LLC and CWGS Group, LLC have no revenue-generating operations of their own. Their ability to meet the financial obligations associated with the Senior Secured Credit Facilities is dependent on the earnings and cash flows of its operating subsidiaries, primarily Good Sam Enterprises, LLC and FR, and their ability to upstream dividends. The Senior Secured Credit Facilities are fully and unconditionally guaranteed, jointly and severally, on a senior secured basis by each of the Company’s existing and future domestic restricted subsidiaries with the exception of FreedomRoads Intermediate Holdco, LLC, the direct parent of FR, and FR and its subsidiaries. The Credit Agreement contains certain restrictive covenants including, but not limited to, mergers, changes in the nature of the business, acquisitions, additional indebtedness, sales of assets, investments, and the prepayment of dividends subject to certain limitations and minimum operating covenants. The Company was in compliance with all debt covenants at September 30, 2018 and December 31, 2017. |
Right to Use Assets and Liabilities |
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Right to Use Liabilities | 7. Right to Use Assets and Liabilities The Company leases operating facilities throughout the United States. The Company analyzes all leases in accordance with ASC 840 — Leases. The Company has included the right to use assets in property and equipment, net, as follows (in thousands):
The following is a schedule by year of the future changes in the right to use liabilities as of September 30, 2018 (in thousands):
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Fair Value Measurements |
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Fair Value Measurements | 8. Fair Value Measurements Accounting guidance for fair value measurements establishes a three tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions. For cash and cash equivalents; accounts receivable; other current assets; accounts payable; notes payable — floor plan, net; and other current liabilities the amounts reported in the accompanying Unaudited Condensed Consolidated Balance Sheets approximate fair value due to their short-term nature or the existence of variable interest rates that approximate prevailing market rates. There have been no transfers of assets or liabilities between the fair value measurement levels and there were no material re-measurements to fair value during 2018 and 2017 of assets and liabilities that are not measured at fair value on a recurring basis. The following table presents the reported carrying value and fair value information for the Company’s debt instruments. The fair values shown below for the Term Loan Facility, as applicable, are based on quoted prices in the inactive market for identical assets (Level 2).
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Commitments and Contingencies |
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Commitments and Contingencies | 9. Commitments and Contingencies The Company holds certain property and equipment under rental agreements and operating leases that have varying expiration dates. A majority of its operating facilities are leased from unrelated parties throughout the United States. From time to time, the Company is involved in litigation arising in the normal course of business operations. On October 19, 2018, a purported stockholder of the Company filed a putative class action lawsuit, captioned Ronge v. Camping World Holdings, Inc. et al., in the United States District Court for the Northern District of Illinois against the Company, certain of its officers and directors, and Crestview Partners II GP, L.P. and Crestview Advisors, L.L.C. On October 25, 2018, a different putative stockholder of the Company filed a putative class action lawsuit, captioned Strougo v. Camping World Holdings, Inc. et al., in the United States District Court for the Northern District of Illinois against the Company, certain of its officers and directors, and Crestview Partners II GP, L.P. and Crestview Advisors, L.L.C. Both complaints allege that the Company violated Section 10(b) of the Securities Exchange Act of 1934, as amended, and rule 10b-5 thereunder, by making allegedly materially misleading statements or omitting material facts necessary to make certain statements not misleading related to the business, operations, and management of the Company. Both lawsuits allege that certain of the Company’s officers and directors violated Section 20(a) of the Securities Exchange Act of 1934, as amended, by allegedly acting as controlling persons of the Company. The lawsuits bring claims on behalf of a putative class of purchasers of the Company’s Class A common stock between March 8, 2017 and August 7, 2018, and seek compensatory damages, attorneys’ fees and costs, and any equitable or injunctive relief the court deems just and proper. The Company believes it has meritorious defenses to the claims of the plaintiffs and members of the putative class, and any liability for the alleged claims is not currently probable or reasonably estimable. |
Cash Flows |
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Statements of Cash Flows | 10. Statement of Cash Flows Supplemental disclosures of cash flow information for the following periods (in thousands):
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Acquisitions |
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Acquisitions | 11. Acquisitions Dealerships and Consumer Shows During the nine months ended September 30, 2018 and 2017, subsidiaries of the Company acquired the assets of multiple dealership locations and consumer shows. The Company used a combination of cash, floor plan financing, proceeds from the May 2017 Public Offering (defined and described in Note 14 — Stockholders’ Equity), and additional borrowings on the Term Loan Facility in March 2017 and 2018 (see Note 6 — Long-term Debt) to complete the acquisitions. The Company considers acquisitions of independent dealerships to be a fast and capital efficient alternative to opening new retail locations to expand its business and grow its customer base. The Company acquires consumer shows as another channel for increasing its customer base. Additionally, the Company believes that its experience and scale allow it to operate these acquired dealerships and consumer shows more efficiently. The acquired businesses were recorded at their estimated fair values under the acquisition method of accounting. The balance of the purchase prices in excess of the fair values of net assets acquired were recorded as goodwill. Separately from the business combinations, for the nine months ended September 30, 2018 and 2017, the Company purchased real property of $100.1 million and $16.8 million, respectively, of which $23.6 million and $12.8 million, respectively, was from parties related to the sellers of the dealership businesses. The estimated fair values of the assets acquired and liabilities assumed for the acquisitions of dealerships and consumer shows consist of the following:
The fair values above are preliminary relating to the nine months ended September 30, 2018 as they are subject to measurement period adjustments for up to one year from the date of acquisition as new information is obtained about facts and circumstances that existed as of the acquisition date. The primary items that generated the goodwill are the value of the expected synergies between the acquired businesses and the Company and the acquired assembled workforce, neither of which qualify for recognition as a separately identified intangible asset. For the nine months ended September 30, 2018 and 2017, acquired goodwill of $20.7 million and $143.8 million, respectively, is expected to be deductible for tax purposes. Included in the nine months ended September 30, 2018 and 2017 consolidated financial results were $55.1 million and $210.7 million of revenue, respectively, and $3.5 million of pre-tax loss and $13.8 million of pre-tax income, respectively, of the acquired dealerships and consumer shows from the applicable acquisition dates. Pro forma information on these acquisitions has not been included, because the Company has deemed them to not be individually or cumulatively material. Retail On May 26, 2017, CWI, Inc. (“CWI”), an indirect subsidiary of the Company, completed the acquisition of certain assets of the Gander Mountain Company (“Gander Mountain”) and its Overton’s, Inc. (“Overton’s”) boating business through a bankruptcy auction that took place in April 2017 for $35.4 million in cash and $1.0 million of contingent consideration. Prior to the acquisition, Gander Mountain operated 160 retail locations and an e-commerce business that serviced the hunting, camping, fishing, shooting sports, and outdoor markets. Overton’s operated two retail locations and an e-commerce business that services the marine and watersports markets. The assets acquired included the right to designate any real estate leases for assignment to CWI or other third parties (the “Designation Rights”), other agreements CWI could elect to assume, intellectual property rights, operating systems and platforms, certain distribution center equipment, Overton’s inventory, the Gander Mountain and Overton’s e-commerce businesses, and fixtures and equipment for Overton’s two retail locations and corporate operations. Furthermore, CWI had committed to exercise Designation Rights and take an assignment of no fewer than 15 Gander Mountain retail leases on or before October 6, 2017, in addition to the two Overton’s retail leases assumed at the closing of the acquisition. The Designation Rights expired on October 6, 2017, which was immediately after CWI assumed the minimum 15 additional Gander Mountain retail