Thousands of recreational vehicle enthusiasts from every state and province in North America celebrated the RV industry’s centennial at The Rally, a four-day extravaganza at the Kentucky Exposition Center, July 22-25.
An estimated 10,000 attendees – including those staying onsite in 2,867 RVs and 5,000 day pass visitors – demonstrate a boom in the RV industry with consumers showing their commitment to the lifestyle they enjoy. The event also pumped more than $11 million into the local Louisville economy, according to a news release.
Attendees browsed the latest and greatest RV models from 42 RV manufacturers and dealers and enjoyed 350 product booths displaying the newest RV products, gadgets and services.
Fleetwood RV Inc., one of the largest motorhome manufacturers in the country, significantly exceeded sales projections, while Lazydays, a leading RV dealer, sold 20-plus units. Pat Terveer, national sales director for Newmar Corp., another leading RV manufacturer, said the company had good results that included selling six of the seven motorized models it displayed at the show, including its luxury new amenity-packed, 2011 Essex diesel motorhome, a $650,000 model. Camping World, which was an exhibitor in both the RV Sales and RV Accessories areas, reported strong sales results as well.
“All in all, we exceeded expectations and The Rally couldn’t have gone better,” said Mike Schneider, CEO of Affinity, parent company of The Rally’s hosts. “Our exhibitors came to Louisville hoping to have a good show and they had a great show. When you put these folks together with our consumers, it gives us a powerful buying group that spends money on the lifestyle they love.”
For more than a decade, the annual Rally event has been hosted by Affinity, the nation’s largest provider of outdoor recreation clubs, services, media and events. Affinity’s family of affiliated companies, including the Good Sam Club, and Trailer Life and MotorHome magazines, works to enhance its customers’ recreational experiences and build the communities that share and promote their fun and adventurous lifestyles. Headquartered in Ventura, Calif., Affinity is leading the industry’s rebound by connecting consumers directly with manufacturers through The Rally and its 34 other consumer shows held annually across the country.
“The Rally demonstrates what we talk about everyday – we enhance the outdoor experience through connecting our partners with consumers,” said Terry Thompson, vice president of sales for Affinity Media/RV and a key organizer of The Rally. “We provide invaluable services to our members and, in turn, help advertisers connect with their target audiences. We produced a wonderful event for attendees, which created fantastic sales for exhibitors.”
The Rally celebrated the 2010 RV centennial in two big ways.
- A special living display of 20 vintage RVs was organized in “Vintage Village,” showcasing models from 1937-1978.
- Bob Livingston, senior vice president of Affinity Media, took 50 families on a sold-out pre-Rally Centennial Caraventure, which gave RVers an inside look into RVs, past and present.
Rounding out The Rally’s extensive event schedule, RV industry gurus presented more than 150 educational seminars, while stand-up comic Bob Newhart and legendary country music artist Tanya Tucker performed during its nightly entertainment program. New this year was “The Rally’s Got Talent” contest featuring a wide variety of acts and interesting talents on Sunday evening, July 25.
The Rally Dog Show, “Kentucky K-9s!” returned for the seventh year. Pet adoptions were also held with the Louisville Metro Animal Services where 12 pets found new homes as a result. Both are popular, recurring events in which Rally-goers showcase their love for their beloved four-legged co-pilots.
For updates on The Rally 2011, taking place in Redmond, Ore. July 14-17, visit www.therally.com, Twitter at www.twitter.com/therally, and Eons by clicking on www.eons.com/groups/group/the-rally. Information and pictures can also be found on The Rally Facebook group page at www.facebook.com/therally.
The Rally is hosted by the following Affinity companies: the Good Sam Club, Trailer Life and MotorHome magazines, Trailer Life and Woodall’s Campground Directories, Camp Club USA, Coast to Coast Resorts and Camping World President’s Club.
After spending Saturday morning attending a seminar about ways to eat healthy while on the road in their recreational vehicle, David and Brenda Franklin of Nashville, Tenn., spent the afternoon at The Rally in Louisville, Ky., meeting new friends at a rally billed as the nation’s largest RV event.
