# Camping World Holdings, Inc. (CWH) FY 2024 MD&A

Verbatim Item 7 Management's Discussion and Analysis from Camping World Holdings, Inc.'s 10-K for fiscal year 2024.

SEC filing source: https://www.sec.gov/Archives/edgar/data/1669779/000155837025001939/cwh-20241231x10k.htm
Accession: 0001558370-25-001939
Filing date: 2025-02-28
Report date: 2024-12-31
Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary. Published MD&A gate trimmed front/tail over-capture.
Confidence: high

Company profile: /company/CWH/
All MD&A years: /company/CWH/mda/
Previous year: /company/CWH/mda/fy2023/ (FY 2023)
Next year: /company/CWH/mda/fy2025/ (FY 2025)

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read together with our Consolidated Financial Statements and related notes included in Part II, Item 8 of this Form 10-K. This discussion contains forward-looking statements based upon current plans, expectations and beliefs involving risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various important factors, including those set forth under “Risk Factors” included in Part I, Item 1A of this Form 10-K, the “Cautionary Note Regarding Forward-Looking Statements” and in other parts of this Form 10-K. Except to the extent that differences among reportable segments are material to an understanding of our business taken as a whole, we present the discussion in Management’s Discussion and Analysis of Financial Condition and Results of Operations on a consolidated basis.

For purposes of this Form 10-K, we define an "Active Customer" as a customer who has transacted with us in any of the eight most recently completed fiscal quarters prior to the date of measurement. Unless otherwise indicated, the date of measurement is December 31, 2024, our most recently completed fiscal quarter.

Overview

Camping World Holdings, Inc. (together with its subsidiaries) is the world’s largest retailer of recreational RVs and related products and services. Through our Camping World and Good Sam brands, our vision is to build a business that makes RVing and other outdoor adventures fun and easy. We strive to build long-term value for our customers, employees, and stockholders by combining a unique and comprehensive assortment of RV products and services with a national network of RV dealerships, service centers and customer support centers along with the industry’s most extensive online presence and a highly-trained and knowledgeable team of associates serving our customers, the RV lifestyle, and the communities in which we operate. We also believe that our Good Sam organization and family of highly-specialized services and plans, including roadside assistance, protection plans and insurance, uniquely enables us to connect with our customers as stewards of an outdoor and recreational lifestyle. On December 31, 2024, we operated a total of 206 store locations, with all of them selling and/or servicing RVs. See Note 1 ─ Summary of Significant Accounting Policies ─ Description of the Business to our consolidated financial statements included in Part II, Item 8 of this Form 10-K.

A summary of the changes in quantities and types of retail stores and changes in same stores from December 31, 2023 to December 31, 2024, are in the table below:

[[GREPCENT_TABLE]]
[["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","RV","RV Service &","\u200b","\u200b","\u200b","Same"],["\u200b","Dealerships","Retail Centers","\u200b","Total","\u200b","Store(1)"],["Number of store locations as of December 31, 2023","\u200b","198","\u200b","4","\u200b","202","\u200b","166"],["Opened","\u200b","17","\u200b","\u2014","\u200b","17","\u200b","\u2014"],["Closed","\u200b","(11)","\u200b","(2)","\u200b","(13)","\u200b","(7)"],["Achieved designation of same store (1)","\u200b","\u2014","\u200b","\u2014","\u200b","\u2014","\u200b","16"],["Number of store locations as of December 31, 2024","\u200b","204","\u200b","2","\u200b","206","\u200b","175"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["(1)","Our same store revenue and unit sales calculations for a given period include only those stores that were open both at the end of the corresponding period and at the beginning of the preceding fiscal year. See \u201cResults of Operations\u201d below for same store revenue and unit sales."]]
[[/GREPCENT_TABLE]]

During the first quarter of 2025, we expect to open twelve RV dealerships, convert one RV service and retail center into an RV dealership, and close two RV dealerships.

Segments

We operate two reportable segments: (i) Good Sam Services and Plans, and (ii) RV and Outdoor Retail. We identify our reporting segments based on the organizational units used by management to monitor performance and make operating decisions. See Note 1 — Summary of Significant Accounting Policies —

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Description of the Business and Note 23 — Segment Information to our consolidated financial statements included in Part II, Item 8 of this Form 10-K for further information regarding our reportable segments.