leases. CWI also assumed certain liabilities, such as cure costs for leases and other agreements it elected to assume, accrued time off for employees retained by CWI and retention bonuses payable to certain key Gander Mountain employees retained by CWI. The cure costs for the minimum 15 Gander Mountain leases assumed under the Designation Rights were $1.0 million and recorded as contingent consideration. As of September 30, 2018, the Company had opened 61 Gander Mountain locations under the rebranded “Gander Outdoors” name as part of its initial rollout after the bankruptcy auction, and closed one location. The Company expects to open an additional 9 Gander Outdoors locations during its initial rollout, which is expected to be substantially complete by December 31, 2018. With the large quantity of stores to be opened in a relatively short period of time for the initial rollout of Gander Outdoors, the Company deemed it necessary to staff the appropriate levels of labor for functions such as management, merchandise procurement, and distribution center to open these retail locations in the compressed timeframe of the initial rollout plan. Many of these expenses were expensed as incurred before retail locations were opened and began to generate revenues. On August 17, 2017, Camping World Inc. (“CW”) an indirect subsidiary of the Company, completed the acquisition of all of the outstanding capital stock and outstanding debt of Active Sports, Inc. (“TheHouse.com”), which specialized in bikes, sailboards, skateboards, wakeboards, snowboards, and outdoor gear. The purchase price consisted of $30.0 million in cash, $5.7 million in restricted shares of Class A common stock of the Company, and the purchase or extinguishment of $35.3 million of TheHouse.com’s debt, including accrued interest. On September 22, 2017, W82, LLC, an indirect subsidiary of the Company, completed the acquisition of substantially all of the assets of EIGHTEEN0THREE LLC, dba W82 (“W82”), which specializes in snowboarding, skateboarding, longboarding, swimwear, footwear, apparel and accessories. The purchase price consisted of $0.6 million in cash and the extinguishment of $1.5 million of W82’s debt, including accrued interest. On January 30, 2018 and April 19, 2018, indirect subsidiaries of the Company acquired substantially all of the assets of Earth Sports LLC, dba Erehwon Mountain Outfitters (“Erehwon”) and Rock Creek Outfitters, Inc. (“Rock Creek”), respectively, for $3.5 million and $5.2 million in cash, respectively. These businesses are specialty retailers of outdoor gear and apparel. The Company believes these businesses are complementary to its existing businesses and will allow for cross marketing of the Company’s consumer services and plans to a wider customer base. The estimated fair values of the assets acquired and liabilities assumed for the acquisition of outdoor and active sports retail businesses consist of the following:
The fair values above are preliminary relating to the nine months ended September 30, 2018 as they are subject to measurement period adjustments for up to one year from the date of acquisition as new information is obtained about facts and circumstances that existed as of the acquisition date. The primary items that generated the goodwill are the value of the expected synergies between the acquired businesses and the Company and the acquired assembled workforce, neither of which qualify for recognition as a separately identified intangible asset. For the nine months ended September 30, 2018 and 2017, acquired goodwill of $3.6 million and $6.2 million, respectively, is expected to be deductible for tax purposes. Included in the nine months ended September 30, 2018 and 2017 consolidated financial results were $10.4 million and $26.0 million of revenue, respectively, and $0.4 million and $11.5 million of pre-tax loss, respectively, of the acquired outdoor and active sports retail locations from the applicable acquisition dates. Pro forma information on these acquisitions has not been included, because the Company has deemed them to not be individually or cumulatively material. |
Income Taxes |
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Income Taxes. | |
Income Taxes | CWH is organized as a Subchapter C corporation and, as of September 30, 2018, is a 41.8% owner of CWGS, LLC (see Note 14 — Stockholders’ Equity and Note 15 — Non-Controlling Interests). CWGS, LLC is organized as a limited liability company and treated as a partnership for federal tax purposes, with the exception of Americas Road and Travel Club, Inc., Camping World and FreedomRoads RV, Inc. (“FRRV”) and their wholly-owned subsidiaries, which are Subchapter C corporations. On December 22, 2017, the U.S. enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (“2017 Tax Act”). The 2017 Tax Act significantly revised the U.S. corporate income tax by, among other things, lowering the statutory corporate tax rate from 35% to 21% and eliminating certain deductions. The 2017 Tax Act also enhanced and extended through 2026 the option to claim accelerated depreciation deductions on qualified property. As of September 30, 2018, the Company had not completed its accounting for the tax effects of the enactment of the 2017 Tax Act on its tax accruals. However, the Company has reasonably estimated the effects of the 2017 Tax Act and recorded provisional amounts in its financial statements as of September 30, 2018 and December 31, 2017. The final impact of the 2017 Tax Act may differ from these estimates, due to, among other things, changes in interpretations, analysis and assumptions made by management, additional guidance that may be issued by the U.S. Department of the Treasury and the Internal Revenue Service, and any updates or changes to estimates the Company has utilized to calculate the transition impact. Pursuant to the SEC Staff Accounting Bulletin No. 118 (“SAB 118”), the Company's measurement period for implementing the accounting changes required by the 2017 Tax Act will close before December 22, 2018 and the Company will complete the accounting under ASC Topic 740, Income Taxes, in the next reporting period prior to the close of the measurement period provided under SAB 118. Shortly after the 2017 Tax Act was enacted, the SEC staff issued SAB 118 to address the application of GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the 2017 Tax Act. In accordance with SAB 118, the Company has determined that the $118.4 million of the deferred tax expense recorded in connection with the remeasurement of certain deferred tax assets and liabilities during the three months ended December 31, 2017 was a provisional amount and a reasonable estimate at December 31, 2017. At September 30, 2018, this estimate was decreased by $1.4 million primarily as a result of the filing of the Company’s tax returns related to the allocation of taxable income to non-controlling interests, and adjustments made to other deferred tax assets. Further, in connection with its adjusted estimate of the December 31, 2017 tax return amounts, the Company as of September 30, 2018 increased its income tax receivable by approximately $6.5 million, increased its Tax Receivable Agreement liability by approximately $2.0 million, and decreased its deferred income tax assets by approximately $2.2 million. In connection with this adjustment, the Company also made a corresponding adjustment to equity for the impact to distributions payable under its Tax Receivable Agreement. As the Company completes its analysis of the 2017 Tax Act, collects and prepares necessary data, and interprets any additional guidance issued by the U.S. Treasury Department, the IRS, and other standard-setting bodies, the Company may continue to make adjustments to the provisional amounts. Any subsequent adjustment to these amounts will be finalized in the next reporting period prior to the close of the measurement period provided under SAB 118. For the three months ended September 30, 2018 and 2017, the Company’s effective income tax rate was 19.2% and 9.1%, respectively. For the nine months ended September 30, 2018 and 2017, the Company’s effective income tax rate was 17.3% and 10.6%, respectively. The amount of income tax expense and the effective income tax rate increased in 2018 partially due to operating losses recorded by its retail segment for which no tax benefit was recognized on account of the valuation allowance recorded against such losses, and partially due to an increased ownership percentage of CWGS, LLC for which the Company is subject to U.S., federal and state taxes on its allocable share of income of CWGS, LLC. The Company's effective tax rate for the three months ended September 30, 2018 was lower than the federal statutory rate of 21.0% primarily due to a portion of the Company’s earnings being attributable to non-controlling interests in limited liability companies which are not subject to corporate level taxes. For the three and nine months ended September 30, 2018, measurement period adjustments discussed above increased the effective income tax rate by 188 basis points for the three months ended September 30, 2018, and decreased the effective income tax rate by 81 basis points for the nine months ended September 30, 2018. The Company's effective tax rate for the three months ended September 30, 2017 was significantly lower than the federal statutory rate of 35.0% primarily due to a portion of the Company’s earnings being attributable to non-controlling interests in limited liability companies which are not subject to corporate level taxes. The Company evaluates its deferred tax assets on a quarterly basis to determine if they can be realized and establishes valuation allowances when it is more likely than not that all or a portion of