“We retired about five years ago, bought an RV and we’ve been on the road ever since,” David Franklin told the Louisville Courier-Journal. “The only time we don’t travel is during the winter months, unless we have a wedding or some sort of event out of town.”
The Franklins were among thousands of RV enthusiasts who were in town since Wednesday (July 21) to attend the four-day rally at the Kentucky Exposition Center.
“People come for a variety of reasons,” said Sue Bray, an official with the Affinity Group Inc. (AGI) of Ventura, Calif., a leisure-industry company that organized the rally. “They come to be entertained, to learn and to shop. They also come because they like being part of a community.”
The event also is intended to celebrate the 100th anniversary of the RV industry.
Bray estimates that 2,500 to 3,000 RVs were parked at the Kentucky Exposition Center and at nearby Papa John’s Cardinal Stadium lots. She said organizers expected up to draw up to 15,000 people from across North America throughout the four-day event.
Affinity estimates that the event had an economic impact of $11 million, making it one of the more lucrative conventions or trade shows held in Louisville this year.
The annual RV rally was first held in 2000 in Wyoming; it was last held in Louisville in 2003. It was in Albuquerque, N.M., last year and is planned for Redmond, Ore., in 2011.
“We love Louisville and this facility,” Bray said of the Expo Center. “It’s really a good fit for us.”
The rally offered attendees a chance to see the latest in RVs. They could test drive and arrange to buy vehicles from among the hundreds to be displayed on site. There was also a trade show consisting of 300 booths on display, selling RV-related products and services.
The RVs on display ranged in cost from a $15,000 travel trailer to a $2 million coach.
Stephen Cooper, a salesman with Parliament Coach Corp., said attending the rally gives his company “a chance to plant a seed and get our name out there.”
“We rarely sell a coach at a show,” he said. “We just like to show people what we can do.”
The RV that Cooper brought is a 45-foot motorcoach valued at about $2 million.
“We custom-build the vehicles, just like many people do with their homes,” he said.
The rally also featured a dog show on Friday and a two-day pet adoption event for dogs and cats in need of a good home.
“RVers love their pets,” Bray said. “About 50% of people who own an RV bring their pets with them when they travel.”
Bray said four dogs and one cat were adopted through Louisville Metro Animal Services on Friday.
AGI is the parent company of RVBUSINESS.com.
The 11th Annual “The Rally,” sponsored by Affinity Group Inc. (AGI), opened this morning (July 22) with a rush of humanity bursting into the Kentucky Exposition Center (KEC) in Louisville, Ky.
“It was like opening the gates to a rock concert,” said Terry Thompson, AGI vice president of sales, RV media division. “We opened at 10 and you can’t walk through the aisles. It’s jammed wall to wall with people.”
The Rally has attracted the owners of more than 2,500 RVs from all parts of North America to enjoy the event, which includes some 1,000 new RVs on display, 500 vendor booths, 120 educational seminars and nightly entertainment.
For the first time, all exhibitor booths and RV displays are inside the KEC’s South Wing, which is an added bonus to this year’s event, as the weather outside is hot and humid.
“We knew it was hot in July in Kentucky but we didn’t know it was this hot,” Thompson said.
The Rally early-bird events got off to a good start Wednesday afternoon with a Coach Preview from 3 p.m. to 6 p.m.
“It was jammed with people, units were sold, things went better than they expected. We don’t always have a preview but we’re glad we did it,” Thompson said.
He called The Rally a “shot in the arm” for the RV industry.
Sherman Goldenberg, publisher of RVBusiness magazine and RVBUSINESS.com, echoed Thompson’s observation on The Rally’s early going, from the bulging crowds to the manufacturers’ early responses.
“Manufacturers seem to be upbeat,” Goldenberg said. ”The Rally seems to be particularly well-timed, pulling together a nice number of consumers at a time there would have been no national event. They appear to be happy about that.”
