OneWater Marine Inc. (NASDAQ: ONEW) (“OneWater” or the “Company”)
today announced results for its fiscal first quarter ended December
31, 2022.
“Our first quarter results came in largely as we
anticipated as the industry experienced a return to more normalized
seasonality, with revenue growing high-single digits, on top of a
57% increase in the prior year. Notably, our high margin service,
parts and other sales grew 86%, driven by strategic acquisitions
over the last 18-months, strengthening our overall gross margins as
expected,” commented Austin Singleton, Chief Executive Officer at
OneWater. “Signs are pointing to a strong selling season, with
positive boat show activity and healthy demand levels, but given
the considerable amount of unknowns driven by a cloudy
macro-economic environment, we are lowering our full-year
outlook.”
“Over the past two years, OneWater has
successfully executed on our growth and diversification strategy,
adding 38 dealership locations and building out our parts and
service platform. As the industry returns to historical seasonal
cycles, we believe our flexible and diversified operating model
positions us to continue to outperform the market and return value
to our shareholders.”
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For the Three Months Ended
December 31 |
|
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2022 |
|
|
2021 |
|
$ Change |
|
% Change |
Revenues |
|
(unaudited, $ in thousands) |
New boat |
|
$ |
232,405 |
|
$ |
236,198 |
|
$ |
(3,793 |
) |
|
(1.6 |
%) |
Pre-owned boat |
|
|
55,778 |
|
|
53,449 |
|
|
2,329 |
|
|
4.4 |
% |
Finance & insurance income |
|
|
8,934 |
|
|
9,307 |
|
|
(373 |
) |
|
(4.0 |
)% |
Service, parts & other |
|
|
69,542 |
|
|
37,318 |
|
|
32,224 |
|
|
86.3 |
% |
Total revenues |
|
$ |
366,659 |
|
$ |
336,272 |
|
$ |
30,387 |
|
|
9.0 |
% |
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Fiscal First Quarter 2023
Results
Revenue for fiscal first quarter 2023 was $366.7
million, an increase of 9.0% compared to $336.3 million in fiscal
first quarter 2022. The growth was primarily attributable to strong
service, parts and other sales from acquired businesses. During
fiscal first quarter 2023 same-store sales decreased 14% following
a 28% and 38% increase in fiscal first quarter 2022 and 2021,
respectively. We believe the decline is primarily due to the return
of seasonality in the business where we realize lower sales and
higher levels of inventory in the fiscal first quarter.
Historically, the December 31 quarter has represented approximately
15% of our annual sales, which has been bolstered by our
investments in service, parts & other sales. The timing of
sales from quarter to quarter can also fluctuate based on our
ability to deliver presold boats to our customers, and sales
activity remains lean in areas of Florida that were heavily
impacted by Hurricane Ian as customers continue to rebuild.
New boat revenue decreased 1.6%, driven by a
decrease in unit sales, muted by an increase in average unit price.
Pre-owned boat revenue increased 4.4% compared to the prior year
quarter, driven by an increase in unit sales. Finance &
insurance income decreased 4.0% compared to the prior year quarter.
Service, Parts and other sales were up 86.3% compared to the prior
year quarter, largely as a result of the Company’s strategic focus
on expanding its high margin, less cyclical revenue streams.
Gross profit totaled $110.0 million for fiscal
first quarter 2023, up $9.0 million from $101.0 million for fiscal
first quarter 2022. Gross profit margin of 30.0% was flat compared
to the prior year period, due primarily to the shift in the volume,
mix and size of boat models sold during the quarter, offset by the
significant increase in higher margin service, parts & other
revenue.
Fiscal first quarter 2023 selling, general and
administrative expenses totaled $77.8 million, or 21.2% of revenue,
compared to $59.1 million, or 17.6% of revenue, in fiscal first
quarter 2022. The increase in selling, general and administrative
expenses as a percentage of revenue was due primarily to higher
personnel expenses related to acquisitions as well as higher
marketing expenses related to the increased boat show activity
during the quarter.