The following table presents percentages of total revenue and total Segment Adjusted EBITDA for our two reportable segments:

[[GREPCENT_TABLE]]
[["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","Year Ended December 31,"],["\u200b","2024","\u200b","2023","","2022"],["As percentage of total revenue:","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Good Sam Services and Plans","\u200b","3.2%","\u200b","\u200b","3.1%","\u200b","\u200b","2.8%"],["RV and Outdoor Retail","\u200b","96.8%","\u200b","\u200b","96.9%","\u200b","\u200b","97.2%"],["As percentage of total Segment Adjusted EBITDA:","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Good Sam Services and Plans","\u200b","49.0%","\u200b","\u200b","37.1%","\u200b","\u200b","14.2%"],["RV and Outdoor Retail","\u200b","51.0%","\u200b","\u200b","62.9%","\u200b","\u200b","85.8%"]]
[[/GREPCENT_TABLE]]

​

Strategic Review

On January 17, 2024, we announced that we were reviewing potential strategic alternatives for our Good Sam business. In conducting that review, we came to the decision that the greatest value to the Company can be achieved through retaining the Good Sam business. We have deepened our appreciation for the non-cyclical nature of the business and recognize the large growth potential of the business over multiple vectors in the outdoor and recreational space. Going forward, we expect that Good Sam will continue to benefit from its relationship with the Camping World brand and store footprint but will be empowered to operate independently to drive growth.

Key Performance Indicators

We evaluate the results of our overall business based on a variety of factors, including the number of Active Customers and Good Sam members, revenue and same store revenue, vehicle units, and same store vehicle units, gross profit and gross profit per vehicle sold, gross margin, finance and insurance per vehicle (“PV”), vehicle inventory turnover, Adjusted EBITDA and Adjusted EBITDA margin, and selling, general and administrative expenses (“SG&A”) excluding stock-based compensation (“SBC”).

Same store revenue.  Same store revenue measures the performance of a store location during the current reporting period against the performance of the same store location in the corresponding period of the previous year. Our same store revenue calculations for a given period include only those stores that were open both at the end of the corresponding period and at the beginning of the preceding fiscal year. As of December 31, 2024 and 2023, we had a base of 175 and 166 same stores, respectively. For the years ended December 31, 2024 and 2023, our aggregate same store revenue was $5.2 billion and $5.5 billion, respectively. With same store revenue driven by the number of transactions and the average transaction price, changes in our mix of new vehicle sales has in the past negatively impacted, and in the future is likely to negatively impact, our new vehicle same store revenue. Over the past several years, we have seen a shift in our overall mix of new RV sales towards travel trailer vehicles, which tend to carry lower average selling prices than other classes of new RV vehicles. From 2015 to 2024, total new vehicle travel trailer units have increased from 62% to 78% of total new vehicle unit sales. From 2015 to 2024 our average selling price of a new vehicle unit increased 1% from $39,853 to $40,089, as inflation over that period was partially offset by the higher mix of lower priced travel trailers.

Gross Profit and Gross Margins.  Gross profit is our total revenue less our total costs applicable to revenue. Our total costs applicable to revenue primarily consists of the cost of goods and cost of sales, exclusive of depreciation and amortization. Gross margin is gross profit as a percentage of revenue.

Our gross profit is variable in nature and generally follows changes in our revenue. Sales of new vehicles generally result in a lower gross margin than other areas of our business, including used vehicles, repair service and installation work, RV equipment and accessories, outdoor equipment and accessories and finance and insurance products. While gross margins for our RV and Outdoor Retail segment are lower than

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gross margins for our Good Sam Services and Plans, this segment generates significant gross profit and is our primary means of acquiring new customers, to whom we then cross sell our higher margin products and services with recurring revenue. We believe the overall growth of our RV and Outdoor Retail segment will allow us to continue to drive growth in gross profit due to our ability to cross sell our Good Sam Services and Plans to our Active Customer base.