Thompson added, “When you have every aisle in an hall selling product, it shows you they (consumers) are alive and kicking, using their units and buying new units. I view it as a great commercial for the RV industry. This is the heartbeat right here; these are the people getting it done.”
Thompson said show sponsors expect a big day crowd to attend the event, which runs through Sunday.
AGI President Mike Schneider noted The Rally’s growth since its inception 11 years ago.
“We’re at the level with the show where we want to be to help service the industry, where additional exposure to the RV lifestyle and additional sales opportunities are important. That’s where we see our role in both those areas,” Schneider said. “The event itself speaks to the vibrancy of the market and Affinity’s role as a conduit between the industry and the consumers. We see ourselves providing a number of different forums that the industry can reach the consumer when they are thinking RV. We do it through magazines, websites, shows and this rally, among other places.”
Schneider tonight will host the Good Sam Club’s Welcome Mat Awards program, which annually recognizes RV friendly business across the U.S.
Comedian Bob Newhart wil entertain the crowd tonight, with Tanya Tucker scheduled for Friday night.
Louisville will be the recreational vehicle capital of the country this weekend, when thousands of RVs descend on the Kentucky Exposition Center for a four-day rally that billed as “the nation’s largest RV event.”
The rally runs Thursday through Sunday and is expected to draw about 15,000 RV enthusiasts from across North America to participate in and watch what organizers describe as “family-friendly activities,” including entertainment, RV seminars, talent contests and events for young people. The activities are open to the public, for a price.
The event also is intended to celebrate the 100th anniversary of the RV industry, the Louisville Courier-Journal reported.
Sue Bray, an official with the Affinity Group Inc. (AGI) of Ventura, Calif., a leisure-industry company that organized the rally, estimated that 2,500 to 3,000 RVs will be parked at the exposition center and at nearby Papa John’s Cardinal Stadium lots. They began arriving Tuesday.
Affinity estimates that the event will have an economic impact of $11 million, making it one of the more lucrative conventions or trade shows held in Louisville this year.
Bray said the Affinity Group annual RV rally was first held in 2000 in Wyoming. It was held previously in Louisville in 2003. It was in Perry, Ga., last year and is planned in Redmond, Ore., in 2011.
People with RVs have the “freedom to travel and have new experiences and to be able to do it in the comfort of your home.”
Among the RV owners in Louisville for the event are John and Paula Reynolds of Rockaway, N.J. He said the couple usually spends three months of the year on the road, taking their RV to rallies, going on camping trips and using it for other leisure travel.
Reynolds, who works as a bus mechanic and driver for a school district, said he enjoys “being able to go where you want to go, when you want to go and how you want to go.”
Reynolds said that he used to travel frequently on business but that he tired of “the mess …. Now I don’t fly any more. I don’t go on trains or buses, unless I absolutely have to. I get in my RV, and we go. I don’t have to wait in line for an airline, or be at a hotel by 6 p.m. And I get to sleep between my own sheets every night.”
Reynolds said driving his RV, a 36-foot long Fleetwood Fiesta Class A, is like driving a bus. He usually tows a car for local driving and brings along a couple of mountain bikes.
The Louisville rally will offer attendees a chance to see the latest in RVs and motorhomes. They can test-drive — and arrange to purchase — vehicles from among the hundreds to be displayed on site. In addition, there will be about 300 booths at a trade show with displays of RV-related products and services.
About 20 vintage RVs will be exhibited, and leisure-industry officials will present more than 150 seminars during the weekend on such topics as healthy cooking on the road, chassis systems, RV trouble-shooting techniques and RV caravan travel.
Evening entertainment will be centered in Freedom Hall. Comic Bob Newhart will be the headliner Thursday night, while Friday night’s concert will feature Tanya Tucker.
Thousands of recreational vehicle enthusiasts will celebrate the RV industry’s centennial at The Rally, a four-day extravaganza at the Kentucky Exposition Center (KEC) , July 22-25.
