OneWater Marine Inc. Announces Fiscal Third Quarter 2021 Results

Strong Execution Drove Significant Margin Expansion and Earnings Growth

Fiscal Third Quarter 2021 Highlights

• Revenue of $404.2 million, despite industry-wide inventory challenges

• Gross profit margin expands more than 800 basis points to 31%

• Record Net income increased 27% to $51.6 million, or $3.04 per diluted share

• Record Adjusted EBITDA¹ increased 33% to $65.5 million

• Announced special dividend of $1.80 per share Class A Common Stock
  

BUFORD, Ga., July 29, 2021 (GLOBE NEWSWIRE) -- OneWater Marine Inc. (NASDAQ: ONEW) (“OneWater” or the “Company”) today announced results for its fiscal third quarter ended June 30, 2021.

“The OneWater team delivered strong third quarter results, expanding gross margin by more than 800 basis points and growing earnings per diluted share to $3.04, despite the lean inventory environment. Our sales associates have done an outstanding job meeting the heightened customer demand by effectively utilizing our powerful digital inventory tools to drive sales. Additionally, we made tremendous progress on building our higher margin service, parts and other business which further supported our growth in the quarter,” commented Austin Singleton, Chief Executive Officer at OneWater.

“Our operational efficiencies and superior execution to date further underscore OneWater’s resiliency. We continue to deliver on our multi-faceted growth strategy through strategic acquisitions and growing our higher margin, less cyclical service, parts and other business to expand market share and drive long-term shareholder value,” Mr. Singleton concluded.

For the Three Months Ended June 30			2021			2020		$ Change				% Change
		(unaudited, $ in thousands)
Revenues
New boat		$	288,222		$	294,678		$	(6,456	)		(2.2	%)
Pre-owned boat			71,116			78,213			(7,097	)		(9.1	%)
Finance & insurance income			15,238			16,639			(1,401	)		(8.4	%)
Service, parts & other sales			29,631			18,743			10,888			58.1	%
Total revenues		$	404,207		$	408,273		$	(4,066	)		(1.0	%)

Fiscal Third Quarter 2021 Results

Revenue for the fiscal third quarter 2021 was $404.2 million, a decrease of 1.0% compared to $408.3 million in fiscal third quarter 2020. Industry-wide inventory challenges hampered sales of new and pre-owned boats in the fiscal third quarter 2021, compared to the prior year. Finance & insurance income was down in-line with boat sales. Partially offsetting this was a 58% increase in service, parts & other sales which grew $10.9 million in the fiscal third quarter 2021 as a result of the Company’s intensified focus on expanding this high margin, less cyclical business.

During the fiscal third quarter 2021 same-store sales decreased 11%, following a 44% increase in the third quarter 2020 and is the result of the industry-wide supply-chain challenges. Same store sales for the third quarter and year-to-date 2021 when compared to the comparable periods in 2019 were 14% and 26%, respectively.

Gross profit totaled $127.0 million for the fiscal third quarter 2021, up $32.3 million from $94.7 million for the fiscal third quarter 2020. Gross profit margin of 31.4% increased 822 basis points compared to the prior year driven by the mix of boats sold and the sharp increase in high margin service, parts & other sales during the quarter.

Fiscal third quarter 2021 selling, general and administrative expenses totaled $60.5 million, or 15.0% of revenue, compared to $43.1 million, or 10.6% of revenue, in the fiscal third quarter of 2020. The increase in selling, general and administrative expenses as a percentage of revenue was due mainly to higher variable personnel costs driven by the increased level of profitability in the current year.

Net income for the fiscal third quarter of 2021 totaled $51.6 million, compared to $40.6 million in the fiscal third quarter of 2020. The significant increase was primarily due the mix of boats sold, the heightened level of gross profit during the quarter and the increase in service, parts & other sales.

Fiscal third quarter 2021 Adjusted EBITDA (see reconciliation of Non-GAAP financial measures) increased to $65.5 million, compared to $49.3 million for the fiscal third quarter of 2020.

As of June 30, 2021, the Company’s cash and cash equivalents balance was $113.2 million, an increase of $25.3 million compared to $88.0 million as of June 30, 2020. Total inventory as of June 30, 2021 decreased sequentially to $116.9 million compared to $186.1 million on March 31, 2021, due to the supply-chain shortages across the industry. Total long-term debt at June 30, 2021 was $115.7 million, less cash and cash equivalents yield net debt of $2.5 million, before the July 19, 2021 dividend payment.

Fiscal Year 2021 Guidance

The Company is raising its fiscal full year 2021 outlook for Adjusted EBITDA to be in the range of $150 million to $155 million and diluted earnings per share to be in the range of $6.60 to $6.80, excluding any acquisitions that may be completed later in the year. However, based on continued broad-based inventory challenges in the industry near-term, OneWater now expects same store sales to increase approximately 10%. This outlook assumes OneWater’s manufacturers can maintain production at the current pace allowing us to deliver presold units and build inventory, in the face of industry-wide supply chain constraints.

Conference Call and Webcast

OneWater will host a conference call to discuss its fiscal first quarter earnings on Thursday, July 29, 2021 at 8:30 am Eastern time. The conference call may be accessed by dialing (866) 220-5793 in the U.S./Canada or (615) 622-8064 for participants outside the U.S./Canada using the Conference ID #8777164. This call is being webcast and 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.

About OneWater Marine Inc.

