onew-20231231

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

________________________________________________________

FORM 10-Q

________________________________________________________


þ			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2023


o			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to ___________

Commission file number: 001-39213

OneWater Marine Inc.

(Exact name of registrant as specified in its charter)


Delaware			83-4330138
(State or other jurisdiction of incorporation or organization)			(IRS Employer Identification No.)

6275 Lanier Islands Parkway Buford, Georgia			30518
(Address of principal executive offices)			(Zip code)

(Registrant’s telephone number, including area code): (678) 541-6300

________________________________________________________

Securities registered pursuant to Section 12(b) of the Exchange Act:

Title of Each Class

Trading Symbol(s)

Name of Each Exchange on Which Registered

Class A common stock, par value $0.01 per share

ONEW

The Nasdaq Global Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.x Yes o No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). x Yes o No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). o Yes x No

The registrant had 14,569,936 shares of Class A common stock, par value $0.01 per share, and 1,429,940 shares of Class B common stock, par value $0.01 per share, outstanding as of January 24, 2024.

ONEWATER MARINE INC.

FORM 10-Q

FOR THE QUARTER ENDED DECEMBER 31, 2023

TABLE OF CONTENTS


		Page
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS		3
PART I – FINANCIAL INFORMATION		5
Item 1.	Condensed Consolidated Financial Statements (Unaudited)	5
	Condensed Consolidated Balance Sheets as of December 31, 2023 and September 30, 2023	5
	Condensed Consolidated Statements of Operations for the Three Months Ended December 31, 2023 and December 31, 2022	6
	Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three Months Ended December 31, 2023 and December 31, 2022	7
	Condensed Consolidated Statements of Stockholders’ Equity for the Three Months Ended December 31, 2023 and December 31, 2022	8
	Condensed Consolidated Statements of Cash Flows for the Three Months Ended December 31, 2023 and December 31, 2022	9
	Notes to the Condensed Consolidated Financial Statements	10
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3.	Quantitative and Qualitative Disclosure about Market Risk	36
Item 4.	Controls and Procedures	36
PART II – OTHER INFORMATION		36
Item 1.	Legal Proceedings	36
Item 1A.	Risk Factors	36
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	37
Item 3.	Defaults Upon Senior Securities	37
Item 4.	Mine Safety Disclosures	37
Item 5.	Other Information	37
Item 6.	Exhibits	38

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

The information in this Quarterly Report on Form 10-Q includes “forward-looking statements.” All statements, other than statements of historical fact included in this Quarterly Report on Form 10-Q, regarding our strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects, plans and objectives of management are forward-looking statements. When used in this Quarterly Report on Form 10-Q, the words “could,” “believe,” “anticipate,” “intend,” “estimate,” “expect,” “project” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. These forward-looking statements are based on our current expectations and assumptions about future events and are based on currently available information as to the outcome and timing of future events. When considering forward-looking statements, you should keep in mind the risk factors and other cautionary statements described under the headings “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business” included in our Annual Report on Form 10-K for the year ended September 30, 2023, filed with the U.S. Securities and Exchange Commission (the “SEC”) on December 14, 2023, and under the headings “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Quarterly Report on Form 10-Q. These forward-looking statements are based on management’s current belief, based on currently available information, as to the outcome and timing of future events.

Forward-looking statements may include statements about:

•general economic conditions, including changes in employment levels, rates of inflation, consumer demand, preferences and confidence levels, fuel prices, levels of discretionary income, consumer spending patterns and uncertainty regarding the timing, pace and extent of an economic recovery in the United States;

•economic conditions in certain geographic regions in which we primarily generate our revenue;

•credit markets and the availability and cost of borrowed funds;

•our business strategy, including acquisitions and Dealership same-store growth or dispositions;

•our ability to integrate acquisitions;

•competition;

•our ability to maintain our relationships with manufacturers, including meeting the requirements of our dealer agreements and receiving the benefits of certain manufacturer incentives;