Net income for fiscal first quarter 2023 totaled
$11.4 million, compared to $23.5 million in fiscal first quarter
2022. Earnings per diluted share for fiscal first quarter 2023
was $0.61 per diluted share, compared to $1.45 per diluted share in
2022. For fiscal first quarter 2023, interest expense increased
$10.0 million compared to the prior year driven by an increase in
the average outstanding borrowings and higher interest rates.
Fiscal first quarter 2023 Adjusted EBITDA1
decreased 32.0% to $27.9 million compared to $41.0 million for
first quarter 2022.
As of December 31, 2022, the Company’s cash and
cash equivalents balance was $43.5 million and total liquidity,
including cash and availability under credit facilities, was in
excess of $100.0 million. Total inventory as of December 31, 2022,
increased year-over-year to $527.0 million compared to $248.2
million on December 31, 2021, primarily driven by acquisitions
completed during the year, the return of the traditional seasonal
cycles where we build inventory in the winter months and the
continued easing of industry-wide supply chain constraints.
Total long-term debt as of December 31, 2022,
was $463.9 million, and adjusted long-term net debt (net of $43.5
million cash)1 was 1.8 times trailing twelve-month Adjusted
EBITDA1.
Fiscal Year 2023 Guidance
The Company’s is updating its previously issued
fiscal full year 2023 outlook. For fiscal full year 2023, OneWater
now anticipates same store sales to be flat to up mid-single
digits. Adjusted EBITDA2 is expected to be in the range of $200
million to $225 million and earnings per diluted share is expected
to be in the range of $7.50 to $8.00.
Conference Call and Webcast
OneWater will host a conference call to discuss
its fiscal first quarter earnings on Thursday, February 2, 2023, at
8:30 am Eastern time. To access the conference call via phone,
participants will need to register using the following link where
they will be provided a phone number and access
code:https://register.vevent.com/register/BI7ed348a781b44352aadaa744402ac065Alternatively,
a live webcast of the conference call can be accessed through the
“Events” section of the Company’s website at
https://investor.onewatermarine.com/ where it will be archived for
one year.
1 See reconciliation of Non-GAAP financial
measures below.2 See reconciliation of Non-GAAP financial measures
below for a discussion of why reconciliations of forward-looking
Adjusted EBITDA are not available without unreasonable effort.
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ONEWATER MARINE INC.CONSOLIDATED
STATEMENTS OF OPERATIONS |
($ in thousands except per share
data)(Unaudited) |
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Three Months EndedDecember
31, |
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2022 |
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2021 |
|
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Revenues |
|
|
|
|
New boat |
$ |
232,405 |
|
|
$ |
236,198 |
|
|
Pre-owned boat |
|
55,778 |
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|
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53,449 |
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Finance & insurance income |
|
8,934 |
|
|
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9,307 |
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Service, parts & other |
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69,542 |
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|
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37,318 |
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Total revenues |
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366,659 |
|
|
|
336,272 |
|
|
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Gross Profit |
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|
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New boat |
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57,147 |
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60,302 |
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Pre-owned boat |
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15,474 |
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14,079 |
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Finance and insurance |
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8,934 |
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9,307 |
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Service, parts & other |
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28,433 |
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17,277 |
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Total gross profit |
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109,988 |
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100,965 |
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Selling, general and administrative expenses |
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77,838 |
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59,096 |
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Depreciation and amortization |
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5,693 |
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1,749 |
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Transaction costs |
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1,330 |
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3,045 |
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Change in fair value of contingent consideration |
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(1,409 |
) |
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5,746 |
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Income from operations |
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26,536 |
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31,329 |
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Other expense (income) |
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Interest expense – floor plan |
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4,779 |
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877 |
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Interest expense – other |
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7,584 |
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1,529 |
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Other (income) expense, net |
