Camping World Holdings Inc

Previous wording

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.

Current wording

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. However, for the three months ended June 30, 2024, overall new vehicle gross margins remained relatively unchanged at 15.3% as the average selling price decreases and average cost decreases mostly offset.

Previous wording

As noted in “Industry Trends” above, we have experienced deflation with respect to new vehicles and, as a byproduct of that new vehicle cost decrease, used vehicles. New and used vehicles regularly represent a majority of our costs. However, inflationary factors, such as increases to our other product and overhead costs, may adversely affect our operating results if the selling prices of our products and services do not increase proportionately with those increased costs or if demand for our products and services declines as a result of price increases to address inflationary costs. 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.

Current wording

As noted in “Industry Trends” above, we have experienced deflation 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 other product and overhead costs, may adversely affect our operating results if the selling prices of our products and services do not increase proportionately with those increased costs or if demand for our products and services declines as a result of price increases to address inflationary costs. 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.

Previous wording

New vehicle gross margins in the first quarter of 2024 were relatively similar to first quarter of 2023 and within the range of gross margins for the pre-COVID-19 pandemic periods presented in the table below. As discussed in “Industry Trends” above, first quarter of 2024 new vehicle gross margins were negatively impacted by clearing out the higher cost pre-2024 model year vehicles to improve the mix of new inventory toward the lower cost 2024 model year vehicles. Additionally, used vehicle gross margins were negatively impacted in the first quarter of 2024 from the discounting necessary to maintain used vehicles as a lower cost alternative for our customers. Beginning primarily in the fourth quarter of 2023, we adjusted our acceptable procurement cost of used vehicles to reflect the lower average market price of RVs that was driven by the lower cost 2024 models. Used vehicle gross margins are expected to improve as we sell through inventory previously procured at higher costs.

Current wording

New vehicle gross margins in the second quarter of 2024 were relatively similar to second quarter of 2023 and slightly above the range of gross margins for the pre-COVID-19 pandemic periods presented in the table below. Additionally, used vehicle gross margins were negatively impacted in the second quarter of 2024 from the discounting necessary to maintain used vehicles as a lower cost alternative for our customers. Beginning primarily in the fourth quarter of 2023, we adjusted our acceptable procurement cost of used vehicles to reflect the lower average market price of RVs that was driven by the lower cost 2024 models.

Previous wording

The following table presents vehicle gross margin and unit sale mix for the three months ended March 31, 2024 and pre-COVID-19 pandemic periods of the three months ended March 31, 2019, 2018, 2017, and 2016 (unaudited):

Current wording

The following table presents vehicle gross margin and unit sale mix for the three months ended June 30, 2024 and pre-COVID-19 pandemic periods for the three months ended June 30, 2019, 2018, 2017, and 2016 (unaudited):

Previous wording

Our corporate structure is commonly referred to as an “Up-C” structure and typically results in a different relationship between income (loss) 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.

Current wording

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.

Previous wording

CWH receives an allocation of its share of the net income (loss) 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 (loss) 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 interest 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 condensed 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 three months ended March 31, 2024 and 2023, the Company used effective income tax rate assumptions of 25.0% and 25.3%, respectively, for income adjustments applicable to CWH when calculating the adjusted net (loss) income attributable to Camping World Holdings, Inc. ─ basic and diluted (see “Non-GAAP Financial Measures” in Part I, Item 2 of this Form 10-Q). CWGS, LLC may be liable for various other state and local taxes.

Current wording

CWH receives an allocation of its share of the net income (loss) 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 (loss) 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 interest 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 condensed 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 three months ended June 30, 2024 and 2023, the Company used effective income tax rate assumptions of 25.0% and 25.3%, respectively, for income adjustments applicable to CWH when calculating the adjusted net income (loss) attributable to Camping World Holdings, Inc. ─ basic and diluted (see “Non-GAAP Financial Measures” in Part I, Item 2 of this Form 10-Q). CWGS, LLC may be liable for various other state and local taxes.

Previous wording

The following table presents the allocation of CWGS, LLC’s C-Corp and Pass-Through net (loss) 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:

Current wording

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

Previous wording

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

Current wording

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

Previous wording

New vehicles revenue increased primarily due to a 21.3% increase in new vehicles sold, partially offset by a 16.4% decrease in the average selling price per new vehicle sold driven primarily by the lower cost 2024 model year travel trailers and discounting of pre-2024 model year new vehicles. On a same store basis, new vehicles revenue decreased 3.7% to $606.8 million with an increase in new vehicles sold of 15.5%, primarily due to a reduced average sales price per vehicle sold.