•changes in industry seasonality and changes in demand for our products and our ability to maintain acceptable pricing for our products and services, including financing, insurance and extended service contracts;

•effects of an inflationary environment on the cost of the products we sell and personnel and other expenses that are incurred within our operations;

•our ability to finance working capital and capital expenditures;

•our operating cash flows, the availability of capital and our liquidity;

•our future revenue, Dealership same-store sales, income, financial condition, and operating performance;

•our ability to sustain and improve our utilization, revenue and margins;

•seasonality and inclement weather such as hurricanes, severe storms, fire and floods, generally and in certain geographic regions in which we primarily generate our revenue;

•any potential tax savings we may realize as a result of our organizational structure;

•our future operating results and profitability; and

•plans, objectives, expectations and intentions contained in this Form 10-Q that are not historical.

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We caution you that these forward-looking statements are subject to all of the risks and uncertainties, most of which are difficult to predict and many of which are beyond our control. Should one or more of the risks or uncertainties occur, or should underlying assumptions prove incorrect, our actual results and plans could differ materially from those expressed in any forward-looking statements. These risks include, but are not limited to:

•decline in demand for our products and services;

•any global public health concerns, including, for example, our ability to safely operate our locations, access to inventory, and customer demand;

•the seasonality and volatility of the boat industry;

•general domestic and international political and regulatory conditions, including changes in tax or fiscal policy and the effects of past or future restrictions on various commercial and economic activities in response to public health concerns;

•environmental conditions and real or perceived human health or safety risks;

•our acquisition strategies and our ability to integrate additional marine retailers;

•effects of industry wide supply chain challenges and our ability to manage our inventory;

•our ability to retain key personnel and the effects of labor shortages;

•the inability to comply with the financial and other covenants and metrics in our credit facilities;

•cash flow and access to capital;

•the timing of development expenditures; and

• the other risks described under “Risk Factors” and discussed elsewhere in our Annual Report on Form 10-K for the year ended September 30, 2023 and discussed elsewhere in this Quarterly Report on Form 10-Q.

All forward-looking statements, expressed or implied, included in this Quarterly Report on Form 10-Q are expressly qualified in their entirety by this cautionary statement. This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that we or persons acting on our behalf may issue.

Any forward-looking statement that we make in this Quarterly Report on Form 10-Q speaks only as of the date of such statement. Except as otherwise required by applicable law, we disclaim any duty to update any forward-looking statements, all of which are expressly qualified by the statements in this section, to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q.

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PART I – FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements (Unaudited)

ONEWATER MARINE INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except par value and share data)

(Unaudited)


	December 31, 2023		September 30, 2023
ASSETS
CURRENT ASSETS:
Cash	$	44,569	$	84,648
Restricted cash	9,584		8,662
Accounts receivable, net	47,885		113,175
Inventories, net	706,805		609,616
Prepaid expenses and other current assets	78,469		65,798
Total current assets	887,312		881,899
Property and equipment, net	83,221		81,532
Operating lease right-of-use assets	133,699		135,667
Other long-term assets	7,827		6,069
Deferred tax assets, net	33,239		35,066
Intangible assets, net	211,173		212,324
Goodwill	336,602		336,602
Total assets	$	1,693,073	$	1,689,159
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	18,897	$	27,113
Other payables and accrued expenses	42,918		54,826
Customer deposits	50,977		51,649
Notes payable – floor plan	562,815		489,024
Current portion of operating lease liabilities	14,843		14,568
Current portion of long-term debt, net	6,125		29,324
Current portion of tax receivable agreement liability	2,447		2,447
Total current liabilities	699,022		668,951
Other long-term liabilities	13,967		13,693
Tax receivable agreement liability	40,688		40,688
Long-term operating lease liabilities	121,404		123,310
Long-term debt, net	433,682		428,439
Total liabilities	1,308,763		1,275,081
STOCKHOLDERS’ EQUITY
Preferred stock, $0.01 par value, 1,000,000 shares authorized, none issued and outstanding as of December 31, 2023 and September 30, 2023	-		-
Class A common stock, $0.01 par value, 40,000,000 shares authorized, 14,544,324 and 14,420,129 shares issued and outstanding as of December 31, 2023 and September 30, 2023, respectively	145		144
Class B common stock, $0.01 par value, 10,000,000 shares authorized, 1,429,940 shares issued and outstanding as of December 31, 2023 and September 30, 2023	14		14
Additional paid-in capital	194,573		193,018
Retained earnings	158,262		165,432
Accumulated other comprehensive income (loss)	(7)		1
Total stockholders’ equity attributable to OneWater Marine Inc.	352,987		358,609
Equity attributable to non-controlling interests	31,323		55,469
Total stockholders’ equity	384,310		414,078
Total liabilities and stockholders’ equity	$	1,693,073	$	1,689,159

