| Summary of Significant Accounting Policies | 1. Summary of Significant Accounting Policies Principles of Consolidation and Basis of Presentation The consolidated financial statements include the accounts of Camping World Holdings, Inc. (āCWHā) and its subsidiaries (collectively, the āCompanyā), and are presented in accordance with accounting principles generally accepted in the United States (āGAAPā). All intercompany accounts and transactions of the Company and its subsidiaries have been eliminated in consolidation. CWH was formed on March 8, 2016 as a Delaware corporation for the purpose of facilitating an initial public offering (the āIPOā) and other related transactions in order to carry on the business of CWGS Enterprises, LLC (āCWGS, LLCā). CWGS, LLC was formed in March 2011 when it received, through contribution from its then parent company, all of the membership interests of Affinity Group Holding, LLC and FreedomRoads Holding Company, LLC (āFreedomRoadsā). The IPO and related reorganization transactions that occurred on October 6, 2016 resulted in CWH as the sole managing member of CWGS, LLC, with CWH having sole voting power in and control of the management of CWGS, LLC (see Note 18 ā Stockholdersā Equity). Despite its position as sole managing member of CWGS, LLC, CWH had a minority economic interest in CWGS, LLC through March 11, 2021. As of December 31, 2021, 2020, and 2019, CWH owned 51.2%, 47.4% and 42.0%, 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. The Company does not have any components of other comprehensive income recorded within its consolidated financial statements and, therefore, does not separately present a statement of comprehensive income in its consolidated financial statements. COVID-19 A novel strain of coronavirus was declared a pandemic by the World Health Organization in March 2020. To date, COVID-19 has surfaced in nearly all regions of the world and resulted in travel restrictions and business slowdowns or shutdowns in affected areas. Many affected areas have made significant progress with the easing of restrictions and reopening certain businesses often under new operating guidelines, although new waves of infection or the spread of new variants may lead to an increase in such restrictions or closures. In conjunction with the initial stay-at-home and shelter-in-place restrictions enacted in many areas, the Company saw significant sequential declines in its overall customer traffic levels and its overall revenues from the mid-March to mid-to-late April 2020 timeframe. In the latter part of April 2020, the Company began to see a significant improvement in its online web traffic levels and number of electronic leads, and in early May 2020, the Company began to see improvements in its overall revenue levels. As the stay-at-home restrictions began to ease across certain areas of the country, the Company experienced significant acceleration in its in-store and online traffic, lead generation, and revenue trends in May 2020 continuing into the quarter ended June 30, 2021 and demand in new and used vehicles remained elevated through the remainder of 2021 and into the beginning of 2022. Demand and interest in new and used vehicles continued to outpace vehicle supply during the year ended December 31, 2021. In the last four months of 2021, the Company was able to procure more new vehicles than were sold during that period, which improved inventory levels at December 31, 2021. In order to offset the initially expected adverse impact of COVID-19 and better align expenses with reduced sales in the middle of March 2020 and early April 2020, the Company reduced marketing expenses and temporarily reduced salaries and hours throughout the business, including for its executive officers, and implemented headcount and other cost reductions. Most of these temporary salary and hourly reductions ended in May 2020 as the adverse economic impacts of the pandemic began to decline. The Company has also taken steps to add new private label lines, expand its relationships with smaller recreational vehicle (āRVā) manufacturers, and acquire used inventory to help manage risks in its supply chain. Throughout the pandemic, the majority of the Companyās retail locations have continued to operate as essential businesses and the Company has continued to operate its e-commerce business. Historically, most of the Companyās consumer shows and events take place during the first quarter. As a consequence of COVID-19, the Company held one in-person consumer show in 2021 and held fewer in-person consumer shows and events during 2020 than in 2019. Since March 2020, the Company has implemented preparedness plans to keep its employees and customers safe, which include social distancing, providing employees with face coverings and/or other protective clothing as required, implementing additional cleaning and sanitization routines, and work-from-home directives for a significant portion of the Companyās workforce. In July 2021, the Company began transitioning many of its employees from work-from-home schedules to a return to the Companyās offices. However, with the increase in COVID-19 cases in the U.S. as a