Adjusted EBITDA and Adjusted EBITDA Margin.  Adjusted EBITDA and Adjusted EBITDA Margin are some of the primary metrics management uses to evaluate the financial performance of our business. Adjusted EBITDA and Adjusted EBITDA Margin are also frequently used by analysts, investors, and other interested parties to evaluate companies in our industry. Adjusted EBITDA and Adjusted EBITDA Margin are non-GAAP metrics. We use Adjusted EBITDA and Adjusted EBITDA Margin to supplement GAAP measures of performance as follows:

[[GREPCENT_TABLE]]
[["","\u2022","as a measurement of operating performance to assist us in comparing the operating performance of our business on a consistent basis, and remove the impact of items not directly resulting from our core operations;"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","\u2022","for planning purposes, including the preparation of our internal annual operating budget and financial projections; and"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","\u2022","to evaluate the performance and effectiveness of our operational strategies."]]
[[/GREPCENT_TABLE]]

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

SG&A Excluding SBC as a Percentage of Gross Profit.  SG&A Excluding SBC is a significant component of our Adjusted EBITDA and Adjusted EBITDA Margin. SBC is excluded from the determination of Adjusted EBITDA and Adjusted EBITDA Margin. Our ability to control costs within SG&A Excluding SBC and the extent to which these expenses are variable with gross profit are a significant focus of our management and we believe they are a focus of analysts, investors, and other interested parties to evaluate companies in our industry.

For a definition of SG&A Excluding SBC, a reconciliation of SG&A Excluding SBC to SG&A, and a further discussion of how we utilize this non-GAAP financial measure and its limitations, see “Non-GAAP Financial Measures” below.

Industry Trends

According to the RV Industry Association’s survey of manufacturers, which almost entirely focuses on North America, wholesale shipments of new RVs for 2024 were 333,733 units, 6.6% greater than in 2023. This positive trend is highlighted by a 7.6% rise in December 2024 shipments with 23,153 units shipped compared to 21,522 units shipped in the same period in 2023.

The per unit cost of new vehicles in fiscal year 2023 was significantly higher than we experienced prior to the COVID-19 pandemic, due to the RV manufacturers’ supply constraints during the pandemic, strong demand for new vehicles during the pandemic, higher inflation, and higher interest rates. These higher costs were partially mitigated by the higher average selling prices on new vehicles initially, but we experienced a decrease in new vehicle gross margins during the year ended December 31, 2023, as a result of these higher costs. We experienced a 4.3% decrease in the average sale price of new vehicles during fiscal year 2023 compared to 2022, driven by more price sensitive customers in a higher interest rate environment.

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Since certain of our RV manufacturers had indicated that they expected new towable vehicle average manufacturer selling prices to decline by up to 10% for 2024 model year vehicles, we focused on clearing out a significant portion of our pre-2024 model year new vehicles primarily during the fourth quarter of 2023 and early 2024 to improve the mix of our new vehicle inventory toward the lower cost 2024 model year vehicles. These new vehicle cost decreases further decreased average selling prices of new vehicles in 2024. For the year ended December 31, 2024, overall new vehicle gross margins decreased 112 basis points to 14.4%, as our average selling price per vehicle decreased 8.6% while our average cost per vehicle decreased 7.4%.

Additionally, these new vehicle price pressures have resulted, and may continue to result, in a decline in residual values of used vehicles, which led us to discount used vehicle pricing in order to maintain used vehicles as a lower cost alternative to new vehicles, which has negatively impacted used vehicle gross margins. We also experienced lower used vehicle inventory levels in 2024 as we slowed procurement to allow RV owner pricing expectations to adjust as a result of 2024 model year pricing declines. During the fourth quarter of 2024, we took steps to reverse the trend of decreasing used vehicle revenue and unit sales, which resulted in an 8.2% increase in used vehicle revenue and 11.4% increase in used vehicle unit sales in the fourth quarter of 2024.

We are closely monitoring U.S. trade policy developments with countries from which we source product and equipment, such as China, Mexico, and Canada. There is uncertainty as to the extent and duration of additional tariffs that have or may be imposed on imports from these countries. We have made adjustments to our procurement practices to partially mitigate certain of the potential negative effects that additional tariffs may impose on the sourcing of our inventory and equipment. Additionally, many of our U.S.-based suppliers source some of their components from these countries, which could result in higher procurement costs from U.S.-based suppliers. In 2024, our costs applicable to revenue included the costs of directly sourced inventory from China, Mexico, and Canada of approximately $27.0 million, $10.0 million and $2.0 million, respectively.