the deferred tax assets may not be realized. At September 30, 2018 and December 31, 2017, the Company determined that all of its deferred tax assets, except those pertaining to Camping World and the direct investment in CWGS, LLC, are more likely than not to be realized. The Company maintains a full valuation allowance against the deferred tax assets of Camping World, since it was determined that it would have insufficient taxable income in the current or carryforward periods under the tax laws to realize the future tax benefits of its deferred tax assets. The Company also maintains a valuation allowance against the portion of the deferred tax asset pertaining to its direct investment in CWGS, LLC. The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position. The tax benefits recognized in the consolidated financial statements related to a particular tax position are measured based on the largest benefit that has a greater than a 50% likelihood of being realized upon settlement. The amount of unrecognized tax benefits is adjusted as appropriate for changes in facts and circumstances, such as significant amendments to existing tax law, new regulations or interpretations by the taxing authorities, new information obtained during a tax examination, or resolution of an examination. As of September 30, 2018, the Company recorded $0.3 million of uncertain tax positions and none at December 31, 2017. The Company recorded $0.1 million of interest and penalties relating to income taxes for the three months and nine months ended September 30, 2018, and none for the three or nine months ended September 30, 2017. On October 6, 2016, the Company entered into a tax receivable agreement (the “Tax Receivable Agreement”) that provides for the payment by the Company to the Continuing Equity Owners and Crestview Partners II GP, L.P. of 85% of the amount of tax benefits, if any, the Company actually realizes, or in some circumstances is deemed to realize, as a result of (i) increases in the tax basis from the purchase of common units from Crestview Partners II GP, L.P. in exchange for Class A common stock in connection with the consummation of the IPO and the related transactions and any future redemptions that are funded by the Company and any future redemptions or exchanges of common units by Continuing Equity Owners as described above and (ii) certain other tax benefits attributable to payments made under the Tax Receivable Agreement. The above payments are predicated on CWGS, LLC making an election under Section 754 of the Internal Revenue Code effective for each tax year in which a redemption or exchange (including a deemed exchange) of common units for cash or stock occur. These tax benefit payments are not conditioned upon one or more of the Continuing Equity Owners or Crestview Partners II GP, L.P. maintaining a continued ownership interest in CWGS, LLC. In general, the Continuing Equity Owners’ or Crestview Partners II GP, L.P.’s rights under the Tax Receivable Agreement are assignable, including to transferees of its common units in CWGS, LLC (other than the Company as transferee pursuant to a redemption or exchange of common units in CWGS, LLC). The Company expects to benefit from the remaining 15% of the tax benefits, if any, which may be realized. During the nine months ended September 30, 2018 and 2017, 215,486 and 6,525,610 common units in CWGS, LLC, respectively, were exchanged for Class A common stock subject to the provisions of the Tax Receivable Agreement. The Company recognized a liability for the Tax Receivable Agreement payments due to those parties that redeemed common units, representing 85% of the aggregate tax benefits the Company expects to realize from the tax basis increases related to the exchange, after concluding it was probable that the Tax Receivable Agreement payments would be paid based on estimates of future taxable income. As of September 30, 2018 and December 31, 2017, the amount of Tax Receivable Agreement payments due under the Tax Receivable Agreement was $133.7 million and $137.7 million, respectively, of which $10.4 million and $8.1 million, respectively, were included in current portion of the Tax Receivable Agreement liability in the Condensed Consolidated Balance Sheets. |
Related Party Transactions |
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Related Party Transactions | |
Related Party Transactions | 13. Related Party Transactions Transactions with Directors, Equity Holders and Executive Officers FreedomRoads leases various retail locations from managers and officers. During the three months ended September 30, 2018 and 2017, the related party lease expense for these locations was $0.5 million and $0.5 million, respectively. During the nine months ended September 30, 2018 and 2017, the related party lease expense for these locations was $1.5 million and $1.4 million, respectively. In January 2012, FreedomRoads entered into a lease (the “Original Lease”) with respect to the Company’s Lincolnshire, Illinois offices, which was amended in March 2013 in connection with the Company’s leasing of additional premises within the same office building (the “Expansion Lease”). The Original Lease is payable in 132 monthly payments of base rent equal to approximately $29,000, commencing April 2013, subject to annual increases. The Expansion Lease is payable in 132 monthly payments of base rent equal to approximately $2,500, commencing May 2013, subject to annual increases. Marcus A. Lemonis, the Company’s Chairman and Chief Executive Officer, has personally guaranteed both leases. During the three months ended September 30, 2018 and 2017, the Company made payments of approximately $180,000 and $193,000, respectively, in connection with the Original Lease, which included approximately $79,000 and $94,000, respectively, for common area maintenance charges on the Original Lease, and the Company made payments of approximately $9,000 and $8,000, respectively, in connection with the Expansion Lease. During the nine months ended September 30, 2018 and 2017, the Company made payments of approximately $512,000 and $546,000, respectively, in connection with the Original Lease, which included approximately $212,000 and $252,000, respectively, for common area maintenance charges on the Original Lease, and the Company made payments of approximately $26,000 and $25,000, respectively, in connection with the Expansion Lease. The Company paid Kaplan, Strangis and Kaplan, P.A., of which Andris A. Baltins is a member, $0.2 million and $0.3 million during the nine months ended September 30, 2018 and 2017, respectively, for legal services. Other Transactions The Company does business with certain companies in which Mr. Lemonis has a direct or indirect material interest. The Company purchased fixtures for interior store sets at the Company’s retail locations from Precise Graphix, LLC (“Precise Graphix”). Mr. Lemonis has a 33% economic interest in Precise Graphix and the Company paid Precise Graphix $0.8 million and $0.5 million for the three months ended September 30, 2018 and 2017, respectively, and $4.4 million and $1.7 million for the nine months ended September 30, 2018 and 2017, respectively. The Company purchased point of purchase and visual merchandise displays from JD Custom Design (“JD Custom”) for use in Camping World’s retail store operations. Mr. Lemonis is a holder of 52% of the combined voting power in JD Custom and the Company paid JD Custom $0.1 million and $0 million for the three months ended September 30, 2018 and 2017,respectively, and paid $0.4 million and $0 for the nine months ended September 30, 2018 and 2017, respectively. Cumulus Media Inc. (“Cumulus Media”) has provided radio advertising for the Company through Cumulus Media’s subsidiary, Westwood One, Inc. Crestview Partners II GP, L.P., an affiliate of CVRV, was the beneficial owner of Cumulus Media’s Class A common stock, until Crestview Partners II GP, L.P.’s most recently filed Schedule 13D amendment with respect to Cumulus Media on June 6, 2018 advised of no further beneficial ownership of Cumulus Media stock. The Company incurred expense from Cumulus Media for the aforementioned advertising services of $0.1 million and $0.4 million for the three months ended September 30, 2018 and 2017, respectively, and $0.2 million and $0.4 million for the nine months ended September 30, 2018, respectively. The Company does business with certain companies in which Stephen Adams, a member of the Company’s board of directors, has a direct or indirect material interest. The Company from time to time purchases advertising services from Adams Radio of Fort Wayne LLC (“Adams Radio”), in which Mr. Adams has an indirect 90% interest. The Company paid Adams Radio $0.0 million for both the three months ended September 30, 2018 and 2017, respectively, and $0.2 million and $0 for the nine months ended September 30, 2018 and 2017, respectively. |
Stockholders' Equity |
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Stockholders' Equity | 14. Stockholders’ Equity Reorganization Transactions In connection with the IPO on October 6, 2016, the Company completed the following Reorganization Transactions:
As required by the LLC Agreement, the Company must, at all times, maintain a one-to-one ratio between the number of outstanding shares of Class A common stock and the number of common units of CWGS, LLC owned by CWH (subject to certain exceptions for treasury shares and shares underlying certain convertible or exchangeable securities). Immediately following the completion of the Reorganization Transactions and IPO, CWH owned 22.6% of CWGS, LLC and the remaining 77.4% of CWGS, LLC was owned by the Continuing Equity Owners (see Note 15 — Non-Controlling Interests). As a result of the Reorganization Transactions, CWH became the sole managing member of CWGS, LLC and, although CWH had a minority economic interest in CWGS, LLC, CWH had the sole voting power in, and controlled the management of, CWGS, LLC. Accordingly, the Company consolidated the financial results of CWGS, LLC and reported a non-controlling interest in its consolidated financial statements. May 2017 Public Offering On May 31, 2017, the Company completed a public offering (the “May 2017 Public Offering”) in which the Company sold 4,000,000 shares of the Company’s Class A common stock at a public offering price of $27.75 per share. The Company received $106.6 million in proceeds, net of underwriting discounts and commissions, which were used to purchase 4,000,000 newly-issued common units from CWGS, LLC at a price per unit equal to the public offering price per share of Class A common stock in the May 2017 Public Offering, less underwriting discounts and commissions. In addition, on June 5, 2017, the underwriters exercised their option to purchase an additional 600,000 shares of Class A common stock. On June 9, 2017, the Company closed on the purchase of the additional 600,000 shares of Class A common stock and received $16.0 million in additional proceeds, net of underwriting discounts and commissions, which were used to purchase 600,000 newly-issued common units from CWGS, LLC at a price per unit equal to the public offering price per share of Class A common stock in the May 2017 Public Offering, less underwriting discounts and commissions. In connection with the May 2017 Public Offering, CVRV Acquisition LLC and CVRV Acquisition II LLC (“May 2017 Selling Stockholders”), each affiliates of Crestview, sold 5,500,000 shares of the Company’s Class A common stock at the same public offering price of $27.75 per share. CVRV Acquisition LLC redeemed 4,323,083 common units of CWGS, LLC for 4,323,083 shares of Class A common stock, which it sold in the May 2017 Public Offering along with 1,176,917 shares of Class A shares that CVRV Acquisition II LLC already held as a result of the Reorganization Transactions. Pursuant to the terms of the LLC Agreement, 4,323,083 shares of the Company’s Class B common stock registered in the name of CVRV Acquisition LLC were cancelled for no consideration on a one-for-one basis with the number of common units redeemed. In addition, on June 5, 2017, the underwriters exercised their option to purchase an additional 825,000 shares of Class A common stock from the May 2017 Selling Stockholders, in conjunction with their exercise of their option to purchase the additional 600,000 shares from the Company as described above. On June 9, 2017, the May 2017 Selling Stockholders closed on the sale of the additional 825,000 shares of Class A common stock. CVRV Acquisition LLC redeemed 648,462 common units of CWGS, LLC for 648,462 shares of Class A common stock, which it sold in the May 2017 Public Offering along with 176,538 shares of Class A shares that CVRV Acquisition II LLC already held as a result of the Reorganization Transactions. Pursuant to the terms of the LLC Agreement, 648,462 shares of the Company’s Class B common stock registered in the name of CVRV Acquisition LLC were cancelled for no consideration on a one-for-one basis with the number of common units redeemed. The Company did not receive any proceeds relating to the sale of the May 2017 Selling Stockholders’ shares. October 2017 Public Offering On October 30, 2017, the Company completed a public offering (the “October 2017 Public Offering”) in which, CVRV Acquisition LLC, CVRV Acquisition II LLC and Crestview Advisors, LLC, each affiliates of Crestview, and CWGS Holding, LLC, a wholly owned subsidiary of ML Acquisition Company, LLC, which is indirectly owned by each of Stephen Adams, a member of Camping World’s board of directors, and Marcus Lemonis, Camping World’s Chairman and Chief Executive Officer (“October 2017 Selling Stockholders”) sold 6,700,000 shares of the Company’s Class A common stock at a public offering price of $40.50 per share. CVRV Acquisition LLC redeemed 4,715,529 common units of CWGS, LLC for 4,715,529 newly-issued shares of Class A common stock, which it sold in the October 2017 Public Offering along with 1,283,756 and 715 shares of Class A shares that CVRV Acquisition II LLC and Crestview Advisors, LLC, respectively, already held as a result of the Reorganization Transactions. Additionally, CWGS Holding, LLC redeemed 700,000 common units of CWGS, LLC for 700,000 shares of Class A common stock, which it sold in the October 2017 Public Offering. Pursuant to the terms of the LLC Agreement, 4,715,529 and 700,000 shares of the Company’s Class B common stock registered in the names of CVRV Acquisition LLC and CWGS Holding, LLC, respectively, were cancelled for no consideration on a one-for-one basis with the number of common units redeemed. In addition, the underwriters exercised their option to purchase an additional 963,799 shares of Class A common stock from the October 2017 Selling Stockholders, in conjunction with their exercise of their option to purchase up to an additional 1,005,000 shares from the October 2017 Selling Stockholders. On November 1, 2017, the October 2017 Selling Stockholders closed on the sale of the additional 963,799 shares of Class A common stock. CVRV Acquisition LLC and CWGS Holding, LLC redeemed 678,331 and 100,695 common units of CWGS, LLC, for 678,331 and 100,695 newly issued shares of Class A common stock, respectively, which they sold in the October 2017 Public Offering along with 184,669 and 104 shares of Class A shares that CVRV Acquisition II LLC and Crestview Advisors, LLC, respectively, already held as a result of the Reorganization Transactions. Pursuant to the terms of the LLC Agreement, 678,331 and 100,695 shares of the Company’s Class B common stock registered in the names of CVRV Acquisition LLC and CWGS Holding, LLC, respectively, were cancelled for no consideration on a one-for-one basis with the number of common units redeemed. The Company did not receive any proceeds relating to the October 2017 Public Offering. Short-Swing Profit Disgorgement In May 2018, the Company received an aggregate of $557,000 from short-swing profit disgorgement remitted by ML Acquisition Company, LLC, of which Marcus A. Lemonis, Chairman and Chief Executive Officer of the Company, is the sole director, which is included as an increase to additional paid-in capital in the unaudited condensed consolidated statement of stockholders’ equity and as a financing activity in the unaudited condensed consolidated statement of cash flows. |
Non-Controlling Interests |
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Non-Controlling Interests | 15. Non-Controlling Interests In connection with the Reorganization Transactions, described in Note 14 — Stockholders’ Equity, CWH became the sole managing member of CWGS, LLC and, as a result, consolidates the financial results of CWGS, LLC. The Company reports a non-controlling interest representing the common units of CWGS, LLC held by Continuing Equity Owners. Changes in CWH’s ownership interest in CWGS, LLC while CWH retains its controlling interest in CWGS, LLC will be accounted for as equity transactions. As such, future redemptions or direct exchanges of common units of CWGS, LLC by the Continuing Equity Owners will result in a change in ownership and reduce the amount recorded as non-controlling interest and increase additional paid-in capital. As of September 30, 2018 and December 31, 2017, there were 88,731,980 and 88,639,567 common units of CWGS, LLC outstanding, respectively, of which CWH owned 37,056,971 and 36,749,072 common units of CWGS, LLC, respectively, representing 41.8% and 41.5% ownership interests in CWGS, LLC, respectively, and the Continuing Equity Owners owned 51,675,009 and 51,890,495 common units of CWGS, LLC, respectively, representing 58.2% and 58.5% ownership interests in CWGS, LLC, respectively. The following table summarizes the effects of changes in ownership in CWGS, LLC on the Company’s equity:
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Equity-based Compensation Plans |
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Equity-based Compensation Plans | 16. Equity-based Compensation Plans The following table summarizes the equity-based compensation that has been included in the following line items within the consolidated statements of operations during:
The following table summarizes stock option activity for the nine months ended September 30, 2018:
The following table summarizes restricted stock unit activity for the nine months ended September 30, 2018:
The weighted-average grant date fair value of restricted stock units granted during the nine months ended September 30, 2018 was $25.73. |
Earnings Per Share |
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Earnings Per Share | 17. Earnings Per Share Basic earnings per share of Class A common stock is computed by dividing net income available to Camping World Holdings, Inc. by the weighted-average number of shares of Class A common stock outstanding during the period. Diluted earnings per share of Class A common stock is computed by dividing net income available to Camping World Holdings, Inc. by the weighted-average number of shares of Class A common stock outstanding adjusted to give effect to potentially dilutive securities. The following table sets forth reconciliations of the numerators and denominators used to compute basic and diluted earnings per share of Class A common stock:
Shares of the Company’s Class B common stock and Class C common stock do not share in the earnings or losses of the Company and are therefore not participating securities. As such, separate presentation of basic and diluted earnings per share of Class B common stock or Class C common stock under the two-class method has not been presented. |