result of the Omicron variant in late 2021, many employees have reverted back to work from home schedules. Description of the Business Camping World Holdings, Inc., together with its subsidiaries, is Americaās largest retailer of RVs and related products and services. As noted above, CWGS, LLC is a holding company and operates through its subsidiaries. The Company has the following two reportable segments: (i) Good Sam Services and Plans and (ii) RV and Outdoor Retail. See Note 22 ā Segments Information for further information about the Companyās segments. Within the Good Sam Services and Plans segment, the Company primarily derives revenue from the sale of the following offerings: emergency roadside assistance plans; property and casualty insurance programs; travel assist programs; extended vehicle service contracts; vehicle financing and refinancing assistance; consumer shows and events; and consumer publications and directories. Within the RV and Outdoor Retail segment, the Company primarily derives revenue from the sale of new and used RVs; commissions on the finance and insurance contracts related to the sale of RVs; the sale of RV service and collision work; the sale of RV parts, accessories, and supplies; the sale of outdoor products, equipment, gear and supplies; business to business distribution of RV furniture, and the sale of Good Sam Club memberships and co-branded credit cards. The Company operates a national network of RV dealerships and service centers as well as a comprehensive e-commerce platform, primarily under the Camping World and Gander RV & Outdoors brands, and markets its products and services primarily to RV and outdoor enthusiasts. In 2019, the Company made a strategic decision to refocus its business around its core RV competencies, and on September 3, 2019, the board of directors approved a strategic plan to shift the business away from locations that did not have the ability or where it was not feasible to sell and/or service RVs (the ā2019 Strategic Shiftā) (see Note 5 ā Restructuring and Long-lived Asset Impairment). The table below summarizes the Companyās retail store openings, closings, divestitures, conversions and number of locations from December 31, 2020 to December 31, 2021: ā ā ā ā ā ā ā ā ā ā ā RV RV Service & Other ā ā ā Dealerships Retail Centers Retail Stores Total Number of store locations as of December 31, 2020 ā 160 ā 10 ā 1 ā 171 Opened ā 16 ā ā ā ā ā 16 Closed / divested ā (1) ā ā ā ā ā (1) Re-opened ā 1 ā ā ā ā ā 1 Converted (1) ā (1) ā ā ā 1 ā ā Number of store locations as of December 31, 2021 ā 175 ā 10 ā 2 ā 187 ā ā ā ā ā ā ā ā ā (1) One RV dealership was converted to a retail clearance center. Use of Estimates The preparation of these financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results may differ from those estimates. In preparing these financial statements, management has made its best estimates and judgments of certain amounts included in the financial statements, giving due consideration to materiality. The Company bases its estimates and judgments on historical experience and other assumptions that management believes are reasonable. However, application of these accounting policies involves the exercise of judgment and use of assumptions as to future uncertainties, including those uncertainties arising from COVID-19, and, as a result, actual results could differ materially from these estimates. The Company periodically evaluates estimates and assumptions used in the preparation of the financial statements and makes changes on a prospective basis when adjustments are necessary. Significant estimates made in the accompanying consolidated financial statements include certain assumptions related to accounts receivable, inventory, goodwill, intangible assets, long-lived assets, long-lived asset impairments, program cancellation reserves, chargebacks, and accruals related to estimated tax liabilities, product return reserves, and other liabilities. Cash and Cash Equivalents The Company considers all short-term, highly liquid investments purchased with an original maturity date of three months or less to be cash equivalents. The carrying amount approximates fair value because of the short-term maturity of these instruments. Outstanding checks that are in excess of the cash balances at certain banks are included in accrued liabilities in the accompanying consolidated balance sheets, and changes in the amounts are reflected in operating cash flows in the accompanying consolidated statement of cash flows. Contracts in Transit, Accounts Receivable and Current Expected Credit Losses Contracts in transit consist of amounts due from non-affiliated financing institutions on retail finance contracts from vehicle sales for the portion of the vehicle sales price financed by the Companyās customers. These retail installment sales contracts are typically funded within ten days of the initial approval of the retail installment sales contract by the third-party lender. Accounts receivable are stated at realizable value, net of an allowance for doubtful accounts, which includes a reserve for expected credit losses. Accounts receivable balances due in excess