Financial Institutions

The Company maintains the majority of its cash and cash equivalents in accounts with major U.S. and multi-national financial institutions, and our deposits at certain of these institutions exceed insured limits. Market conditions can impact the viability of these institutions. In the event of failure of any of the financial institutions where we maintain our cash and cash equivalents, there can be no assurance that we will be able to access uninsured funds in a timely manner or at all.

Inflation

As noted in “Industry Trends” above, we have experienced, and continue to experience, reduced cost and average selling prices with respect to new vehicles and, as a byproduct of the new vehicle pricing decrease, used vehicles. New and used vehicles regularly represent a majority of our costs. However, inflationary factors, such as increases to our product cost, overhead costs, or tariffs on imported product or components used by RV manufacturers, have in the past adversely affected and may in the future adversely affect our operating results if the selling prices of our products and services do not increase proportionately with those increased costs or if demand for our products and services declines as a result of price increases to address inflationary costs. We finance substantially all of our new vehicle inventory and certain of our used vehicle inventory through revolving floor plan arrangements. Inflationary increases in the costs of new and/or used vehicles financed through the revolving floor plan arrangement result in an increase in the outstanding principal balance of the revolving floor plan arrangement. Additionally, our leases require us to pay taxes, maintenance, repairs, insurance and utilities, all of which are generally subject to inflationary increases. Further, the cost of remodeling acquired RV dealership locations and constructing new RV dealership locations is subject to inflationary increases in the costs of labor and material, which results in higher rent expense on new RV dealership locations. Finally, our credit agreements include interest rates that vary based on various benchmarks. Such rates have historically increased during periods of increasing inflation.

Restructuring

In 2019, we made a strategic decision to refocus our business around our core RV competencies (the “2019 Strategic Shift”), which was substantially complete by December 31, 2021. On March 1, 2023, our

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management determined to implement plans (the “Active Sports Restructuring”), which were substantially complete by December 31, 2023. For the 2019 Strategic Shift the remaining potential ongoing charges related to lease termination costs and other associated costs relating to the leases of certain previously closed locations and facilities. The timing of sublease and/or termination negotiations will vary as both are contingent on landlord approvals. We expect that the ongoing lease-related costs relating to the 2019 Strategic Shift, net of associated sublease income, will be less than $3.5 million per year. During the year ended December 31, 2024, the Company terminated the final significant lease under the Active Sports Restructuring that included a $1.5 million lease termination fee that was paid in October 2024. The Company does not expect any further costs under the Active Sports Restructuring beyond insignificant lease costs of less than $0.2 million per year. See Note 5 — Restructuring and Long-Lived Asset Impairment to our consolidated financial statements included in Part II, Item 8 of this Form 10-K.

Our Corporate Structure Impact on Income Taxes

Our corporate structure is commonly referred to as an “Up-C” structure and typically results in a different relationship between income before income taxes and income tax expense than would be experienced by most public companies with a more traditional corporate structure. More traditional structures are typically comprised predominately of Subchapter C corporations (“C-Corps”) and/or lacking significant non-controlling interests with holdings through limited liability companies or partnerships. Typically, most of our income tax expense is recorded at the CWH level, our public holding company, based on its allocation of taxable income from CWGS, LLC.

More specifically, CWH is organized as a C-Corp and, as of December 31, 2024, is a 61.0% owner of CWGS, LLC. CWGS, LLC is organized as a limited liability company and treated as a partnership for U.S. federal and most applicable state and local income tax purposes and, as such is generally not subject to any U.S. federal entity-level income taxes (“Pass-Through”), with the exception of Americas Road and Travel Club, Inc. and FreedomRoads RV, Inc., and their wholly-owned subsidiaries, which are active C-Corps embedded within the CWGS, LLC structure. As discussed below, prior to 2023, Camping World, Inc. (“CW”) and its wholly-owned subsidiaries were also C-Corps embedded within the CWGS, LLC structure.