Segments Information |
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Segments Information | 18. Segments Information During the quarter ended September 30, 2018, the Company’s board of directors appointed Brent Moody, formerly the Chief Operating and Legal Officer, as President of the Company. In this new role, the Company determined that Mr. Moody now performs the role of chief operating decision maker together with the Chief Executive Officer. Additionally, responsibilities of certain members of senior management of the Company were realigned to maximize the contributions of the Company’s recent acquisitions of Retail businesses. As a result of these changes, the Company has determined that its reportable segments have changed. The Company’s new reportable segments have been identified based on various commonalities amongst the Company’s individual product lines, which is consistent with the Company’s operating structure and associated management structure and management evaluates the performance of and allocates resources to these segments based on segment revenues and segment profit. The segment reporting for prior comparative periods have been recasted to conform to the current period presentation. The Company previously had two reportable segments: (i) Consumer Services and Plans; and (ii) Retail. Following the realignment, the Company now has three reportable segments: (i) Consumer Services and Plans, (ii) Dealership, and (iii) Retail. The Company’s Consumer Services and Plans segment remains the same as prior periods and primarily derives revenue from the sale of emergency roadside assistance; property and casualty insurance programs; travel assist programs; extended vehicle service contracts; co-branded credit cards; vehicle financing and refinancing; club memberships; and publications and directories. The Company has separated the prior Retail segment into two distinct segments: Dealership and Retail. The Company’s Dealership segment primarily derives revenue from the sale of new and used RVs, parts, service and other, and finance and insurance products. The Company’s Retail segment primarily derives revenue from the sale of the following: products, parts, service and other, including RV accessories and supplies; and camping, hunting, fishing, skiing, snowboarding, bicycling, skateboarding, marine and watersport equipment and supplies. As noted above, both the Dealership and Retail segments derive revenue from the sale of parts, services and other revenues since certain retail locations without associated dealerships have the capability to perform RV repair and maintenance services. Additionally, certain RV parts and accessories can be sold to customers at a dealership or retail location. The revenues and related costs of revenues for these parts and services are recorded in the segment that enters into the transaction with the customer, either Dealership or Retail. Corporate and other is comprised of the corporate operations of the Company. The reportable segments identified above are the business activities of the Company for which discrete financial information is available and for which operating results are regularly reviewed by the Company’s chief operating decision maker to allocate resources and assess performance. The Company’s chief operating decision maker is a group comprised of the Chief Executive Officer and the President. Reportable segment revenue, segment income, floor plan interest expense, depreciation and amortization, other interest expense, total assets, and capital expenditures are as follows:
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Subsequent Event |
9 Months Ended |
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Sep. 30, 2018 | |
Subsequent Event | |
Subsequent Event |
19. Subsequent Event On November 2, 2018, Camping World Property, Inc. (the ‘‘Real Estate Borrower’’), an indirect wholly-owned subsidiary of CWGS, LLC, and CIBC Bank USA (“Lender”), entered into a loan and security agreement for a real estate credit facility with an aggregate maximum principal amount of $21.525 million (“Real Estate Facility”). Borrowings under the Real Estate Facility are guaranteed by CWGS Group, LLC, a wholly-owned subsidiary of CWGS, LLC (“Real Estate Facility Guarantor”). The Real Estate Facility may be used to finance the acquisition of real estate assets. Concurrent with the establishment of the Real Estate Facility, the Real Estate Borrower borrowed $4.2 million to acquire a distribution facility leased prior to the acquisition thereof. The Real Estate Facility will be secured by first priority security interest on the real estate assets acquired with the proceeds of the Real Estate Facility (“Real Estate Facility Properties”). The Real Estate Facility matures on October 31, 2023. The borrowings under the Real Estate Facility bear interest at a rate per annum equal to, at our option, either: (a) a floating rate tied to the London Interbank Eurodollar market (the ‘‘Floating LIBO Rate’’), plus 2.75%, in the case of Floating LIBO Rate loans or (b) a base rate determined by reference to the greater of: (i) the federal funds rate plus 0.50%, and (ii) the prime rate published by Lender, plus 0.75%, in the case of base rate loans. The Real Estate Borrower was required to pay a commitment fee equal to the product of: (i) 0.50%, and (ii) the aggregate principal amount of the Real Estate Facility. In addition to other customary covenants, the loan and security agreement governing the Real Estate Facility requires the Real Estate Borrower to comply on a quarterly basis, with respect to each of the individual Real Estate Facility Properties, with a debt service coverage ratio of 1.250 to 1.000.
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Summary of Significant Accounting Policies (Policies) |
9 Months Ended |
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Sep. 30, 2018 | |
Summary of Significant Accounting Policies | |
Principles of Consolidation and Basis of Presentation | Principles of Consolidation and Basis of Presentation The consolidated financial statements include the accounts of Camping World Holdings, Inc. (“CWH”) and its subsidiaries (collectively, the “Company”), and are presented in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Accordingly, these interim financial statements do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) necessary for fair presentation of the results of operations, financial position and cash flows for the periods presented have been reflected. All significant intercompany accounts and transactions of the Company and its subsidiaries have been eliminated in consolidation. The condensed consolidated financial statements as of and for the three and nine months ended September 30, 2018 are unaudited. The condensed consolidated balance sheet as of December 31, 2017 has been derived from the audited financial statements at that date but does not include all of the disclosures required by GAAP. These interim condensed consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2017 (the “Annual Report”) filed with the SEC on March 13, 2018. Operating results for the interim periods are not necessarily indicative of the results that may be expected for the full year. CWH was formed on March 8, 2016 as a Delaware corporation for the purpose of facilitating an initial public offering (the “IPO”) and other related transactions in order to carry on the business of CWGS Enterprises, LLC (“CWGS, LLC”). CWGS, LLC was formed in March 2011 when it received, through contribution from its then parent company, all of the membership interests of Affinity Group Holding, LLC and FreedomRoads Holding Company, LLC (“FreedomRoads”). The IPO and related reorganization transactions (the “Reorganization Transactions”) that occurred on October 6, 2016 resulted in CWH as the sole managing member of CWGS, LLC, with CWH having sole voting power in and control of the management of CWGS, LLC. Despite its position as sole managing member of CWGS, LLC, CWH has a minority economic interest in CWGS, LLC. As of September 30, 2018, CWH owned 41.8% of CWGS, LLC. Accordingly, the Company consolidates the financial results of CWGS, LLC and reports a non-controlling interest in its consolidated financial statements. The Company does not have any components of other comprehensive income recorded within its consolidated financial statements, and, therefore, does not separately present a statement of comprehensive income in its consolidated financial statements. |