Current wording

New vehicles revenue increased primarily due to a 16.9% increase in new vehicles sold, partially offset by a 9.5% decrease in the average selling price per new vehicle sold driven primarily by the lower cost 2024 model year travel trailers and discounting of pre-2024 model year new vehicles. On a same store basis, new vehicles revenue decreased 0.8% to $761.5 million with an increase in new vehicles sold of 9.7%, primarily due to a reduced average sales price per vehicle sold.

Previous wording

Used vehicles revenue decreased primarily due to a 14.0% reduction in used vehicles sold and an 11.7% decrease in the average selling price per used vehicle sold. These decreases were driven by the lower cost and selling price of 2024 model year new vehicles, which impacted used vehicles as discussed in “Industry Trends” above. On a same store basis, used vehicles revenue decreased 28.1% to $312.4 million and used vehicles sold decreased 17.3%.

Current wording

Used vehicles revenue decreased primarily due to both an 11.7% reduction in used vehicles sold and a 12.6% decrease in the average selling price per used vehicle sold. The decrease in used vehicles sold was due in large part to slowed procurement of used vehicles. This reduced availability and decrease in average selling price of used vehicles were driven largely as a byproduct of the lower cost and selling price of 2024 model year new vehicles, which impacted used vehicles as discussed in “Industry Trends” above. On a same store basis, used vehicles revenue decreased 27.7% to $436.1 million and used vehicles sold decreased 17.0%.

Previous wording

Used vehicles gross profit decreased primarily due to the used vehicle revenue decrease described above, partially offset by a 5.3% decrease in the average cost per used vehicle sold. Used vehicle gross margin

Current wording

Used vehicles gross profit decreased primarily due to the used vehicle revenue decrease described above, partially offset by an 8.2% decrease in the average cost per used vehicle sold. Used vehicle gross

Previous wording

decreased primarily due to a lower average selling price per used vehicle sold, partially offset by a 5.3% reduction in cost per used vehicle sold.

Current wording

margin decreased primarily due to a lower average selling price per used vehicle sold, partially offset by an 8.2% reduction in cost per used vehicle sold.

Previous wording

Products, service and other revenue decreased primarily due to a reduction in sales activity resulting from our Active Sports Restructuring and fewer used vehicles sold led to a decline in retail product attachment to vehicle sales, partially offset by increases in RV service revenue. On a same store basis, products, service and other revenue decreased 8.9% to $144.4 million for the three months ended March 31, 2024 from the three months ended March 31, 2023.

Current wording

Products, service and other revenue decreased primarily due to a reduction in sales activity resulting from our Active Sports Restructuring and fewer used vehicles sold leading to a decline in retail product attachment to vehicle sales, partially offset by increases in RV service revenue. On a same store basis, products, service and other revenue decreased 6.9% to $184.8 million for the three months ended June 30, 2024 from the three months ended June 30, 2023.

Previous wording

Products, service and other gross profit decreased primarily due to the Active Sports Restructuring and the demand trends noted above. The increase in products, service and other gross margin was primarily due to higher labor billing rates on warranty service and improvements to the pricing strategy.

Current wording

Products, service and other gross profit increased primarily due to the Active Sports Restructuring and higher labor billing rates. The increase in products, service and other gross margin was primarily due to higher labor billing rates on warranty service, the divestiture of our RV furniture business, and improvements to the pricing for aftermarket accessories.

Previous wording

Finance and insurance revenue and gross profit is recorded net, since the Company is acting as an agent in the transaction, and commission is recognized when a finance and insurance product contract payment has been received or financing has been arranged. Finance and insurance, net revenue increased $5.7 million, which was primarily a result of an increased number of contracts sold and an increase in revenue per contract. Finance and insurance, net revenue as a percentage of new and used vehicle revenue was 13.6% for the three months ended March 31, 2024, an increase from 11.9% for the three months ended March 31, 2023. On a same store basis, finance and insurance, net revenue increased 0.2% versus the three months ended March 31, 2023.