By January 2, 2023, the “LLC Conversion” (see Note 12 — Income Taxes to our consolidated financial statements included in Part II, Item 8 of this Form 10-K) was completed. Beginning with the year ended December 31, 2024, the LLC Conversion has allowed and we expect will continue to allow certain losses that previously would have been confined within the C-Corp portion of CWGS, LLC to instead offset a portion of income generated by the Pass-Through portion of CWGS, LLC, which reduces the amount of income tax expense recorded by CWH. The LLC Conversion has and we expect will continue to reduce the amount of tax distributions required to be paid by CWGS, LLC to CWH and the non-controlling interest holders under the CWGS LLC Agreement beginning with the year ended December 31, 2023.

CWH receives an allocation of its share of the net income of CWGS, LLC based on CWH’s weighted-average ownership of CWGS, LLC for the period. CWH recognizes income tax expense on its pre-tax income including its portion of this income allocation from CWGS, LLC primarily relating to Pass-Through entities. The income tax relating to the net income of CWGS, LLC allocated to CWH that relates to separately taxed C-Corp entities is recorded within the consolidated results of CWGS, LLC. No income tax expense is recognized by the Company for the portion of net income of CWGS, LLC allocated to non-controlling interests other than income tax expense recorded by CWGS, LLC. Rather, tax distributions are paid to the non-controlling interest holders, which are recorded as distributions to holders of LLC common units in the consolidated statements of cash flows. CWH is subject to U.S. federal, state and local income taxes with respect to its allocable share of any taxable income of CWGS, LLC and is taxed at the prevailing corporate tax rates. For the years ended December 31, 2024, 2023 and 2022, the Company used blended statutory tax rate assumptions between 25.0% and 25.4%, for income adjustments applicable to CWH when calculating the adjusted net income attributable to Camping World Holdings, Inc. — basic and diluted (see “Non-GAAP Financial Measures” in Part II, Item 7 of this Form 10-K). CWGS, LLC may be liable for various other state and local taxes.

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

[[GREPCENT_TABLE]]
[["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","Year Ended December 31,","\u200b"],["($ in thousands)","","2024","\u200b","2023","","2022"],["C-Corp portion of CWGS, LLC net income allocated to CWH","\u200b","$","2,876","\u200b","$","3,776","\u200b","$","(37,500)","\u200b"],["Pass-Through portion of CWGS, LLC net (loss) income allocated to CWH","\u200b","\u200b","(56,318)","\u200b","\u200b","17,687","\u200b","\u200b","252,771","\u200b"],["CWGS, LLC net (loss) income allocated to CWH","\u200b","\u200b","(53,442)","\u200b","\u200b","21,463","\u200b","\u200b","215,271","\u200b"],["CWGS, LLC net (loss) income allocated to noncontrolling interests","\u200b","\u200b","(40,243)","\u200b","\u200b","19,557","\u200b","\u200b","214,084","\u200b"],["CWGS, LLC net (loss) income","\u200b","\u200b","(93,685)","\u200b","\u200b","41,020","\u200b","\u200b","429,355","\u200b"],["Tax Receivable Agreement liability adjustment","\u200b","\u200b","\u2014","\u200b","\u200b","2,442","\u200b","\u200b","114","\u200b"],["Income tax benefit (expense) recorded by CWH","\u200b","\u200b","13,533","\u200b","\u200b","8,064","\u200b","\u200b","(92,253)","\u200b"],["Other incremental CWH net income","\u200b","\u200b","1,272","\u200b","\u200b","1,403","\u200b","\u200b","616","\u200b"],["Net (loss) income","\u200b","$","(78,880)","\u200b","$","52,929","\u200b","$","337,832","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"]]
[[/GREPCENT_TABLE]]

​

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

[[GREPCENT_TABLE]]
[["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","Year Ended December 31,","\u200b"],["($ in thousands)","","2024","\u200b","2023","","2022"],["Income tax benefit (expense) recorded by CWH(1)","\u200b","$","13,533","\u200b","$","8,064","\u200b","$","(92,253)","\u200b"],["Income tax expense recorded by CWGS, LLC(2)","\u200b","\u200b","(2,156)","\u200b","\u200b","(4,537)","\u200b","\u200b","(20,030)","\u200b"],["Income tax benefit (expense)","\u200b","$","11,377","\u200b","$","3,527","\u200b","$","(112,283)","\u200b"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]