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ONEWATER MARINE INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands except per share data)

(Unaudited)


	Three Months Ended December 31,
	2023		2022
Revenues:
New boat	$	241,084	$	232,405
Pre-owned boat	53,283		55,778
Finance & insurance income	7,360		8,934
Service, parts & other	62,286		69,542
Total revenues	364,013		366,659

Cost of sales (exclusive of depreciation and amortization shown separately below):
New boat	196,403		175,258
Pre-owned boat	41,346		40,304
Service, parts & other	34,821		41,109
Total cost of sales	272,570		256,671

Selling, general and administrative expenses	79,599		77,838
Depreciation and amortization	4,222		5,693
Transaction costs	579		1,330
Change in fair value of contingent consideration	572		(1,409)
Income from operations	6,471		26,536

Other expense (income):
Interest expense – floor plan	7,812		4,779
Interest expense – other	9,152		7,584
Other (income) expense, net	(247)		(639)
Total other expense, net	16,717		11,724
Net (loss) income before income tax (benefit) expense	(10,246)		14,812
Income tax (benefit) expense	(2,276)		3,384
Net (loss) income	(7,970)		11,428
Net (income) attributable to non-controlling interests	(119)		(1,365)
Net loss (income) attributable to non-controlling interests of One Water Marine Holdings, LLC	919		(1,163)
Net (loss) income attributable to OneWater Marine Inc.	$	(7,170)	$	8,900

Net (loss) earnings per share of Class A common stock – basic	$	(0.49)	$	0.62
Net (loss) earnings per share of Class A common stock – diluted	$	(0.49)	$	0.61

Basic weighted-average shares of Class A common stock outstanding	14,540		14,297
Diluted weighted-average shares of Class A common stock outstanding	14,540		14,587

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ONEWATER MARINE INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In thousands)

(Unaudited)


	For the Three Months Ended December 31,
	2023		2022
Net (loss) income	$	(7,970)	$	11,428
Other comprehensive (loss) income:
Foreign currency translation adjustment	(9)		11
Comprehensive (loss) income	(7,979)		11,439
Net (income) attributable to non-controlling interests	(119)		(1,365)
Net loss (income) attributable to non-controlling interests of One Water Marine Holdings, LLC	919		(1,163)
Foreign currency translation adjustment attributable to non-controlling interest of One Water Marine Holdings, LLC	1		(1)
Comprehensive (loss) income attributable to OneWater Marine Inc.	$	(7,178)	$	8,910

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ONEWATER MARINE INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands)

(Unaudited)