Current wording

Finance and insurance revenue and gross profit is recorded net, since the Company is acting as an agent in the transaction, and commission is recognized when a finance and insurance product contract payment has been received or financing has been arranged. Finance and insurance, net revenue increased $12.1 million, which was primarily a result of an increased number of contracts sold and an increase in revenue per contract. Finance and insurance, net revenue as a percentage of new and used vehicle revenue was 13.5% for the three months ended June 30, 2024, an increase from 11.7% for the three months ended June 30, 2023. On a same store basis, finance and insurance, net revenue decreased 0.2% versus the three months ended June 30, 2023.

Previous wording

Good Sam Club revenue and gross margin decreased slightly from the 3.2% decrease in Good Sam Club members, excluding free basic plan members. The decrease in Good Sam Club members resulted from reduced standard Good Sam Club membership enrollment from an increase in the standard membership price and the introduction of the free basic plan in late 2023 that provides for limited participation in the loyalty point program without access to the remaining member benefits. For the remainder of 2024, we expect to continue to see declines in the Good Sam Club members as a result of this price increase and the availability of the free basic plan.

Current wording

Good Sam Club revenue and gross margin decreased slightly primarily from the 7.7% decrease in Good Sam Club members, excluding free basic plan members, partially offset by an increased rate per annual membership and increased Good Sam co-branded credit card royalty fees. The decrease in Good Sam Club members resulted from an increase in the standard membership price and the introduction of the free basic plan in late 2023 that provides for limited participation in the loyalty point program without access to the remaining member benefits. For the remainder of 2024, we expect to continue to see declines in the Good Sam Club members as a result of this price increase and the availability of the free basic plan.

Previous wording

As discussed in Note 4 – Restructuring and Long-Lived Asset Impairment to our condensed consolidated financial statements included in Part I, Item 1 of this Form 10-Q, we recognized $5.8 million of long-lived asset impairments that were unrelated to restructuring activities during the three months ended March 31, 2024 compared to $7.0 million of long-lived asset impairments for the three months ended March 31, 2023 that related primarily to the Active Sports Restructuring.

Current wording

As discussed in Note 4 – Restructuring and Long-Lived Asset Impairment to our condensed consolidated financial statements included in Part I, Item 1 of this Form 10-Q, we recognized $4.6 million of long-lived asset impairments that were unrelated to restructuring activities during the three months ended June 30, 2024 compared to $0.5 million of long-lived asset impairments for the three months ended June 30, 2023 that related primarily to the Active Sports Restructuring.

Previous wording

Other interest expense, net increased primarily due to a 77 basis point increase in the Term Loan Facility average interest rate and a higher average principal balance from additional borrowings on the Company’s Real Estate Facilities (see Note 7 – Long-Term Debt to our condensed consolidated financial statements included in Part I, Item 1 of this Form 10-Q). The average interest rate for the Term Loan Facility for the three months ended March 31, 2024 and 2023 was 7.97% and 7.20%, respectively.

Current wording

Other interest expense, net increased primarily due to a 46 basis point increase in the Term Loan Facility average interest rate and a higher average principal balance from additional borrowings on the Company’s Real Estate Facilities and the revolving line of credit under the Floor Plan Facility (see Note 7 – Long-Term Debt and Note 3 – Inventories and Floor Plan Payables to our condensed consolidated financial statements included in Part I, Item 1 of this Form 10-Q). The average interest rate for the Term Loan Facility for the three months ended June 30, 2024 and 2023 was 7.96% and 7.50%, respectively.

Previous wording

Good Sam Services and Plans revenue decreased slightly primarily from reduced contracts in force for our extended vehicle warranty programs, partially offset by increased contracts in force from the Good Sam Insurance Agency programs.

Current wording

Good Sam Services and Plans revenue increased slightly primarily from increased contracts in force for our Good Sam Insurance Agency programs, partially offset by reduced contracts in force for our extended vehicle warranty programs and reduced advertising revenue for our annual directory.

Previous wording

Good Sam Services and Plans gross profit increased slightly from higher gross margin, which were partially offset by the revenue decrease described above. Good Sam Services and Plans gross margin increased primarily due to increased policies in force for the Good Sam Insurance Agency programs and reduced marketing expenses.

Current wording

Good Sam Services and Plans gross profit and gross margin increased primarily due to increased contracts in force for our Good Sam Insurance Agency Programs and underwriter profit sharing and reduced marketing expenses.