The Rally, now in its 11th year, will bring more than 10,000 RVers to the Bluegrass State to take part in countless fun and family-friendly activities, and includes high-profile entertainers, RV seminars, talent contests, a youth and teen program and a volunteer effort, according to a news release.
Attendees will see the latest and greatest in RVs and motorhomes and can test-drive and purchase from top manufacturers and dealers across the nation with more than 1,000 RV models to choose from. In addition, hundreds of booths will display the newest RV products, gadgets and services. A special living exhibit of 20 vintage RVs will be on display, organized by the RV historian from the RV/MH Hall of Fame in Elkhart, Ind.
RV industry gurus will present more than 150 seminars at The Rally 2010, giving guests the opportunity to meet experts who can answer questions about the RV lifestyle. More than 30 daily seminars will cover such topics as healthy cooking on the road, chassis systems, RV troubleshooting techniques and RV caravan travel — just to name a few.
The Rally 2010 will also bring the best in stage and screen to entertain attendees. Stand-up comic and actor Bob Newhart will be on hand to keep the audience amused with his hilarious stories on Thursday, July 22; while on Friday, July 23, legendary country music artist Tanya Tucker will perform her greatest hits. Bands will play throughout the event, while “The Rally’s Got Talent” contest will feature a wide variety of acts and interesting talents on Sunday evening, July 25.
RVers love their pets, and the popular Rally Dog Show, “Kentucky K-9s!” is returning for the seventh year, giving dog owners and their pets a chance to compete in categories such as Doggie Musical Chairs and the Double Vision look-a-like contest on July 23. The Rally is also offering two pet adoption days for dogs and cats in need of homes through Louisville Metro Animal Services on Friday, July 23, and Saturday, July 24.
While The Rally focuses mainly on fun and exploring the RV lifestyle, attendees will also have the opportunity to give back to the local community. A pre-rally volunteer service day with Brightside, Louisville’s “Keep America Beautiful” affiliate, will take place on Wednesday, July 21. Volunteers will participate in beautification projects throughout the city. In exchange for a guest’s participation, The Rally will provide one night of free dry camping on Tuesday, July 20, as well as transportation and a sack lunch on the project day.
“The Rally is more than just an exposition — it’s an experience that celebrates the RV lifestyle,” said Mike Schneider, CEO of Affinity Group Inc. (AGI), parent company of The Rally’s hosts. “With this year’s 100th anniversary, we’re delighted to offer a great lineup of attractions that the whole family will enjoy. If you’re in the market for an RV, this is also a unique opportunity to compare nearly every make and model in one central location while enjoying entertainment, exhibits, seminars and more. We look forward to welcoming guests from across the country in Louisville this summer.”
As part of the centennial festivities, the Good Sam Club, the world’s largest RV owners’ organization with nearly 1 million member families, announces an RV centennial promotion. Members may submit a story about their first RVing experience, and the writer of the winning entry receives 100 gallons of gasoline or diesel fuel. To enter, Good Sam Club members can visit the RV.net blog.
In addition, a pre-event Centennial Caraventure hosted by Bob Livingston, senior vice president and group publisher of Affinity Media, will take RVers on a caravan into RVs’ past and present. The adventure, designed for enthusiasts who want an in-depth look at the history and lifestyle of RVing, begins in Elkhart, the heart of the RV industry, on July 16. Participants will tour Amish Acres, the RV/MH Hall of Fame, Studebaker National Museum and the Newmar recreational vehicle factory. The event also includes tech and lifestyle seminars. The Caraventure ends July 19 at The Rally.
For more than a decade, the annual Rally event has been hosted by the Good Sam Club, Trailer Life and MotorHome magazines, Trailer Life and Woodall’s Campground directories, Camp Club USA, Coast to Coast Resorts and Camping World President’s Club. All the organizations are either owned by or affiliated with AGI, the nation’s largest provider of outdoor recreation clubs, services, media and events, headquartered in Ventura, Calif.