Description of the Business | Description of the Business CWGS, LLC is a holding company and operates through its subsidiaries. The Company realigned the structure of its internal organization during the three months ended September 30, 2018 in a manner that caused the composition of its reportable segments to change to the following three segments: (i) Consumer Services and Plans, (ii) Dealership, and (iii) Retail. The Company reportable segment financial information has been recasted to reflect the updated reportable segment structure for all periods presented. See Note 18 to Consolidated Financial Statements for further information about the Company’s segments. The Company provides consumer services and plans offerings under its Good Sam brand, its Dealership offerings under its Camping World brand, and its Retail products primarily under the Camping World and Gander Outdoors brands. Within the Consumer Services and Plans segment, the Company primarily derives revenue from the sale of the following offerings: emergency roadside assistance; property and casualty insurance programs; travel assist programs; extended vehicle service contracts; co-branded credit cards; vehicle financing and refinancing; club memberships; and publications and directories. Within the Dealership segment, the Company primarily derives revenue from the sale of new and used recreational vehicles (“RV’s”), sale of RV parts, services and other, and commissions on the related finance and insurance contracts. Within the Retail segment, the Company primarily derives revenue from the sale of the following: products, parts, accessories, supplies and service for RVs, and equipment, gear and supplies for camping, hunting, fishing, skiing, snowboarding, bicycling, skateboarding, marine and watersport and other outdoor activities. As noted above, both the Dealership and Retail segments derive revenue from the sale of parts, services and other revenues since certain retail locations without associated dealerships have the capability to perform RV repair and maintenance services. Additionally, certain RV parts and accessories can be sold to customers at a dealership or retail location. The revenues and related costs of revenues for these parts and services are recorded in the segment that enters into the transaction with the customer, either Dealership or Retail. The Company primarily operates in various regions throughout the United States and markets its products and services to RV owners and outdoor enthusiasts. At September 30, 2018, the Company operated 227 retail locations, of which 136 locations sold new and used RVs and offered RV financing and insurance; 129 locations offered RV products, parts and services; 55 Gander Outdoors locations offered outdoor products and services; one Overton’s location offered marine and watersports products; two TheHouse.com locations offered skiing, snowboarding, bicycling, and skateboarding products; two W82 locations offered skiing, snowboarding, and skateboarding products; and six Uncle Dan’s locations offered outdoor products and services. In addition, on January 30, 2018 the Company acquired certain assets of EARTH SPORTS LLC, dba Erehwon Mountain Outfitter (“Erehwon”), a leading Midwest specialty retailer of outdoor gear and apparel with four retail locations. On April 19, 2018 the Company acquired Rock Creek Outfitters (“Rock Creek”), a specialty outdoor retailer of outdoor gear for kayaking, rock climbing, camping and hiking with seven retail locations. In the first nine months of 2018, the Company converted three RV products, parts and services locations from the Camping World nameplate to the Gander nameplate (Bowling Green, Kentucky, Madison, Wisconsin and Roanoke, Virginia), converted one RV products, parts and services location from a Camping World nameplate to an Overton’s nameplate (Rogers, Minnesota), closed two RV products, parts and services locations from the Camping World nameplate (Winter Garden, FL; and Cleburne, TX), closed two Overton’s locations (Greenville, North Carolina and Raleigh, North Carolina), closed one Gander Outdoors location (Florence, Alabama), and acquired a dealership in Worthing, South Dakota and subsequently merged the operations of the acquired dealership into our existing dealership within the same market. |
Use of Estimates | Use of Estimates The preparation of these unaudited condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results may differ from those estimates. In preparing these financial statements, management has made its best estimates and judgments of certain amounts included in the financial statements, giving due consideration to materiality. The Company bases its estimates and judgments on historical experience and other assumptions that management believes are reasonable. However, application of these accounting policies involves the exercise of judgment and use of assumptions as to future uncertainties and, as a result, actual results could differ materially from these estimates. The Company periodically evaluates estimates and assumptions used in the preparation of the financial statements and makes changes on a prospective basis when adjustments are necessary. Significant estimates made in the accompanying unaudited condensed consolidated financial statements include certain assumptions related to accounts receivable, inventory, goodwill, intangible assets, long lived assets, program cancellation reserves, and accruals related to self-insurance programs, estimated tax liabilities and other liabilities. |
Recently Adopted Accounting Pronouncements and Recently Issued Accounting Pronouncements | Recently Adopted Accounting Pronouncements In May 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”). The FASB has subsequently issued several related ASUs that clarified the implementation guidance for certain aspects of ASU 2014-09, which are effective upon the adoption of ASU 2014-09. This ASU sets forth a five-step model for determining when and how revenue is recognized. Under the model, an entity is required to recognize revenue to depict the transfer of goods or services to a customer at an amount reflecting the consideration it expects to receive in exchange for those goods or services. The Company adopted the amendments of this ASU on January 1, 2018, and the adoption did not materially impact its consolidated financial statements or results of operations (see Note 2 — Revenue for further details). In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”). This ASU addresses several specific cash flow issues with the objective of reducing the diversity in practice of how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The Company adopted the amendments of this ASU on January 1, 2018, and the adoption did not materially impact its consolidated financial statements or results of operations. Recently Issued Accounting Pronouncements In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02”). The FASB has subsequently issued several related ASUs that clarified the implementation guidance for certain aspects of ASU 2016-02, which are effective upon the adoption of ASU 2016-02. The amendments in this ASU relate to the accounting for leasing transactions. This standard requires a lessee to record on the balance sheet the assets and liabilities for the rights and obligations created by leases with lease terms of more than 12 months. In addition, this standard requires both lessees and lessors to disclose certain key information about lease transactions. In July 2018, the FASB made targeted improvements to the standard, including providing an additional and optional transition method. Under this method, an entity initially applies the standard at the adoption date, including the election of certain transition reliefs, and recognizes a cumulative effect adjustment to the opening balance of retained earnings in the period of adoption. This standard will be effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company is executing against its project plan, which includes implementing a software solution, designing and implementing new controls, evaluating new disclosure requirements, and finalizing accounting policies and practical expedients. The Company is in the process of evaluating the impact that the adoption will have on its consolidated balance sheet and statement of income. However, the Company expects that the adoption of the provisions of this ASU will have a significant impact on its consolidated balance sheet by reporting a right-to-use lease asset and corresponding lease obligation, as currently most of its real estate is leased via operating leases. In August 2018, the FASB issued ASU No. 2018-13, Changes to the Disclosure Requirements for Fair Value Measurement (Topic 820) (“ASU 2018-13”). This standard eliminates, amends, and adds disclosure requirements for fair value measurements. The amended and new disclosure requirements primarily relate to Level 3 fair value measurements. The standard will be effective for fiscal years beginning after December 15, 2019. The removal and amendment of certain disclosures may be early adopted with retrospective application while the new disclosure requirements are to be applied prospectively. The Company plans to early adopt this standard as of October 1, 2018. The Company currently does not expect this ASU, which relates only to disclosures, to have a material impact to the Company’s consolidated financial statements. In August 2018, the FASB issued ASU No. 2018-15, Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (“ASU 2018-15”). This standard aligns the accounting for implementation costs incurred in a cloud computing arrangement that is a service arrangement (i.e., hosting arrangement) with the guidance on capitalizing costs in ASC 350-40, Internal-Use Software. The ASU permits either a prospective or retrospective transition approach. The standard will be effective for fiscal years beginning after December 15, 2019. The Company is currently evaluating the impact that the adoption of the provisions of the ASU will have on its consolidated financial statements. |
Immaterial Corrections | Immaterial Corrections Certain immaterial corrections have been made to the statements of cash flows, which reduced net cash provided by operating activities and decreased net cash used in investing activities by $3.8 million for the nine months ended September 30, 2017. As part of these immaterial corrections, the Company increased the Accounts Payable and Other Accrued Expenses line item and decreased the Other, Net line item within cash provided by operating activities for the nine months ended September 30, 2017. These corrections had no impact on the previously-reported consolidated balance sheets, statements of operations, or statements of stockholders' equity. |