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(639 |
) |
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548 |
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Total other expense, net |
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11,724 |
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2,954 |
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Income before income tax expense |
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14,812 |
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28,375 |
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Income tax expense |
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3,384 |
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4,889 |
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Net income |
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11,428 |
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23,486 |
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Less: Net income attributable to non-controlling
interests |
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(1,365 |
) |
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- |
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Less: Net income attributable to non-controlling interests
of One Water Marine Holdings, LLC |
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(1,163 |
) |
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(3,467 |
) |
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Net income attributable to OneWater Marine
Inc. |
$ |
8,900 |
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$ |
20,019 |
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Earnings per share of Class A common stock – basic |
$ |
0.62 |
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$ |
1.50 |
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Earnings per share of Class A common stock – diluted |
$ |
0.61 |
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$ |
1.45 |
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Basic weighted-average shares of Class A common stock
outstanding |
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14,297 |
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13,380 |
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Diluted weighted-average shares of Class A common stock
outstanding |
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14,587 |
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|
13,761 |
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ONEWATER MARINE INC.CONSOLIDATED BALANCE
SHEETS |
($ in thousands, except par value and share
data) |
(Unaudited) |
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December 31,2022 |
|
December 31,2021 |
Assets |
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Current assets: |
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Cash |
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$ |
43,535 |
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$ |
67,908 |
Restricted cash |
|
|
14,673 |
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|
6,861 |
Accounts receivable, net |
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63,613 |
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|
37,643 |
Inventories, net |
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527,023 |
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248,212 |
Prepaid expenses and other current assets |
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61,548 |
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34,321 |
Total current assets |
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710,392 |
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394,945 |
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Property and equipment, net |
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114,802 |
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74,638 |
Operating lease right-of-use assets |
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126,760 |
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118,054 |
Other assets: |
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Other assets |
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3,844 |
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539 |
Deferred tax assets, net |
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7,248 |
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32,956 |
Intangible assets, net |
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311,579 |
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|
121,244 |
Goodwill |
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397,468 |
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|
419,675 |
Total other assets |
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720,139 |
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|
574,414 |
Total assets |
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$ |
1,672,093 |
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$ |
1,162,051 |
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Liabilities and Stockholders’ Equity |
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Current liabilities: |
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Accounts payable |
|
$ |
25,859 |
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$ |
33,262 |
Other payables and accrued expenses |
|
|
44,835 |
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|
30,096 |
Customer deposits |
|
|
60,084 |
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|
56,986 |
Notes payable – floor plan |
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|
425,368 |
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|
195,638 |
Current portion of operating lease liabilities |
|
|
13,410 |
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|
11,173 |
Current portion of long-term debt, net |
|
|
29,247 |
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|
19,420 |
Current portion of tax receivable agreement liability |
|
|
2,363 |
|
|
915 |
Total current liabilities |
|
|
601,166 |
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|
347,490 |
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Long-term Liabilities: |
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Other long-term liabilities |
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|
19,850 |