Previous wording

Selling, general and administrative expenses increased primarily due to $8.0 million of additional advertising expenses, $2.6 million of additional professional fees and services, and $1.0 million of increased other expenses, partially offset by reduced employee compensation costs of $5.9 million, which included a decrease in equity-based compensation expense of $1.1 million.

Current wording

Selling, general and administrative expenses increased primarily due to $19.8 million of additional advertising expenses and $2.4 million of increased other expenses, partially offset by reduced employee compensation costs of $13.6 million, which included a decrease in equity-based compensation expense of $2.1 million. The decrease in equity-based compensation was driven primarily by fewer average RSUs outstanding and a lower average grant date fair value of those RSUs.

Previous wording

The significant increase in floor plan interest expense was primarily due to a 126 basis point increase in the average floor plan borrowing rate, and an increase in the average floor plan balance. The average interest

Current wording

The significant increase in floor plan interest expense was primarily due to a 107 basis point increase in the average floor plan borrowing rate, and an increase in the average floor plan balance. The average interest rate for the Floor Plan Facility for the six months ended June 30, 2024 and 2023 was 7.76% and 6.69%, respectively.

Previous wording

Good Sam Services and Plans segment income decreased primarily due to reduced contracts in force for our extended vehicle warranty programs and increased general and administrative expenses, resulting from increased advertising and outside service fees. Segment income margin decreased 184 basis points to 48.4% primarily due to increased general and administrative expenses.

Current wording

Good Sam Services and Plans segment income decreased primarily due to increased general and administrative expenses, resulting from increased employee compensation expenses. Segment income margin decreased 94 basis points to 50.5% primarily due to increased general and administrative expenses, most notably employee compensation expenses.

Previous wording

RV and Outdoor Retail segment revenue decreased primarily due to a $107.2 million, or 24.1%, decrease in used vehicles revenue, a $29.8 million, or 14.3%, decrease in products, service and other revenue, and a $0.4 million, or 3.2%, decrease in Good Sam Club revenue, partially offset by a $9.6 million, or 1.5%, increase in new vehicles revenue, and a $5.5 million, or 4.3%, increase in finance and insurance, net revenue.

Current wording

RV and Outdoor Retail segment revenue decreased primarily due to a $249.6 million, or 23.3%, decrease in used vehicles revenue, a $41.7 million, or 9.1%, decrease in products, service and other revenue, and a $0.4 million, or 1.6%, decrease in Good Sam Club revenue, partially offset by a $56.1 million, or 3.9%, increase in new vehicles revenue, and a $17.6 million, or 5.9%, increase in finance and insurance, net revenue.

Previous wording

RV and Outdoor Retail segment income decreased primarily due to decreased segment gross profit of $39.0 million primarily relating to reduced volume and average sales price of used vehicles sold, a $7.1 million increase in floor plan interest expense, a $6.6 million increase in loss on sale or disposal of assets, and a $4.5 million increase in selling, general and administrative expenses (see discussion of selling, general and administrative expenses above for the similar drivers of this change), partially offset by a $1.2 million reduction in long-lived asset impairment. RV and Outdoor Retail segment income (loss) margin decreased 403 basis points to (1.8%) for the three months ended March 31, 2024 from the three months ended March 31, 2023 primarily due a lower volume of used vehicles sold and a lower average price per vehicle sold.

Current wording

RV and Outdoor Retail segment income decreased primarily due to decreased segment gross profit of $64.6 million primarily relating to reduced volume and average sales price of used vehicles sold; a $14.2 million increase in floor plan interest expense; a $14.7 million increase in loss on sale or disposal of assets; a $2.9 million increase in long-lived asset impairment; and a $1.6 million increase in selling, general and administrative expenses (see discussion of selling, general and administrative expenses above for the similar drivers of this change). RV and Outdoor Retail segment income margin decreased 288 basis points to 1.3% for the six months ended June 30, 2024 from the six months ended June 30, 2023 primarily due a lower volume of used vehicles sold and a lower average price per vehicle sold, in addition to the $14.7 million increase in loss on sale or disposal of assets.

Previous wording

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, Adjusted Net (Loss) Income Attributable to Camping World Holdings, Inc. – Basic, Adjusted Net (Loss) Income Attributable to Camping World Holdings, Inc. – Diluted, Adjusted (Loss) Earnings Per Share – Basic, and Adjusted (Loss) 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, 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.