of one year was $7.8 million at December 31, 2021 and $8.2 million at December 31, 2020, which are included in other assets in the accompanying consolidated balance sheets. The allowance for doubtful accounts is based on managementās assessment of the collectability of its customer accounts. The Company regularly reviews the composition of the accounts receivable aging, historical bad debts, changes in payment patterns, customer creditworthiness, current economic trends, and reasonable and supportable forecasts about the future. Relevant risk characteristics include customer size and historical loss patterns. Management has evaluated the expected credit losses related to contracts in transit and determined that no allowance for doubtful accounts was required at December 31, 2021 and 2020. Management additionally has evaluated the expected credit losses related to accounts receivable and determined that allowances of approximately $4.7 million as of December 31, 2021 and $3.4 million as of December 31, 2020 for uncollectible accounts were required. Additionally, there was a less than $0.1 million allowance for doubtful accounts for noncurrent receivables at December 31, 2021 recognized during the year ended December 31, 2021. The following table details the changes in the allowance for doubtful accounts relating to current receivables (in thousands): ā ā ā ā ā ā ā ā ā Year Ended ā ā December 31, ā December 31, ā 2021 2020 Allowance for doubtful accounts: ā ā ā ā ā ā Balance, beginning of period ā $ 3,393 ā $ 3,537 Charged to bad debt expense ā ā 1,568 ā ā 1,068 Deductions (1) ā ā (250) ā ā (1,212) Balance, end of period ā $ 4,711 ā $ 3,393 (1) These amounts primarily relate to the write off of uncollectable accounts after collection efforts have been exhausted. Concentration of Credit Risk The Companyās most significant industry concentration of credit risk is with financial institutions from which the Company has recorded receivables and contracts in transit. These financial institutions provide financing to the Companyās customers for the purchase of a vehicle in the normal course of business. These receivables are short-term in nature and are from various financial institutions located throughout the United States. The Company has cash deposited in various financial institutions that is in excess of the insurance limits provided by the Federal Deposit Insurance Corporation. The amount in excess of FDIC limits at December 31, 2021 and 2020 was approximately $278.7 million and $188.1 million, respectively. The Company is potentially subject to concentrations of credit risk in accounts receivable. Concentrations of credit risk with respect to accounts receivable are limited due to the large number of customers and their geographic dispersion. Inventories, net New and used RV inventories consist primarily of new and used recreational vehicles held for sale valued using the specific-identification method and valued at the lower of cost or net realizable value. Cost includes purchase costs, reconditioning costs, dealer-installed accessories, and freight. For vehicles accepted in trades, the cost is the fair value of such used vehicles at the time of the trade-in. Products, parts, accessories, and other inventories primarily consist of retail travel and leisure specialty merchandise and are stated at lower of cost or net realizable value using the first in, first out method. The cost of RV and Outdoor Retail inventories primarily consists of the direct cost of the merchandise including freight. A portion of the products, parts, accessories and other inventory includes capitalized labor relating to assembly. Property and Equipment, net Property and equipment is recorded at historical cost, net of accumulated depreciation and amortization, and, if applicable, impairment charges. Depreciation of property and equipment is provided using the straight-line method over the following estimated useful lives of the assets: ā ā ā ā ā Years Building and improvements ā 40 Leasehold improvements ā 3 - 40 Furniture, fixtures and equipment ā 3 - 12 Software ā 3 - 5 ā Leasehold improvements are amortized over the useful lives of the assets or the remaining term of the respective lease, whichever is shorter. Leases After the adoption of Accounting Standards Codification (āASCā) 842, Leases (āASC 842ā) on January 1, 2019 the Company recognizes a right-of-use (āROUā) asset and a lease liability on the accompanying consolidated balance sheets for operating leases (with the exception of short-term leases based on the practical expedient elected by the Company) at the commencement date, in addition to finance leases that were previously also required to be recognized on the accompanying consolidated balance sheets, and recognizes expenses on the income statement in a similar manner to the previous guidance in ASC 840, Leases (āASC 840ā) (see Note 10 ā Lease Obligations). Goodwill and Other Intangible Assets Goodwill is reviewed at least annually for impairment, and more often when impairment indicators are present (see Note 7 ā Goodwill and Intangible Assets). Finite-lived intangibles are recorded at cost, net of accumulated amortization