Camping world holdings, inc. reports strong third quarter results with more than 32,000 units sold, driven by a record 14,460 used unit sales
Lincolnshire, il--(business wire)--camping world holdings, inc. (nyse: cwh) (the “company” or “cwh”), america’s recreation dealer, today reported results for the third quarter ended september 30, 2022. marcus lemonis, chairman and ceo of camping world holdings, inc. stated, “in this current environment, our company is focused on growing our overall used rv business, strategic and opportunistic dealership acquisitions, and tightening sg&a and capital expenditures with precision.” third quarter operating highlights revenue was $1.9 billion for the third quarter, a decrease of $60.9 million, or 3.2%, driven primarily by a $45.7 million reduction in product revenues from categories we exited in 2021 including fishing, hunting, and apparel. used vehicle revenue was a record $526.0 million for the third quarter(1), an increase of $6.4 million, or 1.2%, while new vehicle revenue declined $30.2 million, or 3.5%. used vehicle unit sales were a record 14,460 units for the third quarter, an increase of 829 units, or 6.1%. same store used vehicle unit sales increased 2.0% for the third quarter, while same store new vehicle unit sales decreased 7.2%. gross profit was $593.7 million, a decrease of $97.7 million, or 14.1%, and total gross margin was 32.0%, a decrease of 408 basis points driven primarily by the higher cost of new vehicles. used vehicle gross margin decreased to a lesser extent. net income was $102.9 million, a decrease of $86.4 million, or 45.6%. diluted earnings per share of class a common stock was $0.97 in 2022 versus $1.72 in 2021. adjusted earnings per share - diluted(2) of class a common stock was $1.07 in 2022 versus $1.98 in 2021. adjusted ebitda(2) was $173.4 million, a decrease of $114.6 million, or 39.8%. new and used vehicle inventories were $1.6 billion, an increase of $491.1 million from september 30, 2021. this increase was driven primarily by restocking to normalized levels of new vehicles and, to a lesser extent, the strategic growth of our used vehicle business and an additional eight dealership locations. on september 29, 2022, the company paid our regular quarterly dividend of $0.625 per share of class a common stock, or $2.50 per share on an annualized basis. ________________________ (1) trailing twelve-month (“ttm”) used vehicle revenue as of september 30, 2022 and 2021 was $1.9 billion and $1.5 billion, respectively. the ttm used vehicle revenue as of september 30, 2022 is comprised of $1.5 billion and $0.4 billion for the nine months ended september 30, 2022 and three months ended december 31, 2021, respectively. the ttm used vehicle revenue as of september 30, 2021 is comprised of $1.3 billion and $0.2 billion for the nine months ended september 30, 2021 and three months ended december 31, 2020, respectively. (2) adjusted earnings per share – diluted and adjusted ebitda are non-gaap measures. for a reconciliation of these non-gaap measures to the most directly comparable gaap measures, see the “non-gaap financial measures” section later in this press release. earnings conference call and webcast information a conference call to discuss the company’s third quarter 2022 financial results is scheduled for november 2, 2022, at 7:30 am central time. investors and analysts can participate on the conference call by dialing 1-877-407-9039 (international callers please dial 1-201-689-8470) and using conference id# 13732920. interested parties can also listen to a live webcast or replay of the conference call by logging on to the investor relations section on the company’s website at http://investor.campingworld.com. the replay of the conference call webcast will be available on the investor relations website for approximately 90 days. presentation this press release presents historical results for the periods presented for the company and its subsidiaries, which are presented in accordance with accounting principles generally accepted in the united states (“gaap”), unless noted as a non-gaap financial measure. the company’s initial public offering (“ipo”) and related reorganization transactions (“reorganization transactions”) that occurred on october 6, 2016 resulted in the company as the sole managing member of cwgs enterprises, llc (“cwgs, llc”), with sole voting power in and control of the management of cwgs, llc. the company’s position as sole managing member of cwgs, llc includes periods where the company has held a minority economic interest in cwgs, llc. as of september 30, 2022 and december 31, 2021, the company owned 50.1% and 51.2%, respectively, of cwgs, llc. accordingly, the company consolidates the financial results of cwgs, llc and reports a non-controlling interest in its consolidated financial statements. unless otherwise indicated, all financial comparisons in this press release compare our financial results for the third quarter ended september 30, 2022 to our financial results from the third quarter ended september 30, 2021. about camping world holdings, inc. camping world holdings, inc., headquartered in lincolnshire, il, (together with its subsidiaries) is america’s largest retailer of rvs and related products and services. our vision is to build a long-term legacy business that makes rving fun and easy, and our camping world and good sam brands have been serving rv consumers since 1966. we strive to build long-term value for our customers, employees, and shareholders by combining a unique and comprehensive assortment of rv products and services with a national network of rv dealerships, service centers and customer support centers along with the industry’s most extensive online presence and a highly-trained and knowledgeable team of associates serving our customers, the rv lifestyle, and the communities in which we operate. we also believe that our good sam organization and