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|
29,617 |
Tax receivable agreement liability |
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|
43,991 |
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45,290 |
Noncurrent operating lease liabilities |
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|
114,601 |
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|
107,452 |
Long-term debt, net |
|
|
434,670 |
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|
327,008 |
Total liabilities |
|
|
1,214,278 |
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|
856,857 |
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Stockholders’ Equity: |
|
|
|
|
Preferred stock, $0.01 par value, 1,000,000 shares authorized, none
issued and outstanding as of December 31, 2022 and September 30,
2022 |
|
|
- |
|
|
- |
Class A common stock, $0.01 par value, 40,000,000 shares
authorized, 14,297,607 shares issued and outstanding as of December
31, 2022 and 13,852,296 issued and outstanding as of December 31,
2021 |
|
|
143 |
|
|
139 |
Class B common stock, $0.01 par value, 10,000,000 shares
authorized, 1,429,940 shares issued and outstanding as of December
31, 2022 and December 31, 2021 |
|
|
14 |
|
|
14 |
Additional paid-in capital |
|
|
182,113 |
|
|
166,411 |
Retained earnings |
|
|
213,770 |
|
|
94,529 |
Accumulated other comprehensive income |
|
|
3 |
|
|
- |
Total stockholders’ equity attributable to OneWater Marine
Inc. |
|
|
396,043 |
|
|
261,093 |
Equity attributable to non-controlling interests |
|
|
61,772 |
|
|
44,101 |
Total stockholders’ equity |
|
|
457,815 |
|
|
305,194 |
Total liabilities and stockholders’ equity |
|
$ |
1,672,093 |
|
$ |
1,162,051 |
ONEWATER MARINE INC.Reconciliation of Non-GAAP Financial
Measures(amounts in thousands, except per share
data)(Unaudited) |
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|
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|
Three months ended December 31, |
|
Trailing twelvemonths endedDecember 31, |
|
|
|
2022 |
|
|
|
2021 |
|
|
2022 |
Net income |
|
$ |
11,428 |
|
|
$ |
23,486 |
|
$ |
140,553 |
Interest expense – other |
|
|
7,584 |
|
|
|
1,529 |
|
|
19,256 |
Income tax expense |
|
|
3,384 |
|
|
|
4,889 |
|
|
41,720 |
Depreciation and amortization |
|
|
6,182 |
|
|
|
1,749 |
|
|
20,730 |
Change in fair value of contingent consideration |
|
|
(1,409 |
) |
|
|
5,746 |
|
|
3,225 |
Loss on extinguishment of debt |
|
|
- |
|
|
|
- |
|
|
356 |
Transaction costs |
|
|
1,330 |
|
|
|
3,045 |
|
|
6,009 |
Other (income)
expense, net |
|
|
(639 |
) |
|
|
548 |
|
|
2,606 |
Adjusted EBITDA |
|
$ |
27,860 |
|
|
$ |
40,992 |
|
$ |
234,455 |
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About OneWater Marine Inc.
OneWater Marine Inc. is one of the largest and
fastest-growing premium marine retailers in the United States.
OneWater operates a total of 100 retail locations, 12 distribution
centers / warehouses and multiple online marketplaces in 20
different states, several of which are in the top twenty states for
marine retail expenditures. OneWater offers a broad range of
products and services and has diversified revenue streams, which
include the sale of new and pre-owned boats, finance and insurance
products, parts and accessories, maintenance, repair and other
services.
Non-GAAP Financial Measures and Key
Performance Indicators
This press release and our related earnings call
contain certain non-GAAP financial measures, including Adjusted
EBITDA and Adjusted Long-Term Net Debt, as measures of our
operating performance. Management believes these measures may be
useful in performing meaningful comparisons of past and present
operating results, to understand the performance of the Company’s
ongoing operations and how management views the business.
Reconciliations of reported GAAP measures to adjusted non-GAAP
measures are included in the financial schedules contained in this
press release. These measures, however, should not be construed as
an alternative to any other measure of performance determined in
accordance with GAAP. Because our non-GAAP financial measures may
be defined differently by other companies, our definition of these
non-GAAP financial measures may not be comparable to similarly
titled measures of other companies, thereby diminishing its
utility. We have not reconciled non‐GAAP forward-looking measures,
including Adjusted EBITDA guidance, to their corresponding GAAP
measures due to the high variability and difficulty in making
accurate forecasts and projections, particularly with respect to
acquisition contingent consideration and transaction costs.
Acquisition contingent consideration and transaction costs are
affected by the acquisition, integration and post-acquisition
performance of our acquirees which is difficult to predict and
subject to change. Accordingly, reconciliations of forward-looking
Adjusted EBITDA is not available without unreasonable
effort.Adjusted EBITDA
We define Adjusted EBITDA as net income (loss)
before interest expense – other, income tax expense, depreciation
and amortization and other (income) expense, further adjusted to
eliminate the effects of items such as the change in fair value of
contingent consideration, gain (loss) on extinguishment of debt and
transaction costs. See reconciliation above.
Our board of directors, management team and
lenders use Adjusted EBITDA to assess our financial performance
because it allows them to compare our operating performance on a
consistent basis across periods by removing the effects of our
capital structure (such as varying levels of interest expense),
asset base (such as depreciation and amortization) and other items
(such as the change in fair value of contingent consideration, gain
or loss on extinguishment of debt and transaction costs) that
impact the comparability of financial results from period to
period. We present Adjusted EBITDA because we believe it provides
useful information regarding the factors and trends affecting our
business in addition to measures calculated under GAAP. Adjusted
EBITDA is not a financial measure presented in accordance with
GAAP. We believe that the presentation of this non-GAAP financial
measure will provide useful information to investors and analysts
in assessing our financial performance and results of operations
across reporting periods by excluding items we do not believe are
indicative of our core operating performance.