Current wording

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; Adjusted Net Income (Loss) Attributable to Camping World Holdings, Inc. – Basic; Adjusted Net Income (Loss) Attributable to Camping World Holdings, Inc. – Diluted; Adjusted Earnings (Loss) Per Share – Basic; Adjusted Earnings (Loss) Per Share – Diluted; and Selling, General, and Administrative Expense (“SG&A”) Excluding Equity-based Compensation (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. Certain of 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, 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

Previous wording

We define “EBITDA” as net (loss) 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, long-lived asset impairment, gains and losses on sale or disposal of assets, net, equity-based compensation, loss and impairment on investments in equity securities, and other unusual or one-time items. We define “Adjusted EBITDA Margin” as Adjusted EBITDA as a percentage of total revenue. 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.

Current wording

We define “EBITDA” as net income (loss) 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, long-lived asset impairment, lease termination, gains and losses on sale or disposal of assets, net, equity-based compensation, loss and impairment on investments in equity securities, and other unusual or one-time items. We define “Adjusted EBITDA Margin” as Adjusted EBITDA as a percentage of total revenue. 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.

Previous wording

Adjusted Net (Loss) Income Attributable to Camping World Holdings, Inc. and Adjusted (Loss) Earnings Per Share

Current wording

Adjusted Net Income (Loss) Attributable to Camping World Holdings, Inc. and Adjusted Earnings (Loss) Per Share

Previous wording

We define “Adjusted Net (Loss) Income Attributable to Camping World Holdings, Inc. – Basic” as net (loss) 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, long-lived asset impairment, gains and losses on sale or disposal of assets, net, equity-based compensation, loss and impairment on investments in equity securities, other unusual or one-time items, the income tax benefit (expense) effect of these adjustments, and the effect of net (loss) income attributable to non-controlling interests from these adjustments.

Current wording

We define “Adjusted Net Income (Loss) Attributable to Camping World Holdings, Inc. – Basic” as net income (loss) 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, long-lived asset impairment, lease termination, gains and losses on sale or disposal of assets, net, equity-based compensation, loss and impairment on investments in equity securities, other unusual or one-time items, the income tax benefit (expense) effect of these adjustments, and the effect of net income (loss) attributable to non-controlling interests from these adjustments.

Previous wording

We define “Adjusted Net (Loss) Income Attributable to Camping World Holdings, Inc. – Diluted” as Adjusted Net (Loss) Income Attributable to Camping World Holdings, Inc. – Basic adjusted for the reallocation of net (loss) 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.

Current wording

We define “Adjusted Net Income (Loss) Attributable to Camping World Holdings, Inc. – Diluted” as Adjusted Net Income (Loss) Attributable to Camping World Holdings, Inc. – Basic adjusted for the reallocation of net income (loss) 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.

Previous wording

We define “Adjusted (Loss) Earnings Per Share – Basic” as Adjusted Net (Loss) Income Attributable to Camping World Holdings, Inc. - Basic divided by the weighted-average shares of Class A common stock outstanding. We define “Adjusted (Loss) Earnings Per Share – Diluted” as Adjusted Net (Loss) 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 (Loss) Income Attributable to Camping World Holdings, Inc. – Basic, Adjusted Net (Loss) Income Attributable to Camping World Holdings, Inc. – Diluted, Adjusted (Loss) Earnings Per Share – Basic, and Adjusted (Loss) 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.

Current wording

We define “Adjusted Earnings (Loss) Per Share – Basic” as Adjusted Net Income (Loss) Attributable to Camping World Holdings, Inc. - Basic divided by the weighted-average shares of Class A common stock outstanding. We define “Adjusted Earnings (Loss) Per Share – Diluted” as Adjusted Net Income (Loss) 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 (Loss) Attributable to Camping World Holdings, Inc. – Basic, Adjusted Net Income (Loss) Attributable to Camping World Holdings, Inc. – Diluted, Adjusted Earnings (Loss) Per Share – Basic, and Adjusted Earnings (Loss) 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.