	Class A Common Stock			Class B Common Stock
	Shares	Amount		Shares	Amount		Additional Paid-in Capital		Retained Earnings		Non-controlling Interest		Accumulated Other Comprehensive Income (Loss)		Total Stockholders’ Equity
Balance at September 30, 2023	14,420	$	144	1,430	$	14	$	193,018	$	165,432	$	55,469	$	1	$	414,078
Net loss	—	—		—	—		—		(7,170)		(800)		—		(7,970)
Distributions to members	—	—		—	—		—		—		(3,789)		—		(3,789)
Purchase of non-controlling interest	—	—		—	—		716		—		(19,556)		—		(18,840)
Shares issued upon vesting of equity-based awards, net of tax withholding	124	1		—	—		(1,553)		—		—		—		(1,552)
Equity-based compensation	—	—		—	—		2,392		—		—		—		2,392
Currency translation adjustment	—	—		—	—		—		—		(1)		(8)		(9)
Balance at December 31, 2023	14,544	$	145	1,430	$	14	$	194,573	$	158,262	$	31,323	$	(7)	$	384,310


	Class A Common Stock			Class B Common Stock
	Shares	Amount		Shares	Amount		Additional Paid-in Capital		Retained Earnings		Non-controlling Interest		Accumulated Other Comprehensive Income (Loss)		Total Stockholders’ Equity
Balance at September 30, 2022	14,212	$	142	1,430	$	14	$	180,296	$	204,880	$	59,552	$	(7)	$	444,877
Net income	—	—		—	—		—		8,900		2,528		—		11,428
Distributions to members	—	—		—	—		—		(10)		(309)		—		(319)
Shares issued upon vesting of equity-based awards, net of tax withholding	86	1		—	—		(755)		—		—		—		(754)
Equity-based compensation	—	—		—	—		2,572		—		—		—		2,572
Currency translation adjustment	—	—		—	—		—		—		1		10		11
Balance at December 31, 2022	14,298	$	143	1,430	$	14	$	182,113	$	213,770	$	61,772	$	3	$	457,815

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ONEWATER MARINE INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


For the Three Months Ended December 31	2023		2022

CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income	$	(7,970)	$	11,428
Adjustments to reconcile net (loss) income to net cash used in operating activities:
Depreciation and amortization	4,905		6,182
Equity-based awards	2,392		2,572
Loss (gain) on asset disposals	(34)		171
Non-cash interest expense	484		2,217
Deferred income tax provision	1,828		1,185
Change in fair value of contingent consideration	572		(1,409)
Loss on equity investment	112		260
(Increase) decrease in assets:
Accounts receivable	20,240		(5,466)
Inventories	(97,223)		(147,832)
Prepaid expenses and other current assets	(12,388)		13,648
Other assets	(1,869)		(729)
Increase (decrease) in liabilities:
Accounts payable	(8,216)		(1,464)
Other payables and accrued expenses	(12,196)		(12,437)
Customer deposits	(671)		(6,376)
Net cash used in operating activities	(110,034)		(138,050)

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment and construction in progress	(4,924)		(6,416)
Proceeds from disposal of property and equipment	59		47
Cash used for additions to intangible assets	(428)		-
Cash used in acquisitions, net of cash acquired	-		(28,611)
Proceeds from disposal of a business	45,100		-
Net cash provided by (used in) investing activities	39,807		(34,980)

CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings from floor plan	73,791		156,032
Proceeds from long-term debt	20,000		20,000
Payments on long-term debt	(38,457)		(379)
Payments of debt issuance costs	(74)		-
Payments of contingent consideration	-		(4,300)
Payments of tax withholdings for equity-based awards	(1,552)		(754)
Distributions to members	(3,789)		(319)
Purchase of non-controlling interest	(18,840)		-
Net cash provided by financing activities	31,079		170,280

Effects of exchange rate changes on cash and restricted cash	(9)		11

Net change in cash	(39,157)		(2,739)
Cash and restricted cash at beginning of period	93,310		60,947
Cash and restricted cash at end of period	$	54,153	$	58,208

Supplemental cash flow disclosures:
Cash paid for interest	$	16,480	$	10,146
Cash paid for income taxes	455		2,897

Noncash items:
Acquisition purchase price funded by contingent consideration	-		2,550

SEC Form 10-Q filed by OneWater Marine Inc.