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Summary of total unsatisfied performance obligation for these revenue streams, that the Company expects to recognize the amounts as revenue | The total unsatisfied performance obligation for these revenue streams at September 30, 2018 and the periods during which the Company expects to recognize the amounts as revenue are presented as follows (in thousands):
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ASU 2014-09 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of cumulative effect of the changes made to the consolidated January 1, 2018 balance sheet for the adoption of ASC 606 and impact of the adoption of ASC 606 on the consolidated balance sheet and statement of operations | The following table details the cumulative effect of the changes made to the consolidated January 1, 2018 balance sheet for the adoption of ASC 606 (in thousands):
The adjustments above related primarily to i) the deferral of sales commissions expenses relating to multiyear consumer services and plans and the recording of such expenses over the same period as the recognition of the related revenues, ii) adjustment of recognition period of RV service revenue from point-in-time to over time, iii) adjustment of capitalized direct-response advertising to expense when the advertising is mailed instead of over the expected benefit period, iv) reclassification of estimated product returns from inventory to prepaid expenses and other assets, v) reclassification of expected refunds previously included in deferred revenues and gains to accrued liabilities, and vi) reclassification and adjustment of the point obligation for the Coast to Coast service from accrued liabilities to deferred revenues and gains. The following table details the impact of the adoption of ASC 606 on the consolidated balance sheet as of September 30, 2018 (in thousands):
The following table details the impact of the adoption of ASC 606 on the consolidated statement of operations for the three and nine months ended September 30, 2018 (in thousands):
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Inventories and Floor Plan Payable (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of inventories | Inventories consisted of the following (in thousands):
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Floor Plan Facility | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of outstanding amounts and available borrowing | The following table details the outstanding amounts and available borrowings under the Floor Plan Facility as of September 30, 2018 and December 31, 2017 (in thousands):
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Property and Equipment, net (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property and Equipment, net | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property and Equipment, net | Property and equipment consisted of the following at (in thousands):
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Goodwill and Intangible Assets (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Changes in goodwill by business line | The following is a summary of changes in the Company’s goodwill by reportable segments for the nine months ended September 30, 2018 (in thousands):
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Finite-lived intangible assets and related accumulated amortization | Finite-lived intangible assets and related accumulated amortization consisted of the following at September 30, 2018 and December 31, 2017 (in thousands):
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Long-Term Debt (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||
Long-Term Debt. | |||||||||||||||||||||||||||||||||||||||||||||||
Long-Term debt | Long-term debt consists of the following (in thousands):
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Right to Use Assets and Liabilities (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||
Right to Use Assets and Liabilities | |||||||||||||||||||||||||||||||||||||||||||
Schedule of right to use assets | The Company has included the right to use assets in property and equipment, net, as follows (in thousands):
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Schedule of future changes in the right to use liability | The following is a schedule by year of the future changes in the right to use liabilities as of September 30, 2018 (in thousands):
Includes $4.8 million of scheduled derecognition of right to use liabilities upon the reduction in lease deposits to less than two months’ rent. |
Fair Value Measurements (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of aggregate carrying value and fair value of fixed rate debt |
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Cash Flows (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Statements of Cash Flows | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental disclosures of cash flow information |
Supplemental disclosures of cash flow information for the following periods (in thousands):
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Acquisitions (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Assets Or Stock Of Multiple Dealership Locations Acquired | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisitions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of the purchase price allocations |
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Acquisitions Excluding Dealership Locations | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisitions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of the purchase price allocations |
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Non-Controlling Interest (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Non-Controlling Interests | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of effects of change in ownership |
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Equity-based Compensation Plans (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity-based Compensation Plans | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of equity-based compensation expense classified with the consolidated statements of operations |
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Summary of stock option activity |
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Summary of restricted stock unit activity |
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Earnings Per Share (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of reconciliations of the numerators and denominators used to compute basic and diluted earnings |
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Segments Information (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Segments Information | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reportable segment revenue |
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Reportable segment income |
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Reportable depreciation and amortization and other interest expense, net |
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Reportable segment assets |
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Revenue - Revenue Recognition (Details) $ in Millions |
9 Months Ended |
---|---|
Sep. 30, 2018
USD ($)
| |
Revenue | |
Lifetime membership period | 18 years |
Deferred Revenues | |
Revenues recognized that were included in the deferred revenue balance | $ 64.8 |
Revenue - Practical Expedients and Exemptions (Details) |
9 Months Ended |
---|---|
Sep. 30, 2018 | |
Revenue | |
Period of time between payment and transfer of the promised goods or services, amount of consideration for the effects of a significant financing component if the Company expects, at contract inception. | true |
Amortization period of those otherwise capitalized sales commissions when incurred | true |
Unsatisfied performance obligations for revenue streams with an original expected length | true |
Inventories and Floor Plan Payable - Inventories (Details) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Jan. 01, 2018 |
Dec. 31, 2017 |
---|---|---|---|
Inventories | |||
Inventories | $ 1,495,041 | $ 1,410,773 | $ 1,415,915 |
Consumer Services and Plans | |||
Inventories | |||
Inventories | 387 | ||
New RV vehicles | |||
Inventories | |||
Inventories | 912,581 | 1,113,178 | |
Used RV vehicles | |||
Inventories | |||
Inventories | 121,225 | 106,210 | |
Dealership parts, services and other | |||
Inventories | |||
Inventories | 8,012 | 7,802 | |
Retail | |||
Inventories | |||
Inventories | $ 453,223 | $ 188,338 |
Inventories and Floor Plan Payable - Floor Plan Outstanding (Details) - USD ($) $ in Thousands |
9 Months Ended | 12 Months Ended | |
---|---|---|---|
Sep. 30, 2018 |
Dec. 31, 2017 |
Dec. 12, 2017 |
|
Floor Plan Payable | |||
Less: borrowings | $ (24,403) | ||
Floor Plan Facility | |||
Floor Plan Payable | |||
Total commitment | 1,415,000 | $ 1,415,000 | $ 1,415,000 |
Less: borrowings, net | (734,038) | (974,043) | |
Less: flooring line aggregate interest reduction account | (147,481) | (106,055) | |
Additional borrowing capacity | 533,481 | 334,902 | |
Less: accounts payable for sold inventory | (59,236) | (31,311) | |
Less: purchase commitments | (39,723) | (77,144) | |
Unencumbered borrowing capacity | 434,522 | 226,447 | |
Line of Credit | Floor Plan Facility | |||
Floor Plan Payable | |||
Total commitment | 35,000 | 35,000 | $ 35,000 |
Less: borrowings | (24,403) | ||
Additional borrowing capacity | 10,597 | 35,000 | |
Letters of credit | Floor Plan Facility | |||
Floor Plan Payable | |||
Total commitment | 15,000 | 15,000 | |
Less: outstanding letters of credit | (9,369) | (9,369) | |
Additional borrowing capacity | $ 5,631 | $ 5,631 |
Goodwill and Intangible Assets - Change in Goodwill (Details) - USD ($) $ in Thousands |
9 Months Ended | |
---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Goodwill | ||