Daily admission to The Rally is $10 for adults; children ages 12 and under are free. RV sites start at $189 for two people, and all-activity Rally Passports (without RV parking) are priced at $69 per attendee. Visit www.therally.com for information and registration. Fans can also join The Rally Facebook group at www.facebook.com/therally, track The Rally on Twitter at www.twitter.com/therally, and get updates at Eons by clicking on www.eons.com/groups/group/the-rally.
RVBusiness magazine is launching the Third Annual RVBusiness Top 50 Dealer Awards — a quality-focused program that sets the bar for best business practices in the RV industry. A gala reception and dinner at the Rio All-Suite Hotel & Casino in Las Vegas will announce the winners Oct. 6 during the annual RV Dealers International Convention/Expo.
This year, RVBusiness expanded the awards to include recreational park model manufacturers, reflecting how significant their contributions have become in a rapidly changing marketplace. The awards name 10 Blue Ribbon retailers, and one organization receives the Dave Altman Award, the equivalent of RVBusiness’ “Lifetime Achievement Award.”
RV manufacturers nominate the best and most professional dealers for aftermarket parts stores, sales lots, service work, F&I departments and personnel matters in addition to civic and charitable contributions. Affinity Group Inc. (AGI), the parent company of RVBusiness and the nation’s largest provider of outdoor clubs, services, media and events to the North American RV and outdoor enthusiast market, then invites nominated dealers to submit applications. Applications are independently reviewed by a panel of industry experts, none of whom are directly associated with RVBusiness or Affinity.
RVBusiness recognizes the Top 50 award winners in the October edition, on RVBUSINESS.com, and in dealers’ local and regional newspapers. Winners also receive RVBT50 window decals, rights to use the RVBT50 logo in their advertising, plus exposure to millions of active RV enthusiasts in the pages — and on the websites — of Affinity’s RV-focused consumer magazines, including Trailer Life, MotorHome, Highways, Coast to Coast and Camping Life.
Supporting the RVBusiness Top 50 Dealer Awards this year are the following “Leadership Alliance” sponsors: ADP Lightspeed, Bank of the West, Blue Ox, Cummins Onan RV Generators, Freightliner Custom Chassis Corp., RV America Insurance, RV Trader Online and Protective.
“We felt that the pursuit of professionalism and top-notch consumer care finds an even more receptive ear this year than it did during the dregs of the recession, and the Dealer Awards sets the bar for best business practices,” said RVBusiness magazine Publisher Sherman Goldenberg. “Looking around at the state of the industry, we realize just how much we have to be thankful for. The current upbeat atmosphere within the commercial sector beats the heck out of where we all were at this time last year.”
RVBusiness previously announced special celebrity guest, conservative Republican columnist and bestselling author, Ann Coulter, as the keynote speaker during the award ceremony. Coulter will talk about a variety of hot political topics including the “Tea Party” movement and related conservative themes.
The Con/Expo is sponsored by the U.S. Recreation Vehicle Dealer Association (RVDA) and the Recreation Vehicle Dealers Association of Canada (RVDA Canada). Tickets for the dinner are $139 ($119 for RVDA members, Con/Expo exhibitors and Top 50 dealer guests), and are available at the convention or at RVBusiness.com.
About the Top 50 RV Dealers Program:
The program’s purpose is to showcase credible role models and establish best business practices benchmarks at the retail level of the RV industry in terms of staff training, performing warranty and service work, managing aftermarket stores, superior consumer care and being good citizens of their respective communities. The dealerships were selected among those nominated as the best by the nation’s RV manufacturers. The program was founded and coordinated by RVBusiness magazine with additional support provided by the Leadership Alliance.
Affinity, www.affinitygroup.com, is the nation’s largest provider of outdoor clubs, services, media and events that service the safety, security, comfort and convenience needs of the North American recreational vehicle (RV) and outdoor enthusiast market. By providing information, insights, and resources, the company champions the fun, freedom, and adventure of recreation in motion. The company works to enhance its customers’ recreational experiences and build the communities that share and promote their fun and adventurous lifestyles.