and, if applicable, impairment charges. Long-Lived Assets Long lived assets are included in property and equipment, which also includes capitalized software costs to be held and used. For the Companyās major software systems, such as its accounting and membership systems, its capitalized costs may include some internal or external costs to configure, install and test the software during the application development stage. The Company does not capitalize preliminary project costs, nor does it capitalize training, data conversion costs, maintenance or post development stage costs. The Companyās long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Companyās long-lived asset groups exist predominantly at the individual location level and the associated impairment analysis involves the comparison of an asset groupās estimated future undiscounted cash flows over its remaining useful life to its respective carrying value, which primarily includes furniture, equipment, leasehold improvements, and operating lease assets. For long-lived asset groups identified with carrying values not recoverable by future undiscounted cash flows, impairment charges are recognized to the extent the sum of the discounted future cash flows from the use of the asset group is less than the carrying value. The impairment charge is allocated to the individual long-lived assets within an asset group; however, an individual long-lived asset is not impaired below its individual fair value, if readily determinable. The measurement of any impairment loss includes estimation of the fair value of the asset groupās respective operating lease assets, which includes estimates of market rental rates based on comparable lease transactions. Long-Term Debt The fair value of the Companyās long-term debt is estimated based on the quoted market prices for the same or similar issues or on the current rates offered for debt of the same or similar remaining maturities. Revenue Recognition Revenues are recognized by the Company when control of the promised goods or services is transferred to its customers in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. Sales and other taxes collected from the customer concurrent with revenue-producing activities are excluded from revenue. Incidental items that are immaterial in the context of the contract are recognized as expense. The Companyās contracts with customers may include multiple performance obligations. For such arrangements, the Company allocates revenue to each performance obligation based on its relative stand-alone selling price. The Company generally determines stand-alone selling prices based on the prices charged to customers or using the adjusted market assessment approach. The Company presents disaggregated revenue on its consolidated statements of operations. Good Sam Services and Plans revenue consists of revenue from publications, consumer shows, and marketing fees from various consumer services and plans. Roadside Assistance (āRAā) revenues are deferred and recognized over the contractual life of the membership. RA claim expenses are recognized when incurred. Marketing fees for finance, insurance, extended service and other similar products are recognized as variable consideration, net of estimated cancellations, if applicable, when a product contract payment has been received or financing has been arranged. These marketing fees are recorded net as the Company acts as an agent in the transaction. The related estimate for cancellations on the marketing fees for multi-year finance and insurance products utilize actuarial analysis to estimate the exposure. Promotional expenses consist primarily of direct mail advertising expenses and renewal expenses and are expensed at the time related materials are mailed. Newsstand sales of publications and related expenses are recorded as variable consideration at the time of delivery, net of estimated returns. Subscription sales of publications are reflected in income over the lives of the subscriptions. The related selling expenses are expensed as incurred. Advertising revenues and related expenses are recorded at the time of delivery. Revenue and related expenses for consumer shows are recognized when the show occurs. RV vehicle revenue consists of sales of new and used recreational vehicles, sales of RV parts and services, and commissions on the related finance and insurance contracts. Revenue from the sale of recreational vehicles is recognized upon completion of the sale to the customer. Conditions to completing a sale include having an agreement with the customer, including pricing, whereby the sales price must be reasonably expected to be collected and having control transferred to the customer. Revenue from RV-related parts, service and other products sales is recognized over time as work is completed, and when parts or other products are delivered to the Companyās customers. For service and parts revenues recorded over time, the Company utilizes a method that considers total costs incurred to date and the applicable margin in relation to total expected efforts to complete our performance obligation in order to determine the appropriate amount of