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Inventories and Floor Plan Payables

3 Months Ended

Mar. 31, 2024

3. Inventories and Floor Plan Payables

Inventories consisted of the following (in thousands):


	March 31,		December 31,		March 31,
	2024		2023		2023
Good Sam services and plans	$	392	$	452	$	530
New RVs		1,469,193		1,378,403		1,219,889
Used RVs		389,810		464,833		510,689
Products, parts, accessories and other		218,197		199,261		248,998
	$	2,077,592	$	2,042,949	$	1,980,106

Substantially all of the Company’s new RV inventory and certain of its used RV inventory, included in the RV and Outdoor Retail segment, is financed by a floor plan credit agreement (“Floor Plan Facility”) with a syndication of banks (“Floor Plan Lenders”).

As of March 31, 2024, December 31, 2023, and March 31, 2023, the applicable interest rate for the floor plan notes payable under the Floor Plan Facility was 7.87%, 7.28%, and 6.63%, respectively. As of March 31, 2024, December 31, 2023, and March 31, 2023, the applicable interest rate for revolving line of credit

borrowings under the Floor Plan Facility was 7.62%, 7.63%, and 6.83%, respectively. Additionally, under the Floor Plan Facility, the revolving line of credit borrowings are limited by a borrowing base calculation, which did not limit the borrowing capacity at March 31, 2024, December 31, 2023, and March 31, 2023.

Management has determined that the credit agreement governing the Floor Plan Facility includes subjective acceleration clauses, which could impact debt classification. Management believes that no events have occurred at March 31, 2024 that would trigger a subjective acceleration clause. Additionally, the credit agreement governing the Floor Plan Facility contains certain financial covenants. FreedomRoads, LLC was in compliance with all financial debt covenants at March 31, 2024, December 31, 2023, and March 31, 2023.

The following table details the outstanding amounts and available borrowings under the Floor Plan Facility as of March 31, 2024 and December 31, 2023, and March 31, 2023 (in thousands):


	March 31,		December 31,		March 31,
	2024		2023		2023
Floor Plan Facility
Notes payable - floor plan:
Total commitment	$	1,850,000	$	1,850,000	$	1,700,000
Less: borrowings, net of FLAIR offset account		(1,414,696)		(1,371,145)		(1,042,099)
Less: FLAIR offset account⁽¹⁾		(147,654)		(145,047)		(223,899)
Additional borrowing capacity		287,650		333,808		434,002
Less: short-term payable for sold inventory⁽²⁾		(91,299)		(41,577)		(61,520)
Less: purchase commitments⁽³⁾		(31,551)		(27,420)		(22,991)
Unencumbered borrowing capacity	$	164,800	$	264,811	$	349,491

Revolving line of credit:	$	70,000	$	70,000	$	70,000
Less: borrowings		(31,885)		(20,885)		(20,885)
Additional borrowing capacity	$	38,115	$	49,115	$	49,115

Letters of credit:
Total commitment	$	30,000	$	30,000	$	30,000
Less: outstanding letters of credit		(12,300)		(12,300)		(11,371)
Additional letters of credit capacity	$	17,700	$	17,700	$	18,629

(1)

Flooring line aggregate interest reduction (“FLAIR”) offset account that allows the Company to transfer cash to the Floor Plan Lenders as an offset to the payables under the Floor Plan Facility. The FLAIR offset account does not reduce the outstanding amount of loans under the Floor Plan Facility for purposes of determining the unencumbered borrowing capacity under the Floor Plan Facility.

(2)

The short-term payable represents the amount due for sold inventory. A payment for any floor plan units sold is due within three to ten business days of sale. Due to the short-term nature of these payables, the Company reclassifies the amounts from notes payable‒floor plan, net to accounts payable in the condensed consolidated balance sheets. Changes in the vehicle floor plan payable are reported as cash flows from financing activities in the condensed consolidated statements of cash flows.

(3)	Purchase commitments represent vehicles approved for floor plan financing where the inventory has not yet been received by the Company from the supplier and no floor plan borrowing is outstanding.