RVBUSINESS.com has completed more than a year of impressive viewership growth since unveiling its remodeled website in March of 2009.
An independent survey by Compete Inc. (www.Compete.com <http://www.Compete.com> ), a third-party web analytics firm, places the number of unique RVBUSINESS.com visitors in April at 23,792, a 12.2% increase over the previous month and a 113.4% increase over April of 2009 when the redesigned site debuted.
During that 14-month period ending April 30, according to Google Analytics, the site recorded 3.1 million pageviews as the busiest business-to-business site operated by Ventura, Calif.-based Affinity Group Inc., RVB’s parent company and one of the nation’s leading providers of outdoor recreation media and clubs.
“We’re pleased that our industry readers have responded so well to our daily efforts to build up the content and functionality of RVBUSINESS.com,” said RVB Publisher Sherman Goldenberg, who’s based out of the RV-building hub of Elkhart, Ind. “And we hope they appreciate the fact that the site is run by veteran newspaper people who adhere to RVB’s traditional, even-handed approach to industry news and care about the veracity of the news they disseminate
“Central to this whole effort,” he added, “is RVB Web Editor Steve Bibler, a former Elkhart Truth staffer who also doubles as editor of RVB’s sister publication, Woodall’s Campground Management. Bibler handles the hour-by-hour task of posting stories on RVBUSINESS.com as well as WOODALLSCM.com and is backed up by support people in Southern California and Bowling Green, Ky.”
The RVBUSINESS.com site, an offshoot of RVBusiness magazine, typically offers industry readers a selection of 12 Breaking News stories daily, as well as regular, staff-written “News in Focus” and “Retail Pulse” dealer profiles plus video, an industry calendar and an automatic stock ticker.
The redesigned site also distributes timely breaking industry news via RSS feeds and daily e-email and features video links on news postings, a video screen for news and advertising, new interactive ad buttons that drive better click-thru rates to advertisers and enhanced interactivity among websites.
Standard & Poor’s Ratings Services today (April 1) raised its ratings on Ventura, Calif.-based direct marketing company Affinity Group Holding Inc. (AGHI) and its operating subsidiary, Affinity Group Inc. (together referred to as “Affinity Group”).
“We raised our corporate credit rating on the company to ‘CCC’ from ‘D’ and raised our issue-level rating on AGHI’s 10.875% senior notes due 2012 to ‘CC’ (two notches lower than the ‘CCC’ corporate credit rating on the company) from ‘D’. The recovery rating on this debt remains unchanged at ‘6’, indicating our expectation of negligible (0%-10%) recovery in the event of a payment default,” according to a news release.
In addition, S&P noted, “We raised our issue-level rating on Affinity Group Inc.’s (AGI) 9% senior subordinated notes due 2012 to ‘CC’ (two notches lower than the ‘CCC’ corporate credit rating on the company) from ‘C’. We revised the recovery rating on this debt to ‘6’ from ‘5’. The revision of the recovery rating on the 9% senior subordinated notes due 2012 reflects the increase in secured debt following the refinancing of its credit agreement and the company entering into a new asset-based revolving credit facility. The recovery rating of ‘6’ indicates our expectation of negligible (0%-10%) recovery in the event of a payment default.”
AGI is the parent company of RVBUSINESS.com.
For more about this action, read more from the news release.
The ‘CCC’ corporate rating reflects the company’s thin liquidity, modest EBITDA coverage of interest and declining operating performance. It also reflects our concern that the company’s margin of compliance with covenants could diminish this year, that discretionary cash flow may be weak in 2010, and that the company may not be able to absorb the cost of an amendment, should it require covenant relief.
Standard & Poor’s is concerned that the company faces a tough challenge to maintain an adequate margin of compliance under its new senior credit facility because of continued pressure on the business from the weak economy and successive tightening of covenants, which begin Sept. 30, 2010.
Furthermore, the new credit facility could mature in November 2011, depending on Affinity’s ability to repay or refinance other debt.
On March 1, 2010, the company refinanced its credit agreement. Its first-lien facility was set to expire on March 31, 2010. The company also had second-lien notes due July 31, 2010. Both of these obligations were refinanced by the new $144.3 million senior secured facility. About $25.4 million of AGHI 10.875% senior notes were due on March 15, 2010. AGHI acquired these notes from the affiliates that held them and subsequently cancelled the obligations.
In conjunction with the transaction, AGI’s subsidiary Camping World Inc. entered into a credit agreement for an asset-based lending facility of up to $22 million, of which $10 million is available for letters of credit and $12 million is available for revolving loans. Despite the refinancing, we believe that refinancing risk still exists. The term loans mature on the earlier of March 15, 2015, or 90 days prior to the maturity of either AGI’s 9% senior subordinated notes due Feb. 15, 2012, or AGHI’s 10.875% senior notes due Feb. 15, 2012. This could mean that the new $144.3 million term loans will become due in November 2011.
Affinity Group is a direct marketer and retailer targeting North American RV owners and outdoor enthusiasts. Revenue and profitability deteriorated over the past two years because the weak economy put pressure on consumer discretionary spending and reduced advertising spending. The company is also indirectly vulnerable to fuel shortages and increases in gas prices. During 2009, EBITDA (excluding impairment charges) fell 26% year-over-year, on a 10% revenue decline, reflecting lower advertising sales, a decrease in licensing fees because of an agreement that was terminated in 2008 and a decline in exhibitor revenues from fewer consumer shows. The retail segment also contributed to the overall revenue decline, reporting a 7% revenue decline year-over-year because of the closure of some stores and a decline of 4.5% in same store sales. We are concerned that revenue and EBITDA could continue to decline if the economy remains weak.
Pro forma for the refinancing, lease-adjusted debt to EBITDA is high at roughly 8.7x, up from 7.7x for the 2008 year-end. Unadjusted EBITDA coverage of interest expense for the same period was thin at 1x, a decrease from the company’s EBITDA coverage of interest of 1.6x for 2008. We are concerned that the company’s EBITDA coverage of interest could deteriorate further in 2010 if EBITDA continues to decline. Moreover, if the margin of compliance with covenants thins, we are concerned that interest coverage and liquidity may not be sufficient to absorb the increased interest costs and fees associated with an amendment. Discretionary cash flow in 2009 was modestly positive.
Discretionary cash flow increased from the year ended Dec. 31, 2009, and resulted in a 29% conversion of EBITDA, because of lower capital expenditures.
The company did not open any stores in 2009. Although we expect that capital expenditures in 2010 will remain relatively low, we believe discretionary cash flow could decline as a result of higher interest expense and pressure on EBITDA.
Liquidity is weak. The company had $10.1 million of cash at Dec. 31, 2009, and we expect its cash balance will remain low. Its subsidiary Camping World Inc. entered into a credit agreement for an asset-based lending facility of up to $22 million. The facility could become due in September 2011. The facility matures on March 1, 2013, or 60 days prior to the maturity date of the new senior credit facility, or 120 days prior to the earlier maturity date of AGI’s 9% subordinated and AGHI’s 10.875% senior notes. Also, the term loan could mature in November 2011. The term loans mature on the earlier of March 15, 2015, or 90 days prior to the maturity of either the AGI’s 9% senior subordinated notes due Feb. 15, 2012, or AGHI’s 10.875% senior notes due Feb. 15, 2012. We remain concerned about refinancing risk because a significant portion of Affinity Group’s debt could mature in 2011 if these notes are not refinanced. Near-term debt maturities, however, are modest. The company’s term loan amortizes at a rate of 1% annually and quarterly amortization payments begin March 1, 2011.
We are also concerned about the company’s margin of compliance with financial covenants. Despite the refinancing, the company could have difficulty maintaining an adequate cushion of compliance under its new senior credit facility because of continued pressure on the business from the weak economy and because of successive tightening which begin Sept. 30, 2010. If the company’s margin of compliance thins, we are concerned that the company interest coverage and cash flow may not be sufficient to absorb the increased interest costs and fees associated with an amendment.
The rating outlook is negative and reflects our concern about liquidity amid continuing pressure on EBITDA and the possibility that a significant portion of its capital structure could become due in 2011. We are concerned both about the company’s ability to maintain an adequate cushion of compliance with its financial covenants and that it may not be able to meet the costs of an amendment should its margin of compliance with covenants diminish. We could lower the rating if we become convinced that the company could violate covenants within the near term or if it does not refinance its capital structure in a timely fashion. Based on our estimates, we believe the company could violate its interest coverage covenant as early as June. 30, 2010, if EBITDA does not increase. Factors that could contribute to such a scenario include prolonged economic weakness that contributes to further declines in advertising revenue and pressure on the retail segment. Although less likely, we could raise the rating if operating performance rebounds, if interest coverage and discretionary cash flow improve, if these trends widen the margin of compliance with financial covenants and if the risk of a meaningful near-term maturity is removed.
FreedomRoads/Camping World RV, the nation’s largest recreational vehicle retailer, was recognized for the fifth consecutive year as the No.1 seller of towable RVs by Statistical Surveys Inc. (SSI) in its recent 2009 annual sales awards.
This award comes on the heels of the retailer’s recent No. 1 ranking in motorized sales for the 2009 calendar year, according to a Camping World news release.
“We are very excited to be the leader in towable sales again in 2009,” said Roger Nuttall, vice president and CFO of FreedomRoads/Camping World RV. “We are proud of this accomplishment and are off to a great sales year in 2010 for travel trailers and fifth-wheels. We have great manufacturer partners and our goal is simple; increase our share organically in each of our markets.”
FreedomRoads/Camping World RV dealerships increased market share over the No.1 ranking in 2008. Companywide, 15,872 total new and used towable RVs were sold including non-reporting states to SSI. All U.S. dealers sold 150,322 towables in 2009.
Camping World RV also sold 6,262 motorized units, of which 2,567 were “new.” All U.S. dealers sold 18,854 motorized units in 2009.
“As with being No. 1 in motorized sales, the fact that we are also No. 1 in towable sales exhibits our desire to serve the entire RV community with quality manufacturers, service and parts,” said Marcus Lemonis, chairman and CEO of FreedomRoads/Camping World. “We are very proud of this honor and all the praise goes to our associates as well as the entire RV industry for keeping consumers excited and interested in our great lifestyle.”
Statistical Surveys’ awards are based solely on unit volume according to independent data gathered annually.
FreedomRoads/Camping World RV operates a network of well-established local and regional RV dealerships, RV maintenance/repair centers and RV rental stations.
Camping World is owned by Affinity Group Inc. (AGI), parent company of RVBUSINESS.com.
Ventura, Calif.-based Affinity Group Inc. (AGI) announced today (Mar. 3) that it has completed the refinancing of its senior bank debt. Affinity has entered into a new $144 million loan agreement that allows the company to restructure its existing debt, which was set to mature on March 31.
“We’re very pleased with this direction and the stability it gives Affinity as we grow our core business to new heights,” said Affinity CEO Mike Schneider. “As we begin to exit a major financial downturn, this financing puts us in a strong position to capitalize on new revenue growth opportunities and continue our commitment to leadership in the outdoor recreation marketplace.”
A multi-media company, Affinity manages several membership clubs including the Good Sam Club, the world’s largest RV owner’s organization, and operates numerous consumer and business websites, publications and shows for RV, powersports, marine and outdoor enthusiasts.
The company also owns Camping World, the largest aftermarket retailer in the RV industry with more than 75 locations throughout the United States.
Moelis & Company acted as exclusive financial advisor and sole placement agent to Affinity in connection with the refinancing.