revenue to recognize over time. Finance and insurance revenue is recorded net, since the Company is acting as an agent in the transaction, and is recognized when a finance and insurance product contract payment has been received or financing has been arranged. The proceeds the Company receives for arranging financing contracts, selling extended service contracts, and selling other products, are subject to chargebacks if the customer terminates the respective contract earlier than a stated period. In the case of insurance and service contracts, the stated period typically extends from one to five years with the refundable commission balance declining over the contract term. These proceeds are recorded as variable consideration, net of estimated chargebacks. Chargebacks are estimated based on ultimate future cancellation rates by product type and year sold using a combination of actuarial methods and leveraging the Companyās historical experience from the past eight years , adjusted for new consumer trends. The chargeback liabilities included in the estimate of variable consideration totaled $68.8 million and $58.9 million as of December 31, 2021 and December 31, 2020, respectively. The remaining RV and Outdoor retail revenue consists of sales of products, service and other, including RV accessories and supplies, RV furniture, camping, hunting, fishing, skiing, snowboarding, bicycling, skateboarding, marine and watersport equipment and supplies. Revenue from products, service and other is recognized over time as work is completed, and when parts or other products are delivered to the Companyās customers. For service and parts revenues recorded over time, the Company utilizes a method that considers total costs incurred to date and the applicable margin in relation to total expected efforts to complete our performance obligation in order to determine the appropriate amount of revenue to recognize over time. E-commerce sales are recognized when the product is shipped and recorded as variable consideration, which is net of anticipated merchandise returns that reduce revenue and cost of sales in the period that the related sales are recorded. Good Sam Club revenue consists of revenue from club membership fees and royalty fees from co-branded credit cards. Membership revenue is generated from annual, multiyear and lifetime memberships. The revenue and expenses associated with these memberships are deferred and amortized over the membership period. Unearned revenue and profit are subject to revisions as the membership progresses to completion. Revisions to membership period estimates would change the amount of income and expense amortized in future accounting periods. For lifetime memberships, an 18-year period is used, which is the actuarially determined estimated fulfillment period. Royalty revenue is earned under the terms of an arrangement with a third-party credit card provider based on a percentage of the Companyās co-branded credit card portfolio retail spending with such third-party credit card provider and for acquiring new cardholders. The Company does not adjust the promised amount of consideration for the effects of a significant financing component if the Company expects, at contract inception, that the period of time between payment and transfer of the promised goods or services will be one year or less. The Company expenses sales commissions when incurred in cases where the amortization period of those otherwise capitalized sales commissions would have been one year or less. The Company does not disclose the value of unsatisfied performance obligations for revenue streams for (i) contracts with an original expected length of one year or less and (ii) contracts for which the Company recognizes revenue at the amount to which it has the right to invoice for services performed. The Company accounts for shipping and handling as activities to fulfill the promise to transfer the good to the customer and does not evaluate whether shipping and handling is a separate performance obligation. Parts and Service Internal Profit The Companyās parts and service departments recondition the majority of used vehicles acquired by the Companyās used vehicle departments and perform minor preparatory work on new vehicles acquired by the Companyās new vehicle departments. The parts and service departments charge the new and used vehicle departments as if they were third parties in order to account for total activity performed by that department. The revenue and costs applicable to revenue associated with the internal work performed by the Companyās parts and service departments are eliminated in consolidation. The Company maintains a reserve for internal work order profits on vehicles that remain in inventories. Advertising Expenses Advertising expenses are expensed as incurred. Advertising expenses for the years ended December 31, 2021, 2020 and 2019 were $136.3 million, $96.3 million and $117.8 million, respectively. Advertising expenses relating to RV and Outdoor Retail segment were included in selling, general and administrative expenses in the consolidated statements of operations. Advertising expenses relating to the Good Sam Services and Plans segment were included in costs applicable to revenues in the consolidated statements of operations, since, by the nature of those revenue streams, they are integral to the generation of those revenues. Vendor Allowances As a component of the Companyās consolidated procurement program, the Company frequently enters into contracts with vendors that provide for payments of rebates or other allowances. These vendor payments are reflected in the carrying value of the inventory when earned or as progress is made toward earning the rebate or allowance and as a component of cost of sales as the inventory is sold. Certain of these vendor contracts provide for rebates and other allowances that are contingent upon the Company meeting specified performance measures such as a cumulative level of purchases over a specified period of time. Such contingent rebates and other allowances are given accounting recognition at the point at which achievement of the specified performance measures are deemed to be probable and reasonably estimable. Shipping and Handling Fees and Costs The Company reports shipping and handling costs billed to customers as a component of revenues, and related costs are reported as a component of costs applicable to revenues. For the years ended December 31, 2021, 2020, and 2019, $8.0 million, $8.2 million, and $6.2 million of shipping and handling fees, respectively, were included in the RV and Outdoor Retail segment as revenue. Income Taxes The Company recognizes deferred tax assets and liabilities based on the asset and liability method, which requires an adjustment to the deferred tax asset or liability to reflect income tax rates currently in effect. When income tax rates increase or decrease, a corresponding adjustment to income tax expense is recorded by applying the rate change to the cumulative temporary differences. The Company recognizes the tax benefit from an uncertain tax position in accordance with accounting guidance on accounting for uncertainty in income taxes. The Company classifies interest and penalties relating to income taxes as income tax expense. See Note 11 ā Income Taxes for additional information. Reclassifications of Prior Period Amounts Certain prior-period amounts have been reclassified to conform to the current period presentation. Specifically, the current and noncurrent portions of finance lease liabilities have been reclassified to be presented separately from current and noncurrent portions of long-term debt, respectively, in the accompanying consolidated balance sheet as of December 31, 2020. Further, the payments on finance leases have been reclassified to be presented separately from payments on long-term debt in the accompanying consolidated statement of cash flows for the years ended December 31, 2020 and 2019. Additionally, for the years ended December 31, 2020 and 2019, the equity-based compensation and non-controlling interest adjustment line items in the accompanying consolidated statements of stockholders' equity (deficit) have been reclassified to present the equity-based compensation allocated to the non-controlling interest in the non-controlling interest column with an offsetting reclassification to the non-controlling interest adjustment line item. Recently Adopted Accounting Pronouncements In December 2019, the Financial Accounting Standards Board (āFASBā) issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (āASU 2019-12ā). This standard reduces complexity by removing specific exceptions to general principles related to intraperiod tax allocations, ownership changes in foreign investments, and interim period income tax accounting for year-to-date losses that exceed anticipated losses. This standard also simplifies accounting for franchise taxes that are partially based on income, transactions with a government that result in a step up in the tax basis of goodwill, separate financial statements of legal entities that are not subject to tax, and enacted changes in tax laws in interim periods. The Company adopted ASU 2019-12 as of January 1, 2021 and the adoption did not materially impact its consolidated financial statements. Recently Issued Accounting Pronouncements In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (āASU 2021-08ā). This standard requires contract assets and contract liabilities, such as certain receivables and deferred revenue, acquired in a business combination to be recognized and measured by the acquirer on the acquisition date in accordance with Accounting Standards Codification (āASCā) 606, Revenue from Contracts with Customers. Generally, this new guidance will result in the acquirer recognizing contract assets and contract liabilities at the same amounts recorded by the acquiree instead of recording those balances at fair value. This standard should be applied prospectively to acquisitions occurring after the effective date. The standard will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022, with early adoption permitted. The Company early adopted ASU 2021-08 as of January 1, 2022 and the Company does not expect that its adoption will materially impact its consolidated financial statements. |
