10-Q 1 brhc10023809_10q.htm 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended March 31, 2021

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

6275 Lanier Islands Parkway Buford, Georgia (Address of principal executive offices)		30518 (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.☒ Yes ☐ 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). ☒ Yes ☐ 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. ☐

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

The registrant had 10,968,152 shares of Class A common stock, par value $0.01 per share, and 4,070,872 shares of Class B common stock, par value $0.01 per share, outstanding as of April 26, 2021.

ONEWATER MARINE INC.

FORM 10-Q

FOR THE QUARTER ENDED MARCH 31, 2021

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 March 31, 2021 and September 30, 2020	5

	Condensed Consolidated Statements of Operations for the Three and Six Months Ended March 31, 2021 and March 31, 2020	6

	Condensed Consolidated Statements of Stockholders’ and Members’ Equity for the Three and Six Months Ended March 31, 2021 and March 31, 2020	7

	Condensed Consolidated Statements of Cash Flows for the Six Months Ended March 31, 2021 and March 31, 2020	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	39

Item 4.	Controls and Procedures	39

PART II – OTHER INFORMATION		40

Item 1.	Legal Proceedings	40

Item 1A.	Risk Factors	40

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	40

Item 3.	Defaults Upon Senior Securities	40

Item 4.	Mine Safety Disclosures	40

Item 5.	Other Information	40

Item 6.	Exhibits	41

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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, 2020, filed with the U.S. Securities and Exchange Commission (the “SEC”) on December 3, 2020, 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:

•

the impact of COVID-19 on our business and results of operations;

•

general economic conditions, including changes in employment levels, 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 same-store growth;

•

our ability to integrate acquired dealer groups;

•

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

•

our ability to finance working capital and capital expenditures;

•

general domestic and international political and regulatory conditions, including changes in tax or fiscal policy and the effects of current restrictions on various commercial and economic activities in response to the COVID-19 pandemic;

•

global public health concerns, including the COVID-19 pandemic;

•

demand for our products and our ability to maintain acceptable pricing for our products and services, including financing, insurance and extended service contracts;

•

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

•

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

•

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

•

competition;

•

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;

•

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

•

our ability to retain key personnel;

•

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

•

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

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•

uncertainty regarding our future operating results and profitability;

•

other risks associated with the COVID-19 pandemic including, among others, the ability to safely operate our stores, access to inventory and customer demand; and

•

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

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, the effects of the COVID-19 pandemic on the Company’s business, the seasonality and volatility of the boat industry, our acquisition strategies, 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, 2020 and in subsequent Quarterly Reports 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)

	March 31, 2021		September 30, 2020
Assets
Current assets:
Cash	$	76,713	$	66,087
Restricted cash		10,769		2,066
Accounts receivable, net		41,005		18,479
Inventories		186,089		150,124
Prepaid expenses and other current assets		14,324		15,302
Total current assets		328,900		252,058

Property and equipment, net		64,612		18,442

Other assets:
Deposits		478		350
Deferred tax asset		13,113		12,854
Identifiable intangible assets		74,004		61,304
Goodwill		151,417		113,059
Total other assets		239,012		187,567
Total assets	$	632,524	$	458,067

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	25,931	$	12,781
Other payables and accrued expenses		22,276		24,221
Customer deposits		39,395		17,280
Notes payable – floor plan		183,802		124,035
Current portion of long-term debt		13,995		7,419
Current portion of tax receivable agreement liability		306		-
Total current liabilities		285,705		185,736

Long-term Liabilities:
Other long-term liabilities		8,634		1,482
Tax receivable agreement liability, net of current portion		17,560		15,585
Long-term debt, net of current portion and unamortized debt issuance costs		105,079		81,977
Total liabilities		416,978		284,780

Stockholders’ Equity:
Preferred stock, $0.01 par value, 1,000,000 shares authorized, none issued and outstanding as of March 31, 2021 and September 30, 2020		-		-
Class A common stock, $0.01 par value, 40,000,000 shares authorized, 10,968,152 shares issued and outstanding as of March 31, 2021 and 10,391,661 issued and outstanding as of September 30, 2020		110		104
Class B common stock, $0.01 par value, 10,000,000 shares authorized, 4,070,872 shares issued and outstanding as of March 31, 2021 and 4,583,637 issued and outstanding as of September 30, 2020		41		46
Additional paid-in capital		113,088		105,947
Retained earnings		44,959		16,757
Total stockholders’ equity attributable to OneWater Marine Inc.		158,198		122,854
Equity attributable to non-controlling interests		57,348		50,433
Total stockholders’ equity		215,546		173,287
Total liabilities and stockholders’ equity	$	632,524	$	458,067

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ONEWATER MARINE INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

($ in thousands except per share data)

(Unaudited)

	Three Months Ended March 31,				Six Months Ended March 31,
	2021		2020		2021			2020
Revenues
New boat	$	239,654	$	132,719	$	391,482		$	235,571
Pre-owned boat		56,082		38,186		94,662			71,257
Finance & insurance income		11,789		8,083		17,752			12,408
Service, parts & other		22,086		10,975		39,798			24,425
Total revenues		329,611		189,963		543,694			343,661

Cost of sales (exclusive of depreciation and amortization shown separately below)
New boat		187,147		108,254		309,679			194,209
Pre-owned boat		42,548		31,343		73,000			59,209
Service, parts & other		11,130		5,782		19,793			13,470
Total cost of sales		240,825		145,379		402,472			266,888

Selling, general and administrative expenses		48,348		32,383		83,208			60,688
Depreciation and amortization		1,378		791		2,341			1,551
Transaction costs		368		2,925		568			3,362
Loss on contingent consideration		-		-		377			-
Income from operations		38,692		8,485		54,728			11,172

Other expense (income)
Interest expense – floor plan		330		2,525		1,250			5,184
Interest expense – other		1,215		2,457		2,139			4,310
Change in fair value of warrant liability		-		-		-			(771	)
Other expense (income), net		5		52		(89	)		65
Total other expense, net		1,550		5,034		3,300			8,788
Income before income tax expense		37,142		3,451		51,428			2,384
Income tax expense		6,550		472		9,061			472
Net income		30,592		2,979		42,367			1,912
Less: Net income attributable to non-controlling interests				103					350
Less: Net income attributable to non-controlling interests of One Water Marine Holdings, LLC		10,117		1,791		14,104			477
Net income attributable to OneWater Marine Inc	$	20,475	$	1,085	$	28,263		$	1,085

Earnings per share of Class A common stock – basic	$	1.88	$	0.18	$	2.61		$	0.18
Earnings per share of Class A common stock – diluted	$	1.83	$	0.18	$	2.55		$	0.18

Basic weighted-average shares of Class A common stock outstanding		10,901		6,088		10,838			6,088
Diluted weighted-average shares of Class A common stock outstanding		11,171		6,088		11,083			6,088

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ONEWATER MARINE INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ AND MEMBERS’ EQUITY

($ in thousands)

(Unaudited)

Six Months Ended March 31, 2021

Stockholders’ and Members’ Equity

Class A Common Stock

Class B Common Stock

Redeemable Preferred Interest in Subsidiary

Members’ Equity

Amount

Additional Paid-in Capital

Retained Earnings

SEC Form 10-Q filed by OneWater Marine Inc.