Previous wording

The following table reconciles Adjusted Net (Loss) Income Attributable to Camping World Holdings, Inc. – Basic, Adjusted Net (Loss) Income Attributable to Camping World Holdings, Inc. – Diluted, Adjusted (Loss) Earnings Per Share – Basic, and Adjusted (Loss) Earnings Per Share – Diluted to the most directly comparable GAAP financial performance measure:

Current wording

The following table reconciles Adjusted Net Income (Loss) Attributable to Camping World Holdings, Inc. – Basic, Adjusted Net Income (Loss) Attributable to Camping World Holdings, Inc. – Diluted, Adjusted Earnings (Loss) Per Share – Basic, and Adjusted Earnings (Loss) Per Share – Diluted to the most directly comparable GAAP financial performance measure:

Previous wording

As discussed under “Our Corporate Structure Impact on Income Taxes” in Part I, Item 2 of this Form 10-Q, 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 (loss) 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 (loss) 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 (j) above).

Current wording

As discussed under “Our Corporate Structure Impact on Income Taxes” in Part I, Item 2 of this Form 10-Q, 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 (loss) 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 (loss) per share assuming the full redemption of common units in CWGS, LLC for all periods, even when those common units would be

Previous wording

During the three months ended March 31, 2024, the RV and Outdoor Retail segment purchased real property for an aggregate purchase price of $1.2 million.

Current wording

During the six months ended June 30, 2024, the RV and Outdoor Retail segment purchased real property for an aggregate purchase price of $1.2 million.

Previous wording

Over the next twelve months, our expansion of dealerships through construction and acquisition is expected to cost between $70.0 million and $90.0 million from a combination of business acquisitions and capital expenditures relating to land, buildings, and improvements. These cost estimates exclude amounts for acquired inventories, which are primarily financed through our Floor Plan Facility. Additionally, the cost estimates do not consider potential funding received through sale leaseback transactions or other means for real estate and construction activities. We are in the early stages of evaluating additional dealership acquisition opportunities and will update our cost estimates in future periodic reports, if necessary, as there are further developments. Factors that could impact the quantity of future locations or the cost to acquire or open those locations include, but are not limited to, our ability to locate potential acquisition targets or greenfield locations in a geographic area and at a cost that meets our success criteria; continued strong cash flow generation from our operations to fund these acquisitions and new locations; and availability of financing on our Floor Plan Facility. We expect the additional cash requirements of the other announced initiatives to be immaterial.

Current wording

Over the next twelve months, our expansion of dealerships through construction and acquisition is expected to cost between $40.0 million and $90.0 million from a combination of business acquisitions and capital expenditures relating to land, buildings, and improvements. These cost estimates exclude amounts for acquired inventories, which are primarily financed through our Floor Plan Facility. Additionally, the cost estimates do not consider potential funding received through sale leaseback transactions or other means for real estate and construction activities. We are in the early stages of evaluating additional dealership acquisition opportunities and will update our cost estimates in future periodic reports, if necessary, as there are further developments. Factors that could impact the quantity of future locations or the cost to acquire or open those locations include, but are not limited to, our ability to locate potential acquisition targets or greenfield locations in a geographic area and at a cost that meets our success criteria; continued strong cash flow generation from our operations to fund these acquisitions and new locations; and availability of financing on our Floor Plan Facility. We expect the additional cash requirements of the other announced initiatives to be immaterial.

Previous wording

As of March 31, 2024, December 31, 2023, and March 31, 2023, we had working capital of $381.6 million, $401.3 million, and $654.1 million, respectively, including $29.7 million, $39.6 million, and $72.8 million, respectively, of cash and cash equivalents. Our working capital reflects the cash provided by deferred revenue and gains reported under current liabilities of $95.9 million, $92.4 million, and $94.2 million as of March 31, 2024, December 31, 2023, and March 31, 2023, respectively. Deferred revenue primarily consists of cash collected for club memberships and roadside assistance contracts in advance of services to be provided, which is deferred and recognized as revenue over the life of the membership, and deferred revenue for the annual guide. We use net proceeds from this deferred membership revenue to lower our long-term borrowings and finance our working capital needs. Our Floor Plan Facility includes a flooring line aggregate interest reduction (“FLAIR”) offset account that allows us to transfer cash as an offset to the payables under the Floor Plan Facility. The FLAIR offset account at March 31, 2024 was $147.7 million, $34.1 million of which could have been withdrawn while remaining in compliance with the financial covenants of the Floor Plan Facility.