Balance | $ 348,387 | |
Acquisitions | 40,700 | |
Balance | 389,087 | |
Impairment of goodwill | 0 | $ 0 |
Consumer Services and Plans | ||
Goodwill | ||
Balance | 49,944 | |
Acquisitions | 376 | |
Balance | 50,320 | |
Retail | ||
Goodwill | ||
Balance | 36,467 | |
Acquisitions | 3,579 | |
Balance | 40,046 | |
Dealership | ||
Goodwill | ||
Balance | 261,976 | |
Acquisitions | 36,745 | |
Balance | $ 298,721 |
Long-Term Debt - Tabular Disclosure (Details) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Long-Term Debt | ||
Term Loan Facility | $ 1,161,389 | $ 916,902 |
Less: current portion | (11,991) | (9,465) |
Long-term debt, net of current maturities | 1,149,398 | 907,437 |
Unamortized discount | 5,600 | 6,000 |
Finance costs | $ 14,100 | $ 14,200 |
Long-Term Debt - General Information (Details) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
Nov. 08, 2016 |
---|---|---|---|
Long-Term Debt | |||
Amount outstanding | $ 1,161,389 | $ 916,902 | |
Secured Debt | Line of Credit | Existing Senior Secured Credit Facility, Term Loan Facility | |||
Long-Term Debt | |||
Average interest rate (as a percent) | 4.87% | ||
Amount outstanding | $ 1,181,100 | 937,100 | |
Secured Debt | Revolving Credit Facility | Existing Senior Secured Credit Facility, Revolving Credit Facility | |||
Long-Term Debt | |||
Maximum amount allocated to letters of credit | $ 15,000 | ||
Available borrowings | 32,200 | 31,800 | |
Amount outstanding | 0 | 0 | |
Secured Debt | Letters of credit | Senior Secured Credit Facility, Letters of Credit | |||
Long-Term Debt | |||
Available borrowings | $ 2,800 | $ 3,200 |
Right to Use Assets and Liabilities - Right to Use Assets (Details) - Right To Use Assets - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Right to Use Assets | ||
Right to use assets | $ 10,673 | $ 10,673 |
Accumulated depreciation | (1,120) | (926) |
Total | $ 9,553 | $ 9,747 |
Right to Use Assets and Liabilities - Future Changes in the Right to Use Liabilities (Details) $ in Thousands |
9 Months Ended |
---|---|
Sep. 30, 2018
USD ($)
lease
| |
Right to Use Liabilities | |
Scheduled derecognition of right to use liability due to reductions in the lease deposit to less than two months rent | $ 4,800 |
Number of month's rent the lease deposit is less than | lease | 2 |
Right to Use Liabilities | |
Right to Use Liabilities | |
2018 | $ 218 |
2019 | 486 |
2020 | 486 |
2021 | 487 |
2022 | 487 |
Thereafter | 13,260 |
Total minimum lease payments | 15,424 |
Amounts representing interest | (5,350) |
Present value of net minimum right to use liability payments | $ 10,074 |
Fair Value Measurements (Details) - USD ($) $ in Thousands |
9 Months Ended | 12 Months Ended |
---|---|---|
Sep. 30, 2018 |
Dec. 31, 2017 |
|
Fair Value Measurements | ||
Transfers of assets between the fair value measurement levels 1 to level 2 | $ 0 | $ 0 |
Transfers of assets between the fair value measurement levels 2 to level 1 | 0 | 0 |
Transfers of liabilities between the fair value measurement levels 1 to level 2 | 0 | 0 |
Transfers of liabilities between the fair value measurement levels 2 to level 1 | 0 | 0 |
Transfers of assets or liabilities between the fair value measurement levels 3 | 0 | 0 |
Carrying Value | ||
Fair Value Measurements | ||
Term Loan Facility | 1,161,389 | 916,902 |
Level 2 | Fair Value | ||
Fair Value Measurements | ||
Term Loan Facility | $ 1,161,954 | $ 953,269 |
Cash Flows (Details) - USD ($) $ in Thousands |
9 Months Ended | |
---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Cash paid during the period for: | ||
Interest | $ 70,326 | $ 47,374 |
Income taxes | (17,408) | (25,660) |
Non-cash investing activities: | ||
Vehicles transferred to property and equipment from inventory | 780 | 1,605 |
Portion of acquisition purchase price paid through issuance of Class A common stock | 5,720 | |
Landlord paid tenant improvements on behalf of the Company | 28,431 | 857 |
Derecognition of non-tenant improvements | 7,018 | |
Capital expenditures in accounts payable and accrued liabilities | 6,051 | 6,595 |
Non-cash financing activities: | ||
Pa value of Class A common stock issued in exchange for common units in CWGS, LLC | 3 | 66 |
Par value of Class A common stock issued for vested restricted stock units | $ 1 | |
Par value of Class A common stock issued for acquisition | $ 1 |
Acquisitions - Narrative (Details) - USD ($) $ in Millions |
9 Months Ended | |
---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Acquisitions | ||
Real properties purchased | $ 100.1 | $ 16.8 |
Real properties purchased from parties related to the sellers of the dealership businesses | 23.6 | 12.8 |
Goodwill for tax purposes | 3.6 | 6.2 |
Assets Or Stock Of Multiple Dealership Locations Acquired | ||
Acquisitions | ||
Goodwill for tax purposes | 20.7 | 143.8 |
Revenue | 55.1 | 210.7 |
Pre-tax income (loss) | 3.5 | 13.8 |
Gander Mountain and Overton's | ||
Acquisitions | ||
Revenue | 26.0 | |
Pre-tax income (loss) | $ 11.5 | |
Erehwon and Rock Creek | ||
Acquisitions | ||
Revenue | 10.4 | |
Pre-tax income (loss) | $ 0.4 |
Equity-based Compensation Plans - Summary of Equity-Based Compensation (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Equity-based compensation expense: | ||||
Equity based compensation expense | $ 4,188 | $ 1,204 | $ 10,535 | $ 2,792 |
Costs applicable to revenue | ||||
Equity-based compensation expense: | ||||
Equity based compensation expense | 223 | 81 | 570 | 254 |
Selling, general, and administrative | ||||
Equity-based compensation expense: | ||||
Equity based compensation expense | $ 3,965 | $ 1,123 | $ 9,965 | $ 2,538 |
Equity-based Compensation Plans - Stock Options (Details) - Stock options shares in Thousands |
9 Months Ended |
---|---|
Sep. 30, 2018
shares
| |
Stock Options | |
Outstanding at December 31, 2017 (in shares) | 953 |
Exercised (in shares) | (7) |
Forfeited (in shares) | (48) |
Outstanding at June 30, 2018 (in shares) | 898 |
Options exercisable at June 30, 2018 (in shares) | 171 |
Equity-based Compensation Plans - Restricted Stock Units (Details) - Restricted Stock Units (RSUs) shares in Thousands |
9 Months Ended |
---|---|
Sep. 30, 2018
$ / shares
shares
| |
Share-based Compensation Plans | |
Weighted average grant date fair value (per share) | $ / shares | $ 25.73 |
Restricted Stock Units | |
Outstanding at December 31, 2017 (in shares) | 1,247 |
Granted (in shares) | 725 |
Vested (in shares) | 89 |
Forfeited (in shares) | (52) |
Outstanding at June 30, 2018 (in shares) | 1,831 |
Weighted Average Grant Date Fair Value | |
Outstanding at December 31, 2017 (per share) | $ / shares | $ 25.73 |
Segments Information - General Information (Details) - segment |
3 Months Ended | 6 Months Ended |
---|---|---|
Sep. 30, 2018 |
Jun. 30, 2018 |
|
Segments Information | ||
Number of reportable segments | 3 | 2 |
Retail | ||
Segments Information | ||
Number of segments separated into | 2 |
Segments Information - Depreciation and Amortization (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Segments Information | ||||
Depreciation and amortization | $ 13,179 | $ 8,382 | $ 34,207 | $ 22,819 |
Operating Segments | ||||
Segments Information | ||||
Depreciation and amortization | 12,984 | 8,154 | 34,012 | 22,476 |
Corporate, Non-Segment | ||||
Segments Information | ||||
Depreciation and amortization | 195 | 228 | 195 | 343 |
Consumer Services and Plans | Operating Segments | ||||
Segments Information | ||||
Depreciation and amortization | 951 | 888 | 2,546 | 2,889 |
Dealership | Operating Segments | ||||
Segments Information | ||||
Depreciation and amortization | 3,975 | 3,466 | 11,676 | 10,130 |
Retail | Operating Segments | ||||
Segments Information | ||||
Depreciation and amortization | $ 8,058 | $ 3,800 | $ 19,790 | $ 9,457 |
Segments Information - Other Interest Expense, Net (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Segments Information | ||||
Other interest expense, net | $ 16,794 | $ 11,012 | $ 45,740 | $ 30,973 |
Operating Segments | ||||
Segments Information | ||||
Other interest expense, net | 1,362 | 1,424 | 4,183 | 4,380 |
Corporate, Non-Segment | ||||
Segments Information | ||||
Other interest expense, net | 15,432 | 9,588 | 41,557 | 26,593 |
Consumer Services and Plans | Operating Segments | ||||
Segments Information | ||||
Other interest expense, net | 1 | 1 | (1) | 5 |
Dealership | Operating Segments | ||||
Segments Information | ||||
Other interest expense, net | 1,183 | 876 | 3,626 | 2,916 |
Retail | Operating Segments | ||||
Segments Information | ||||
Other interest expense, net | $ 178 | $ 547 | $ 558 | $ 1,459 |
Segments Information - Assets (Details) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Segments Information | ||
Assets | $ 2,827,098 | $ 2,561,477 |
Operating Segments | ||
Segments Information | ||
Assets | 2,602,291 | 2,258,830 |
Corporate, Non-Segment | ||
Segments Information | ||
Assets | 224,807 | 302,647 |
Consumer Services and Plans | Operating Segments | ||
Segments Information | ||
Assets | 140,992 | 180,295 |
Dealership | Operating Segments | ||
Segments Information | ||
Assets | 1,685,916 | 1,715,084 |
Retail | Operating Segments | ||
Segments Information | ||
Assets | $ 775,383 | $ 363,451 |
Subsequent Event (Details) - Subsequent Event - Real Estate Facility - Secured Debt $ in Thousands |
Nov. 02, 2018
USD ($)
|
---|---|
Subsequent event | |
Maximum borrowing capacity | $ 21,525 |
Debt issued | $ 4,200 |
Commitment fee (as a percent) | 0.50% |
Debt service coverage ratio | 1.250 |
London Interbank Offered Rate (LIBOR) | |
Subsequent event | |
Variable rate spread (as a percent) | 2.75% |
Federal Funds Effective Rate | |
Subsequent event | |
Variable rate spread (as a percent) | 0.50% |
Prime Rate | |
Subsequent event | |
Variable rate spread (as a percent) | 0.75% |