family of programs and services uniquely enables us to connect with our customers as stewards of the rv enthusiast community and the rv lifestyle. with rv sales and service locations in 42 states, camping world has grown to become the prime destination for everything rv. for more information, please visit http://www.campingworld.com. forward-looking statements this press release contains forward-looking statements within the meaning of the private securities litigation reform act of 1995. all statements contained in this press release that do not relate to matters of historical fact should be considered forward-looking statements, including, without limitation, statements about macroeconomic trends and our business plans and goals, including statements regarding the strength of our business, our long-term plan, the company’s strategic focuses, including growing its used rv business, potential acquisitions and tightening sg&a expenses and capital expenditures, potential stock repurchases, future dividend payments and our future financial results. these forward-looking statements are based on management’s current expectations. these statements are neither promises nor guarantees, but involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements, including, but not limited to, the following: the covid-19 pandemic, which has had, and could have in the future, certain negative impacts on our business; risks related to the cybersecurity incident announced in february 2022; our ability to execute and achieve the expected benefits of our 2019 strategic shift; the availability of financing to us and our customers; fuel shortages or high prices for fuel; the success of our manufacturers; general economic conditions in our markets; changes in consumer preferences; competition in our industry; risks related to acquisitions and expansion into new markets; our failure to maintain the strength and value of our brands; our ability to manage our inventory; fluctuations in our same store sales; the cyclical and seasonal nature of our business; our dependence on the availability of adequate capital and risks related to our debt; our reliance on six fulfillment and distribution centers; natural disasters, including epidemic outbreaks; risks associated with selling goods manufactured abroad; our dependence on our relationships with third party suppliers and lending institutions; our ability to retain senior executives and attract and retain other qualified employees; risks associated with leasing substantial amounts of space; regulatory risks; data privacy and cybersecurity risks; risks related to our intellectual property; the impact of ongoing or future lawsuits against us and certain of our officers and directors; and risks related to our organizational structure. these and other important factors discussed under the caption “risk factors” in our annual report on form 10‑k filed for the year ended december 31, 2021 and our other reports filed with the sec could cause actual results to differ materially from those indicated by the forward-looking statements made in this press release. any such forward-looking statements represent management’s estimates as of the date of this press release. while we may elect to update such forward-looking statements at some point in the future, we disclaim any obligation to do so, even if subsequent events cause our views to change, except as required under applicable law. these forward-looking statements should not be relied upon as representing our views as of any date subsequent to the date of this press release. in addition, this press release references projected annualized dividend payments. future declarations of quarterly dividends are subject to the determination and discretion of the company’s board of directors based on its consideration of various factors, including the company’s results of operations, financial condition, level of indebtedness, anticipated capital requirements, contractual restrictions, restrictions in its debt agreements, restrictions under applicable law, receipt of excess tax distributions from cwgs enterprises, llc, its business prospects and other factors that camping world’s board of directors may deem relevant. we intend to use our official facebook, twitter, and instagram accounts, each at the handle @campingworld, as well as the investor page of our website, investor.campingworld.com, as a distribution channel of material information about the company and for complying with our disclosure obligations under regulation fd. the information we post through these social media channels and on our investor webpage may be deemed material. accordingly, investors should subscribe to these accounts and our investor alerts, in addition to following our press releases, sec filings, public conference calls and webcasts. these social media channels may be updated from time to time. camping world holdings, inc. and subsidiaries consolidated statements of operations (unaudited) (in thousands except per share amounts) three months ended nine months ended september 30, september 30, 2022 2021 2022 2021 revenue: good sam services and plans $ 50,352 $ 46,581 $ 144,504 $ 134,354 rv and outdoor retail new vehicles 834,112 864,303 2,746,323 2,745,057 used vehicles 525,988 519,550 1,484,978 1,273,944 products, service and other 268,940 305,882 761,914 862,706 finance and insurance, net 165,136 167,779 513,921 483,718 good sam club 11,154 12,479 35,070 36,383 subtotal 1,805,330 1,869,993 5,542,206 5,401,808 total revenue 1,855,682 1,916,574 5,686,710 5,536,162 costs applicable to revenue (exclusive of depreciation and amortization shown separately below): good sam services and plans 18,871 21,637 54,532 53,241 rv and outdoor retail new vehicles 675,119 612,418 2,171,660 2,014,206 used vehicles 398,882 376,852 1,115,876 934,874 products, service and other 167,298 212,444 467,680 556,542 good sam club 1,824 1,847 6,279 5,586 subtotal 1,243,123 1,203,561 3,761,495 3,511,208 total costs applicable to revenue 1,261,994 1,225,198 3,816,027 3,564,449 gross profit: good sam services and plans 31,481 24,944 89,972 81,113 rv and outdoor retail new vehicles 158,993 251,885 574,663 730,851 used vehicles 127,106 142,698 369,102 339,070 products, service and other 101,642 93,438 294,234 306,164 finance and insurance, net 165,136 167,779 513,921 483,718 good sam club 9,330 10,632 28,791 30,797 subtotal 562,207 666,432 1,780,711 1,890,600 total gross profit 593,688 691,376 1,870,683 1,971,713 operating expenses: selling, general, and administrative 419,102 424,385 1,245,540 1,193,668 debt restructure expense — 24 — 9,055 depreciation and amortization 18,207 23,552 61,369 49,297 long-lived asset impairment 887 316 3,505 1,398 lease termination — 329 1,122 2,085 (gain) loss on sale or disposal of assets (40) 96 390 7 total operating expenses 438,156 448,702 1,311,926 1,255,510 income from operations 155,532 242,674 558,757 716,203 other expense: floor plan interest expense (9,484) (3,125) (24,483) (9,886) other interest expense, net (20,526) (11,250) (49,762) (35,262) loss on debt restructure — — — (1,390) tax receivable agreement liability adjustment — — — (3,520) other expense, net (177) (122) (472) (77) total other expense (30,187) (14,497) (74,717) (50,135) income before income taxes 125,345 228,177 484,040 666,068 income tax expense (22,397) (38,869) (75,808) (83,259) net income 102,948 189,308 408,232 582,809 less: net income attributable to non-controlling interests (61,822) (109,605) (238,065) (331,596) net income attributable to camping world holdings, inc. $ 41,126 $ 79,703 $ 170,167 $ 251,213 earnings per share of class a common stock: basic $ 0.98 $ 1.75 $ 4.01 $ 5.57 diluted $ 0.97 $ 1.72 $ 3.99 $ 5.49 weighted average shares of class a common stock outstanding: basic 41,985 45,628 42,419 45,072 diluted 42,505 47,022 42,947 46,433 camping world holdings, inc. and subsidiaries supplemental data three months ended september 30, increase percent 2022 2021 (decrease) change unit sales new vehicles 17,616 18,748 (1,132) (6.0%) used vehicles 14,460 13,631 829 6.1% total 32,076 32,379 (303) (0.9%) average selling price new vehicles $ 47,350 $ 46,101 $ 1,249 2.7% used vehicles $ 36,375 $ 38,115 $ (1,740) (4.6%) same store unit sales(1) new vehicles 16,045 17,293 (1,248) (7.2%) used vehicles 13,114 12,852 262 2.0% total 29,159 30,145 (986) (3.3%) same store revenue(1) ($ in 000's) new vehicles $ 764,144 $ 801,412 $ (37,268) (4.7%) used vehicles 482,329 493,914 (11,585) (2.3%) products, service and other 186,260 211,591 (25,331) (12.0%) finance and insurance, net 151,039 156,870 (5,831) (3.7%) total $ 1,583,772 $ 1,663,787 $ (80,015) (4.8%) average gross profit per unit new vehicles $ 9,025 $ 13,435 $ (4,410) (32.8%) used vehicles $ 8,790 10,469 $ (1,679) (16.0%) finance and insurance, net per vehicle unit $ 5,148 5,182 $ (34) (0.7%) total vehicle front-end yield(2) $ 14,068 17,368 $ (3,300) (19.0%) gross margin good sam services and plans 62.5% 53.5% 897 bps new vehicles 19.1% 29.1% (1,008) bps used vehicles 24.2% 27.5% (330) bps products, service and other 37.8% 30.5% 725 bps finance and insurance, net 100.0% 100.0% unch. bps good sam club 83.6% 85.2% (155) bps subtotal rv and outdoor retail 31.1% 35.6% (450) bps total gross margin 32.0% 36.1% (408) bps inventories ($ in 000's) new vehicles $ 1,180,364 $ 723,593 $ 456,771 63.1% used vehicles 425,824 391,466 34,358 8.8% products, parts, accessories and misc. 293,588 246,900 46,688 18.9% total rv and outdoor retail inventories $ 1,899,776 $ 1,361,959 $ 537,817 39.5% vehicle inventory per location ($ in 000's) new vehicle inventory per dealer location $ 6,415 $ 4,111 $ 2,304 56.0% used vehicle inventory per dealer location $ 2,314 2,224 $ 90 4.0% vehicle inventory turnover(3) new vehicle inventory turnover 2.0 3.6 (1.5) (42.9%) used vehicle inventory turnover 3.5 4.4 (0.8) (18.8%) retail locations rv dealerships 184 176 8 4.5% rv service & retail centers 8 10 (2) (20.0%) subtotal 192 186 6 3.2% other retail stores 1 1 — 0.0% total 193 187 6 3.2% other data active customers(4) 5,366,558 5,458,531 (91,973) (1.7%) good sam club members 2,038,826 2,185,100 (146,274) (6.7%) service bays (5) 2,639 2,599 40 1.5% finance and insurance gross profit as a % of total vehicle revenue 12.1% 12.1% 2 bps n/a same store locations 168 n/a n/a n/a nine months ended september 30, increase percent 2022 2021 (decrease) change unit sales new vehicles 60,040 66,362 (6,322) (9.5%) used vehicles 40,991 38,269 2,722 7.1% total 101,031 104,631 (3,600) (3.4%) average selling price new vehicles $ 45,742 $ 41,365 $ 4,377 10.6% used vehicles $ 36,227 $ 33,289 $ 2,938 8.8% same store unit sales(1) new vehicles 54,831 63,436 (8,605) (13.6%) used vehicles 37,670 36,870 800 2.2% total 92,501 100,306 (7,805) (7.8%) same store revenue(1) ($ in 000's) new vehicles $ 2,524,359 $ 2,628,952 $ (104,593) (4.0%) used vehicles 1,379,819 1,233,022 146,797 11.9% products, service and other 553,833 650,283 (96,450) (14.8%) finance and insurance, net 473,898 465,100 8,798 1.9% total $ 4,931,909 $ 4,977,357 $ (45,448) (0.9%) average gross profit per unit new vehicles $ 9,571 $ 11,013 $ (1,442) (13.1%) used vehicles 9,004 8,860 144 1.6% finance and insurance, net per vehicle unit 5,087 4,623 464 10.0% total vehicle front-end yield(2) 14,428 14,849 (421) (2.8%) gross margin good sam services and plans 62.3% 60.4% 189 bps new vehicles 20.9% 26.6% (570) bps used vehicles 24.9% 26.6% (176) bps products, service and other 38.6% 35.5% 313 bps finance and insurance, net 100.0% 100.0% unch. bps good sam club 82.1% 84.6% (255) bps subtotal rv and outdoor retail 32.1% 35.0% (287) bps total gross margin 32.9% 35.6% (272) bps inventories ($ in 000's) new vehicles $ 1,180,364 $ 723,593 $ 456,771 63.1% used vehicles 425,824 391,466 34,358 8.8% products, parts, accessories and misc. 293,588 246,900 46,688 18.9% total rv and outdoor retail inventories $ 1,899,776 $ 1,361,959 $ 537,817 39.5% vehicle inventory per location ($ in 000's) new vehicle inventory per dealer location $ 6,415 $ 4,111 $ 2,304 56.0% used vehicle inventory per dealer location 2,314 2,224 90 4.0% vehicle inventory turnover(3) new vehicle inventory turnover 2.0 3.6 (1.5) (42.9%) used vehicle inventory turnover 3.5 4.4 (0.8) (18.8%) retail locations rv dealerships 184 176 8 4.5% rv service & retail centers 8 10 (2) (20.0%) subtotal 192 186 6 3.2% other retail stores 1 1 — 0.0% total 193 187 6 3.2% other data active customers(4) 5,366,558 5,458,531 (91,973) (1.7%) good sam club members 2,038,826 2,185,100 (146,274) (6.7%) service bays (5) 2,639 2,599 40 1.5% finance and insurance gross profit as a % of total vehicle revenue 12.1% 12.0% 11 bps n/a same store locations 168 n/a n/a n/a (1) our same store revenue and units calculations for a given period include only those stores that were open both at the end of the corresponding period and at the beginning of the preceding fiscal year. (2) front end yield is calculated as gross profit from new vehicles, used vehicles and finance and insurance (net), divided by combined new and used vehicle unit sales. (3) inventory turnover calculated as vehicle costs applicable to revenue over the last twelve months divided by the average quarterly ending vehicle inventory over the last twelve months. (4) an active customer is a customer who has transacted with us in any of the eight most recently completed fiscal quarters prior to the date of measurement. (5) a service bay is a fully-constructed bay dedicated to service, installation, and collision offerings. camping world holdings, inc. and subsidiaries consolidated balance sheets (unaudited) (in thousands except share and per share amounts) september 30, december 31, 2022 2021 assets current assets: cash and cash equivalents $ 148,235 $ 267,332 contracts in transit 87,487 57,741 accounts receivable, net 117,428 101,644 inventories 1,900,127 1,792,865 prepaid expenses and other assets 46,869 64,295 total current assets 2,300,146 2,283,877 property and equipment, net 728,208 599,324 operating lease assets 719,656 750,876 deferred tax assets, net 178,808 199,321 intangible assets, net 21,819 30,970 goodwill 533,217 483,634 other assets 29,532 24,927 total assets $ 4,511,386 $ 4,372,929 liabilities and stockholders' equity current liabilities: accounts payable $ 187,613 $ 136,757 accrued liabilities 252,644 189,595 deferred revenues 101,917 95,467 current portion of operating lease liabilities 61,001 62,217 current portion of finance lease liabilities 10,397 4,964 current portion of tax receivable agreement liability 11,686 11,322 current portion of long-term debt 15,827 15,822 notes payable – floor plan, net 899,568 1,011,345 other current liabilities 83,959 70,834 total current liabilities 1,624,612 1,598,323 operating lease liabilities, net of current portion 743,914 774,889 finance lease liabilities, net of current portion 95,496 74,752 tax receivable agreement liability, net of current portion 159,790 171,073 revolving line of credit 20,885 20,885 long-term debt, net of current portion 1,368,380 1,377,751 deferred revenues 73,294 69,024 other long-term liabilities 87,517 52,338 total liabilities 4,173,888 4,139,035 commitments and contingencies stockholders' equity: preferred stock, par value $0.01 per share – 20,000,000 shares authorized; none issued and outstanding as of september 30, 2022 and december 31, 2021 — — class a common stock, par value $0.01 per share – 250,000,000 shares authorized; 47,855,259 issued and 42,129,078 outstanding as of september 30, 2022 and 47,805,259 issued and 44,130,956 outstanding as of december 31, 2021 476 475 class b common stock, par value $0.0001 per share – 75,000,000 shares authorized; 69,066,445 issued as of september 30, 2022 and december 31, 2021; and 41,466,964 outstanding as of september 30, 2022 and december 31, 2021 4 4 class c common stock, par value $0.0001 per share – one share authorized, issued and outstanding as of september 30, 2022 and december 31, 2021 — — additional paid-in capital 117,151 98,113 treasury stock, at cost; 5,442,009 and 3,390,131 shares as of september 30, 2022 and december 31, 2021, respectively (190,658) (130,006) retained earnings 280,772 189,471 total stockholders' equity attributable to camping world holdings, inc. 207,745 158,057 non-controlling interests 129,753 75,837 total stockholders' equity 337,498 233,894 total liabilities and stockholders' equity $ 4,511,386 $ 4,372,929 camping world holdings, inc. and subsidiaries summary of consolidated statements of cash flows (unaudited) (in thousands) nine months ended september 30, 2022 2021 net cash provided by operating activities $ 523,919 $ 571,876 investing activities purchases of property and equipment (118,445) (88,560) proceeds from sale of property and equipment 1,105 2,253 purchase of real property (41,696) (61,056) proceeds from the sale of real property 6,809 1,360 purchases of businesses, net of cash acquired (83,227) (99,749) purchase of other investments (3,000) (7,983) purchases of intangible assets (851) (2,580) net cash used in investing activities (239,305) (256,315) financing activities proceeds from long-term debt — 124,893 payments on long-term debt (11,869) (174,148) net (payments) proceeds on notes payable – floor plan, net (99,802) 19,199 proceeds from landlord funded construction on finance leases 6,028 — payments on finance leases (4,541) (2,169) proceeds from sale-leaseback arrangement 27,951 — payments on sale-leaseback arrangement (87) — payment of debt issuance costs — (1,827) dividends on class a common stock (78,866) (44,846) proceeds from exercise of stock options 317 3,775 rsu shares withheld for tax (6,474) (7,166) repurchases of class a common stock to treasury stock (79,757) (86,824) distributions to holders of llc common units (156,611) (179,725) net cash used in financing activities (403,711) (348,838) decrease in cash and cash equivalents (119,097) (33,277) cash and cash equivalents at beginning of the period 267,332 166,072 cash and cash equivalents at end of the period $ 148,235 $ 132,795 earnings per share basic earnings per share of class a common stock is computed by dividing net income attributable 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 attributable 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 (unaudited): three months ended september 30, nine months ended september 30, (in thousands except per share amounts) 2022 2021 2022 2021 numerator: net income $ 102,948 $ 189,308 $ 408,232 $ 582,809 less: net income attributable to non-controlling interests (61,822) (109,605) (238,065) (331,596) net income attributable to camping world holdings, inc. — basic $ 41,126 $ 79,703 170,167 251,213 add: reallocation of net income attributable to non-controlling interests from the assumed dilutive effect of stock options and rsus 281 1,226 1,019 3,793 net income attributable to camping world holdings, inc. — diluted $ 41,407 $ 80,929 $ 171,186 $ 255,006 denominator: weighted-average shares of class a common stock outstanding — basic 41,985 45,628 42,419 45,072 dilutive options to purchase class a common stock 53 138 62 157 dilutive restricted stock units 467 1,256 466 1,204 weighted-average shares of class a common stock outstanding — diluted 42,505 47,022 42,947 46,433 earnings per share of class a common stock — basic $ 0.98 $ 1.75 $ 4.01 $ 5.57 earnings per share of class a common stock — diluted $ 0.97 $ 1.72 $ 3.99 $ 5.49 weighted-average anti-dilutive securities excluded from the computation of diluted earnings per share of class a common stock: restricted stock units 1,396 10 2,094 9 common units of cwgs, llc that are convertible into class a common stock 42,045 42,635 42,045 43,731 non-gaap financial measures to supplement our condensed consolidated financial statements, which are prepared and presented in accordance with accounting principles generally accepted in the united states (“gaap”), we use the following non-gaap financial measures: ebitda, adjusted ebitda, adjusted ebitda margin, ttm adjusted ebitda, adjusted net income attributable to camping world holdings, inc. – basic, adjusted net income attributable to camping world holdings, inc. – diluted, adjusted earnings per share – basic, and adjusted earnings per share – diluted (collectively the "non-gaap financial measures"). we believe that these non-gaap financial measures, when used in conjunction with gaap financial measures, provide useful information about operating results, enhance the overall understanding of past financial performance and future prospects, and allow for greater transparency with respect to the key metrics we use in our financial and operational decision making. these non-gaap financial measures are also frequently used by analysts, investors and other interested parties to evaluate companies in the company’s industry and are used by management to evaluate our operating performance, liquidity and capital resources, to evaluate the effectiveness of strategic initiatives and for planning purposes. by providing these non-gaap financial measures, together with reconciliations, we believe we are enhancing investors’ understanding of our business and our results of operations, as well as assisting investors in evaluating how well we are executing our strategic initiatives. in addition, our senior secured credit facilities use adjusted ebitda, as calculated for our subsidiary cwgs group, llc, to measure our compliance with covenants such as the consolidated leverage ratio. the non-gaap financial measures have limitations as analytical tools, and the presentation of this financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with gaap. they should not be construed as an inference that the company’s future results will be unaffected by any items adjusted for in these non-gaap financial measures. in evaluating these non-gaap financial measures, it is reasonable to expect that certain of these items will occur in future periods. however, we believe these adjustments are appropriate because the amounts recognized can vary significantly from period to period, do not directly relate to the ongoing operations of our business and complicate comparisons of our internal operating results and operating results of other companies over time. each of the normal recurring adjustments and other adjustments described in this section and in the reconciliation tables below help management with a measure of our core operating performance over time by removing items that are not related to day-to-day operations. the non-gaap financial measures that we use are not necessarily comparable to similarly titled measures used by other companies due to different methods of calculation. ebitda, adjusted ebitda and adjusted ebitda margin we define “ebitda” as net income before other interest expense, net (excluding floor plan interest expense), provision for income tax expense and depreciation and amortization. we define “adjusted ebitda” as ebitda further adjusted for the impact of certain noncash and other items that we do not consider in our evaluation of ongoing operating performance. these items include, among other things, loss and expense on debt restructure, long-lived asset impairment, lease termination costs, gains and losses on sale or disposal of assets, net, equity-based compensation, tax receivable agreement liability adjustment, restructuring costs related to the 2019 strategic shift, and other unusual or one-time items. we define “adjusted ebitda margin” as adjusted ebitda as a percentage of total revenue. we caution investors that amounts presented in accordance with our definitions of ebitda, adjusted ebitda, and adjusted ebitda margin may not be comparable to similar measures disclosed by our competitors, because not all companies and analysts calculate ebitda, adjusted ebitda, and adjusted ebitda margin in the same manner. we present ebitda, adjusted ebitda, and adjusted ebitda margin because we consider them to be important supplemental measures of our performance and believe they are frequently used by securities analysts, investors and other interested parties in the evaluation of companies in our industry. management believes that investors’ understanding of our performance is enhanced by including these non-gaap financial measures as a reasonable basis for comparing our ongoing results of operations. the following table reconciles ebitda, adjusted ebitda, adjusted ebitda margin, and ttm adjusted ebitda to the most directly comparable gaap financial performance measures (unaudited): three months ended september 30, nine months ended september 30, ($ in thousands) 2022 2021 2022 2021 ebitda and adjusted ebitda: net income $ 102,948 $ 189,308 $ 408,232 $ 582,809 other interest expense, net 20,526 11,250 49,762 35,262 depreciation and amortization 18,207 23,552 61,369 49,297 income tax expense 22,397 38,869 75,808 83,259 subtotal ebitda 164,078 262,979 595,171 750,627 long-lived asset impairment (a) 887 316 3,505 1,398 lease termination (b) — 329 1,122 2,085 (gain) loss on sale or disposal of assets, net (c) (40) 96 390 7 equity-based compensation (d) 6,792 6,913 27,434 19,069 tax receivable agreement liability adjustment (e) — — — 3,520 restructuring costs (f) 1,671 17,362 5,548 23,439 loss and expense on debt restructure (g) — 24 — 10,445 adjusted ebitda $ 173,388 $ 288,019 $ 633,170 $ 810,590 three months ended september 30, nine months ended september 30, (as percentage of total revenue) 2022 2021 2022 2021 adjusted ebitda margin: net income margin 5.5% 9.9% 7.2% 10.5% other interest expense, net 1.1% 0.6% 0.9% 0.6% depreciation and amortization 1.0% 1.2% 1.1% 0.9% income tax expense 1.2% 2.0% 1.3% 1.5% subtotal ebitda margin 8.8% 13.7% 10.5% 13.6% long-lived asset impairment (a) 0.0% 0.0% 0.1% 0.0% lease termination (b) — 0.0% 0.0% 0.0% (gain) loss on sale or disposal of assets, net (c) (0.0%) 0.0% 0.0% 0.0% equity-based compensation (d) 0.4% 0.4% 0.5% 0.3% tax receivable agreement liability adjustment (e) — — — 0.1% restructuring costs (f) 0.1% 0.9% 0.1% 0.4% loss and expense on debt restructure (g) — 0.0% — 0.2% adjusted ebitda margin 9.3% 15.0% 11.1% 14.6% three months ended ttm ended september 30, june 30, march 31, december 31, september 30, ($ in thousands) 2022 2022 2022 2021 2022 adjusted ebitda: net income $ 102,948 $ 197,985 $ 107,299 $ 59,266 $ 467,498 other interest expense, net 20,526 14,935 14,301 11,650 61,412 depreciation and amortization 18,207 17,627 25,535 17,121 78,490 income tax expense 22,397 32,375 21,036 8,865 84,673 subtotal ebitda 164,078 262,922 168,171 96,902 692,073 long-lived asset impairment (a) 887 2,618 — 1,646 5,151 lease termination (b) — 944 178 126 1,248 (gain) loss on sale or disposal of assets, net (c) (40) 381 49 (583) (193) equity-based compensation (d) 6,792 8,968 11,674 28,867 56,301 tax receivable agreement liability adjustment (e) — — — (707) (707) restructuring costs (f) 1,671 1,854 2,023 2,262 7,810 loss and expense on debt restructure (g) — — — 3,023 3,023 adjusted ebitda $ 173,388 $ 277,687 $ 182,095 $ 131,536 $ 764,706 (a) represents long-lived asset impairment charges related to the rv and outdoor retail segment, which relate to locations affected by the 2019 strategic shift. (b) represents the loss on the termination of operating leases, relating primarily to the 2019 strategic shift, resulting from lease termination fees and the derecognition of the operating lease assets and liabilities. (c) represents an adjustment to eliminate the losses and gains on disposals and sales of various assets. (d) represents non-cash equity-based compensation expense relating to employees, directors, and consultants of the company. (e) represents an adjustment to eliminate the loss (gain) on remeasurement of the tax receivable agreement primarily due to changes in our blended statutory income tax rate. (f) represents restructuring costs relating to our 2019 strategic shift. these restructuring costs include one-time employee termination benefits relating to retail store or distribution center closures/divestitures, incremental inventory reserve charges, and other associated costs. these costs exclude lease termination costs, which are presented separately above (see (b) above). (g) represents the loss and expense incurred on debt restructure and financing expense for the nine months ended september 30, 2021. which is comprised of $0.4 million in extinguishment of the original issue discount and $1.0 of extinguishment of capitalized finance costs related to the previous term loan facility, and $9.0 million in legal and other expenses related to the new term loan facility in 2021. for the twelve months ended september 30, 2022, represents $3.0 million of legal and other expenses related to the new term loan facility in 2021. adjusted net income attributable to camping world holdings, inc. and adjusted earnings per share we define “adjusted net income attributable to camping world holdings, inc. – basic” as net income attributable to camping world holdings, inc. adjusted for the impact of certain non-cash and other items that we do not consider in our evaluation of ongoing operating performance. these items include, among other things, loss and expense on debt restructure, long-lived asset impairment, lease termination costs, gains and losses on sale or disposal of assets, net, equity-based compensation, tax receivable agreement liability adjustment, restructuring costs related to the 2019 strategic shift, other unusual or one-time items, the income tax expense effect of these adjustments, and the effect of net income attributable to non-controlling interests from these adjustments. we define “adjusted net income attributable to camping world holdings, inc. – diluted” as adjusted net income attributable to camping world holdings, inc. – basic adjusted for the reallocation of net income attributable to non-controlling interests from stock options and restricted stock units, if dilutive, or the assumed redemption, if dilutive, of all outstanding common units in cwgs, llc for shares of newly-issued class a common stock of camping world holdings, inc. we define “adjusted earnings per share – basic” as adjusted net income attributable to camping world holdings, inc. - basic divided by the weighted-average shares of class a common stock outstanding. we define “adjusted earnings per share – diluted” as adjusted net income attributable to camping world holdings, inc. – diluted divided by the weighted-average shares of class a common stock outstanding, assuming (i) the redemption of all outstanding common units in cwgs, llc for newly-issued shares of class a common stock of camping world holdings, inc., if dilutive, and (ii) the dilutive effect of stock options and restricted stock units, if any. we present adjusted net income attributable to camping world holdings, inc. – basic, adjusted net income attributable to camping world holdings, inc. – diluted, adjusted earnings per share – basic, and adjusted earnings per share – diluted because we consider them to be important supplemental measures of our performance and we believe that investors’ understanding of our performance is enhanced by including these non-gaap financial measures as a reasonable basis for comparing our ongoing results of operations. the following table reconciles adjusted net income attributable to camping world holdings, inc. – basic, adjusted net income attributable to camping world holdings, inc. – diluted, adjusted earnings per share – basic, and adjusted earnings per share – diluted to the most directly comparable gaap financial performance measure: three months ended nine months ended september 30, september 30, (in thousands except per share amounts) 2022 2021 2022 2021 numerator: net income attributable to camping world holdings, inc. $ 41,126 $ 79,703 $ 170,167 $ 251,213 adjustments related to basic calculation: loss and expense on debt restructure (a): gross adjustment — 24 — 10,445 income tax expense for above adjustment (b) — (3) — (1,376) long-lived asset impairment (c): gross adjustment 887 316 3,505 1,398 income tax expense for above adjustment (b) — — (99) — lease termination (d): gross adjustment — 329 1,122 2,085 income tax expense for above adjustment (b) — 1 — (38) (gain) loss on sale or disposal of assets (e): gross adjustment (40) 96 390 7 income tax expense for above adjustment (b) (12) 3 (15) 5 equity-based compensation (f): gross adjustment 6,792 6,913 27,434 19,069 income tax expense for above adjustment (b) (792) (820) (3,080) (2,181) tax receivable agreement liability adjustment (g): gross adjustment — — — 3,520 income tax expense for above adjustment (b) — — — (898) restructuring costs (h) gross adjustment 1,671 17,362 5,548 23,439 income tax expense for above adjustment (b) — 23 — (42) adjustment to net income attributable to non-controlling interests resulting from the above adjustments (i) (4,642) (12,091) (18,866) (27,580) adjusted net income attributable to camping world holdings, inc. – basic 44,990 91,856 186,106 279,066 adjustments related to diluted calculation: reallocation of net income attributable to non-controlling interests from the dilutive effect of stock options and restricted stock units (j) 409 1,892 1,519 — income tax on reallocation of net income attributable to non-controlling interests from the dilutive effect of stock options and restricted stock units (k) (104) (489) (404) — reallocation of net income attributable to non-controlling interests from the dilutive redemption of common units in cwgs, llc (j) — — — 359,176 income tax on reallocation of net income attributable to non-controlling interests from the dilutive redemption of common units in cwgs, llc (k) — — — (89,668) assumed income tax expense of combining c-corporations with full or partial valuation allowances with the income of other consolidated entities after the dilutive redemption of common units in cwgs, llc (l) — — — (11,227) adjusted net income attributable to camping world holdings, inc. – diluted $ 45,295 $ 93,259 $ 187,221 $ 537,347 denominator: weighted-average class a common shares outstanding – basic 41,985 45,628 42,419 45,072 adjustments related to diluted calculation: dilutive redemption of common units in cwgs, llc for shares of class a common stock (m) — — — 43,731 dilutive options to purchase class a common stock (m) 53 138 62 157 dilutive restricted stock units (m) 467 1,256 466 1,204 adjusted weighted average class a common shares outstanding – diluted 42,505 47,022 42,947 90,164 adjusted earnings per share - basic $ 1.07 $ 2.01 $ 4.39 $ 6.19 adjusted earnings per share - diluted $ 1.07 $ 1.98 $ 4.36 $ 5.96 anti-dilutive amounts (n): numerator: reallocation of net income attributable to non-controlling interests from the anti-dilutive redemption of common units in cwgs, llc (j) $ 66,055 $ 119,804 $ 255,412 $ — income tax on reallocation of net income attributable to non-controlling interests from the anti-dilutive redemption of common units in cwgs, llc (k) $ (16,804) $ (30,965) $ (66,789) $ — assumed income tax benefit of combining c-corporations with full or partial valuation allowances with the income of other consolidated entities after the anti-dilutive redemption of common units in cwgs, llc (l) $ 627 $ 1,466 $ 6,464 $ — denominator: anti-dilutive redemption of common units in cwgs, llc for shares of class a common stock (m) 42,045 42,635 42,045 — reconciliation of per share amounts: earnings per share of class a common stock - basic $ 0.98 $ 1.75 $ 4.01 $ 5.57 non-gaap adjustments (o) 0.09 0.26 0.38 0.62 adjusted earnings per share - basic $ 1.07 $ 2.01 $ 4.39 $ 6.19 earnings per share of class a common stock - diluted $ 0.97 $ 1.72 $ 3.99 $ 5.49 non-gaap adjustments (o) 0.10 0.26 0.37 0.62 dilutive redemption of common units in cwgs, llc for shares of class a common stock (p) — — — (0.14) dilutive options to purchase class a common stock and/or restricted stock units (p) — — — (0.01) adjusted earnings per share - diluted $ 1.07 $ 1.98 $ 4.36 $ 5.96 (a) represents the loss and expense incurred on debt restructure and financing expense, which is comprised of $0.4 million in extinguishment of the original issue discount and $1.0 million in extinguishment of capitalized finance costs related to the previous term loan facility, and $9.0 million in legal and other expenses related to the new term loan facility. (b) represents the current and deferred income tax expense or benefit effect of the above adjustments, many of which are related to entities with full valuation allowances for which no tax benefit can be currently recognized. this assumption uses an effective tax rate of 25.4% and 25.5% for the adjustments for the 2022 and 2021 periods, respectively, which represents the estimated tax rate that would apply had the above adjustments been included in the determination of our non-gaap metric. (c) represents long-lived asset impairment charges related to the rv and outdoor retail segment, which relate to locations affected by the 2019 strategic shift. (d) represents the loss on termination of operating leases, relating primarily to the 2019 strategic shift, resulting from the lease termination fees and the derecognition of the operating lease assets and liabilities. (e) represents an adjustment to eliminate the gains and losses on disposals and sales of various assets. (f) represents non-cash equity-based compensation expense relating to employees, directors, and consultants of the company. (g) represents an adjustment to eliminate the loss on remeasurement of the tax receivable agreement primarily due to changes in our blended statutory income tax rate. (h) represents restructuring costs relating to our 2019 strategic shift. these restructuring costs include other associated costs. these costs exclude lease termination costs, which are presented separately above (see (d) above). (i) represents the adjustment to net income attributable to non-controlling interests resulting from the above adjustments that impact the net income of cwgs, llc. this adjustment uses the non-controlling interest’s weighted average ownership of cwgs, llc of 50.0% and 48.3% for the three months ended september 30, 2022 and 2021, respectively, and 49.8% and 49.2% for the nine months ended september 30, 2022 and 2021, respectively. (j) represents the reallocation of net income attributable to non-controlling interests from the impact of the assumed change in ownership of cwgs, llc from stock options, restricted stock units, and/or common units of cwgs, llc. (k) represents the income tax expense effect of the above adjustment for reallocation of net income attributable to non-controlling interests. this assumption uses an effective tax rate of 25.4% and 25.5% for the adjustments for 2022 and 2021 periods, respectively. (l) typically represents adjustments to reflect the income tax benefit of losses of consolidated c-corporations that under the company’s current equity structure cannot be used against the income of other consolidated subsidiaries of cwgs, llc. however, for the three and nine months ended september 30, 2021, this adjustment included the reversal of the $0.3 million expense and $14.5 million benefit, respectively, from changes in the valuation allowance for camping world, inc. subsequent to the redemption of all common units in cwgs, llc, the company believes certain actions could be taken such that the c-corporations’ losses could offset income of other consolidated subsidiaries. the adjustment reflects the income tax benefit assuming effective tax rate of 25.4% and 25.5% during the 2022 and 2021 periods, respectively, for the losses experienced by the consolidated c-corporations for which valuation allowances have been recorded. no assumed release of valuation allowance established for previous periods were included in these amounts and the $0.3 million and $14.5 million release of valuation allowance during the three and nine months ended september 30, 2021, respectively, was considered to be reversed and excluded from adjusted net income attributable to camping world holdings, inc. – diluted for purposes of this calculation. (m) represents the impact to the denominator for stock options, restricted stock units, and/or common units of cwgs, llc. (n) the below amounts have not been considered in our adjusted earnings per share – diluted amounts as the effect of these items are anti-dilutive. (o) represents the per share impact of the non-gaap adjustments to net income detailed above (see (a) through (h) above). (p) represents the per share impact of stock options, restricted stock units, and/or common units of cwgs, llc from the difference in their dilutive impact between the gaap and non-gaap earnings per share calculations. our “up-c” corporate structure may make it difficult to compare our results with those of companies with a more traditional corporate structure. there can be a significant fluctuation in the numerator and denominator for the calculation of our adjusted earnings per share – diluted depending on if the common units in cwgs, llc are considered dilutive or anti-dilutive for a given period. to improve comparability of our financial results, users of our financial statements may find it useful to review our earnings per share assuming the full redemption of common units in cwgs, llc for all periods, even when those common units would be anti-dilutive. the relevant numerator and denominator adjustments have been provided under “anti-dilutive amounts” in the table above (see (n) above).