Current wording

As of June 30, 2024, December 31, 2023, and June 30, 2023, we had working capital of $379.1 million, $401.3 million, and $601.9 million, respectively, including $23.7 million, $39.6 million, and $54.5 million, respectively, of cash and cash equivalents. Our working capital reflects the cash provided by deferred revenue and gains reported under current liabilities of $99.0 million, $92.4 million, and $96.9 million as of June 30, 2024, December 31, 2023, and June 30, 2023, respectively. Deferred revenue primarily consists of cash collected for club memberships and roadside assistance contracts in advance of services to be provided, which is deferred and recognized as revenue over the life of the membership, and deferred revenue for the annual guide. We use net proceeds from this deferred membership revenue to lower our long-term borrowings and finance our working capital needs. Our Floor Plan Facility includes a flooring line aggregate interest reduction (“FLAIR”) offset account that allows us to transfer cash as an offset to the payables under the Floor Plan Facility. The FLAIR offset account at June 30, 2024 was $199.5 million, $70.2 million of which could have been withdrawn while remaining in compliance with the financial covenants of the Floor Plan Facility.

Previous wording

The following table shows summary cash flow information for the three months ended March 31, 2024 and 2023:

Current wording

The following table shows summary cash flow information for the six months ended June 30, 2024 and 2023:

Previous wording

*Operating activities.*Our cash flows from operating activities are primarily collections from contracts in transit and customers following the sale of new and used vehicles, as well as from the sale of retail products and services and Good Sam services and plans. Contracts in transit represent amounts due from third-party lenders from whom pre-arranged agreements have been determined, and to whom the retail installment sales

Current wording

*Operating activities.*Our cash flows from operating activities are primarily collections from contracts in transit and customers following the sale of new and used vehicles, as well as from the sale of retail products and services and Good Sam services and plans. Contracts in transit represent amounts due from third-party lenders from whom pre-arranged agreements have been determined, and to whom the retail installment sales contracts have been assigned. Our primary uses of cash from operating activities are repayments of vehicle floor plan payables, payments to retail product suppliers, personnel-related expenditures, payments related to leased property, advertising, and various services and program costs.

Previous wording

Net cash used in operating activities was $68.0 million in the three months ended March 31, 2024, a decrease of $267.2 million from $199.2 million of net cash provided by operating activities in the three months ended March 31, 2023. The decrease was primarily due to a $137.6 million decrease in the working capital adjustment for inventory, a $55.7 million reduction in net income, a $39.5 million decrease in the working capital adjustment for accounts payable and other accrued expenses, a $28.7 million decrease in the working capital adjustment for prepaid expenses and other assets, a $16.1 million decrease in the working capital adjustment for receivables and contracts in transit, a $1.0 million decrease in non-cash lease expense, a $1.2 million decrease in long-lived asset impairment, a $1.2 million decrease in equity-based compensation and a $0.5 million increase in deferred income taxes, partially offset by a $6.6 million increase in loss on sale or disposal of assets, a $5.8 million increase in the working capital adjustment for deferred revenue, a $4.7 million in increase in depreciation and amortization, a $3.4 million decrease in the working capital adjustment for other, net, and a $0.5 million increase in provisions for losses on accounts receivable.

Current wording

Net cash provided by operating activities was $84.3 million in the six months ended June 30, 2024, a decrease of $143.6 million from $228.0 million of net cash provided by operating activities in the six months ended June 30, 2023. The decrease was primarily due to a $97.0 million reduction in net income, a $47.9 million decrease in the working capital adjustment for inventory, a $28.7 million decrease in working capital adjustment for prepaid expenses and other assets, a $16.7 million decrease in the working capital adjustment for receivables and contracts in transit, a $2.3 million decrease in equity-based compensation, and a $2.0 million decrease in non-cash lease expense, partially offset by a $22.3 million increase in working capital adjustment for accounts payable and other accrued expenses, a $14.7 million increase in loss on sale or disposal of assets, a $7.5 million in increase in depreciation and amortization, a $6.2 million increase in the working capital adjustment for deferred revenue, and a $2.9 million increase in long-lived asset impairment.

Previous wording

The table below summarizes our capital expenditures for the three months ended March 31, 2024 and 2023:

Current wording

The table below summarizes our capital expenditures for the six months ended June 30, 2024 and 2023: