Will the Camping World IPO Pitch a Tent for Unicorn Hunters?

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Several initial public offerings are expected to hit the market in the first week of October, after several successful IPOs in the month of September. One such IPO that 24/7 Wall St. is watching is Camping World Holdings. The stock will list on the New York Stock Exchange under the CWH stock ticker.

What matters here is twofold. Camping World is not a high-tech or a biotech outfit. It is a basic economy stock that should be in the “slow and steady” category of companies. It is also tied to the rather public entrepreneur Marcus Lemonis.

The Lincolnshire, Illinois-based company is the largest national network of RV-centric retail locations in the United States. It has a network of 120 stores and a membership platform, with 1.7 million Good Sam Club members dedicated to the RV lifestyle, with over 3 million active customers and 11 million unique contacts in its database.

We looked at its compounded annual growth rate (CAGR) for five years, on top of its financial data presented in the filing for fiscal year 2015. Camping World’s total revenue was $3.333 billion (21.3% CAGR), and net income was $178.5 million (139.8% CAGR). Adjusted EBITDA was $253.7 million (25.6% CAGR).

Its filing said:

We believe we are significantly larger in scale than our next largest competitor. We provide new and used RVs, repair parts, RV accessories and supplies, RV repair and maintenance services, protection plans, travel assistance plans, RV financing, and lifestyle products and services for new and existing RV owners. Our retail locations are staffed with knowledgeable local team members, providing customers access to extensive RV expertise. Our retail locations are strategically located in key national RV markets. In 2015, our network generated approximately 3.5 million unique transactions, continuing to build our Active Customer database.

As of September 26, Camping World was set to sell 11,363,636 shares at $21.00 to $23.00 apiece. Camping World’s underwriting syndicate is rather large: Goldman Sachs, JPMorgan, Merrill Lynch, Credit Suisse, Robert W. Baird, KeyBanc Capital Markets, Wells Fargo Securities and Stephens.

There is one issue to consider here, and it is a disclosure made by the company right up front on its S-1 filings:

We will have three classes of common stock outstanding after this offering: Class A common stock, Class B common stock and Class C common stock. That is a complex structure.

Three additional notes on that structure from the filing were shown as follows:

Each share of our Class A common stock and Class B common stock entitles its holders to one vote per share on all matters presented to our stockholders generally; provided that, for as long as the ML Related Parties (as defined herein and currently indirectly owned by each of Stephen Adams and our Chairman and Chief Executive Officer, Marcus Lemonis), directly or indirectly, beneficially own in the aggregate 27.5% or more of all of the outstanding common units of CWGS Enterprises, LLC (“CWGS, LLC”), the shares of Class B common stock held by the ML Related Parties will entitle the ML Related Parties to the number of votes necessary such that the ML Related Parties, in the aggregate, cast 47% of the total votes eligible to be cast by all of our stockholders on all matters presented to a vote of our stockholders generally. Additionally, we will have one authorized share of Class C common stock that will entitle its holder to the number of votes necessary such that the holder casts 5% of the total votes eligible to be cast by all of our stockholders on all matters presented to a vote of our stockholders generally. We will issue such share of Class C common stock to ML RV Group, LLC, a Delaware limited liability company, wholly-owned by our Chairman and Chief Executive Officer, Marcus Lemonis. Upon a Class C Change of Control (as defined herein under “Description of Capital Stock”), our Class C common stock shall no longer have any voting rights, such share of our Class C common stock will be cancelled for no consideration and will be retired, and we will not reissue such share of Class C common stock.

We will be a holding company, and upon consummation of this offering and the application of proceeds therefrom, our principal asset will be the common units of CWGS,  LLC that we purchase from CWGS, LLC and acquire in connection with the consummation of the Transactions (as defined herein) from certain of the indirect owners of membership interests in CWGS, LLC, collectively representing an aggregate 22.1% economic interest in CWGS, LLC. The remaining 77.9% economic interest in CWGS, LLC will be owned by the Continuing Equity Owners through their ownership of common units.

We will be the sole managing member of CWGS, LLC. We will operate and control all of the business and affairs of CWGS, LLC and, through CWGS, LLC and its subsidiaries, conduct our business.

This is going to be one to watch. It could make a big difference for how other companies in retail that have not come public yet are willing to view the public market.

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