Adjusted Long-Term Net Debt
We define Adjusted Long-Term Net Debt as
long-term debt (including current portion) less cash. We consider,
and we believe certain investors and analysts consider, adjusted
long-term net debt, as well as adjusted long-term net debt divided
by trailing twelve-month Adjusted EBITDA, to be an indicator of our
financial leverage.
Dealership Same-Store Sales
We define Dealership same-store sales as sales
from our stores excluding new and acquired stores. New and acquired
stores become eligible for inclusion in the comparable store base
at the end of the store’s thirteenth month of operations under our
ownership and revenues are only included for identical months in
the same-store base periods. Stores relocated within an existing
market remain in the comparable store base for all periods.
Additionally, amounts related to closed stores are excluded from
each comparative base period. We use Dealership same-store sales to
assess the organic growth of our revenue on a same-store basis. We
believe that our assessment on a same-store basis represents an
important indicator of comparative financial results and provides
relevant information to assess our performance.
Cautionary Statement Concerning
Forward-Looking Statements
This press release and statements made during
the above referenced conference call may contain “forward-looking
statements” within the meaning of the Private Securities Litigation
Reform Act of 1995, including regarding our strategy, future
operations, financial position, prospects, plans and objectives of
management, growth rate and its expectations regarding future
revenue, operating income or loss or earnings or loss per share. In
some cases, you can identify forward-looking statements because
they contain words such as “may,” “will,” “will be,” “will
likely result,” “should,” “expects,” “plans,” “anticipates,”
“could,” “would,” “foresees,” “intends,” “target,” “projects,”
“contemplates,” “believes,” “estimates,” “predicts,” “potential,”
“outlook” or “continue” or the negative of these words or other
similar terms or expressions that concern our expectations,
strategy, plans or intentions. These forward-looking statements are
not guarantees of future performance, but are based on management's
current expectations, assumptions and beliefs concerning future
developments and their potential effect on us, which are inherently
subject to uncertainties, risks and changes in circumstances that
are difficult to predict. Our expectations expressed or implied in
these forward-looking statements may not turn out to be
correct.
Important factors, some of which are beyond our
control, that could cause actual results to differ materially from
our historical results or those expressed or implied by these
forward-looking statements include the following: effects of
industry wide supply chain challenges including a heightened
inflationary environment and our ability to maintain adequate
inventory, changes in demand for our products and services, the
seasonality and volatility of the boat industry, fluctuation in
interest rates, adverse weather events, our acquisition and
business strategies, the inability to comply with the financial and
other covenants and metrics in our credit facilities, cash flow and
access to capital, effects of the COVID-19 pandemic and related
governmental actions or restrictions on the Company’s business,
risks related to the ability to realize the anticipated benefits of
any proposed acquisitions, including the risk that proposed
acquisitions will not be integrated successfully, the timing of
development expenditures, and other risks. More information on
these risks and other potential factors that could affect our
financial results is included in our filings with the Securities
and Exchange Commission, including in the “Risk Factors” and
“Management’s Discussion and Analysis of Financial Condition and
Results of Operations” sections of our Annual Report on Form 10-K
for the fiscal year ended September 30, 2022 and in our
subsequently filed Quarterly Reports on Form 10-Q, each of which is
on file with the SEC and available from OneWater Marine’s website
at www.onewatermarine.com under the “Investors” tab, and in other
documents OneWater Marine files with the SEC. Any forward-looking
statement speaks only as of the date as of which such statement is
made, and, except as required by law, we undertake no obligation to
update or revise publicly any forward-looking statements, whether
because of new information, future events, or otherwise.
Investor or Media Contact:Jack
EzzellChief Financial OfficerIR@OneWaterMarine.com
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