OneWater Marine Inc. is one of the largest and fastest-growing premium recreational boat retailers in the United States. OneWater operates 69 stores throughout 10 different states, seven 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, parts and accessories, finance and insurance products, maintenance and repair services and ancillary services such as boat storage.

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 as a measure 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 the fair value of warrant liability, gain (loss) on contingent consideration, gain (loss) on extinguishment of debt and transaction costs. See reconciliation below.

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 fair value adjustment of the warrants, gain or loss on 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.

Same-Store Sales

We define 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 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 and our ability to maintain adequate inventory, changes in demand for our products and services, the seasonality and volatility of the boat industry, 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, 2020 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 Ezzell
Chief Financial Officer
IR@OneWaterMarine.com

1 See reconciliation of Non-GAAP financial measures below.

ONEWATER MARINE INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
($ in thousands except per share data) (Unaudited)
	Three Months Ended June 30,								Nine Months Ended June 30,
		2021				2020				2021				2020
Revenues
New boat	$	288,222			$	294,678			$	679,704			$	530,249
Pre-owned boat		71,116				78,213				165,778				149,470
Finance & insurance income		15,238				16,639				32,990				29,047
Service, parts & other		29,631				18,743				69,429				43,168
Total revenues		404,207				408,273				947,901				751,934
Gross Profit
New boat		77,081				54,029				158,884				95,391
Pre-owned boat		18,550				14,619				40,212				26,667
Finance & insurance		15,238				16,639				32,990				29,047
Service, parts & other		16,083				9,398				36,088				20,353
Total gross profit		126,952				94,685				268,174				171,458
Selling, general and administrative expenses		60,476				43,134				143,685				103,822
Depreciation and amortization		1,475				824				3,816				2,375
Transaction costs		65				31				633				3,393
Loss on contingent consideration		-				-				377				-
Income from operations		64,936				50,696				119,663				61,868
Other expense (income)
Interest expense – floor plan		956				2,298				2,206				7,482
Interest expense – other		1,083				3,082				3,222				7,392
Change in fair value of warrant liability		-				-				-				(771	)
Other (income) expense, net		(158	)			(43	)			(247	)			22
Total other expense, net		1,881				5,337				5,181				14,125
Income before income tax expense		63,055				45,359				114,482				47,743
Income tax expense		11,498				4,737				20,559				5,209
Net income		51,557				40,622				93,923				42,534
Less: Net income attributable to non-controlling interests		-				-				-				350
Less: Net income attributable to non-controlling interests of One Water Marine Holdings, LLC		17,054				26,255				31,158				26,732
Net income attributable to OneWater Marine Inc	$	34,503			$	14,367			$	62,675			$	15,452
Earnings per share of Class A common stock – basic	$	3.14			$	2.36			$	5.77			$	2.54
Earnings per share of Class A common stock – diluted	$	3.04			$	2.36			$	5.63			$	2.54
Basic weighted-average shares of Class A common stock outstanding		10,976				6,088				10,884				6,088
Diluted weighted-average shares of Class A common stock outstanding		11,341				6,097				11,143				6,093

ONEWATER MARINE INC. CONDENSED CONSOLIDATED BALANCE SHEETS
($ in thousands, except par value and share data) (Unaudited)
			June 30, 2021					June 30, 2020
Cash			$	113,249				$	87,989
Restricted cash				7,437					3,080
Accounts receivable, net				37,748					57,439
Inventories				116,873					171,300
Prepaid expenses and other current assets				32,251					10,880
Total current assets				307,558					330,688
Property and equipment, net				66,206					16,785
Other assets:
Deposits				504					356
Deferred tax assets				18,967					2,845
Identifiable intangible assets				74,004					61,304
Goodwill				151,564					113,059
Total other assets				245,039					177,564
Total assets			$	618,803				$	525,037
Accounts payable			$	24,908				$	25,154
Other payables and accrued expenses				56,098					20,414
Customer deposits				43,114					12,851
Notes payable – floor plan				108,160					176,061
Current portion of long-term debt				11,858					8,435
Current portion of tax receivable agreement liability				482					-
Total current liabilities				244,620					242,915
Other long-term liabilities				8,300					1,512
Tax receivable agreement liability, net of current portion				25,594					-
Long-term debt, net of current portion and unamortized debt issuance costs				103,885					108,780
Total liabilities				382,399					353,207
Preferred stock, $0.01 par value, 1,000,000 shares authorized, none issued and outstanding as of June 30, 2021 and June 30, 2020				-					-
Class A common stock, $0.01 par value, 40,000,000 shares authorized, 11,661,575 shares issued and outstanding as of June 30, 2021 and 6,087,906 shares issued and outstanding as of June 30, 2020				117					61
Class B common stock, $0.01 par value, 10,000,000 shares authorized, 3,377,449 shares issued and outstanding as of June 30, 2021 and 8,462,392 shares issued and outstanding as of June 30, 2020				34					85
Additional paid-in capital				123,643					56,683
Retained earnings				58,956					15,452
Total stockholders’ equity attributable to OneWater Marine Inc				182,750					72,281
Equity attributable to non-controlling interests				53,654					99,549
Total stockholders’ equity				236,404					171,830
Total liabilities and stockholders’ equity			$	618,803				$	525,037

ONEWATER MARINE INC. Reconciliation of Net Income to Adjusted EBITDA
($ in thousands) (Unaudited)
		Three months ended June 30,								Nine months ended June 30,
Description			2021				2020				2021				2020
Net income		$	51,557			$	40,622			$	93,923			$	42,534
Interest expense – other			1,083				3,082				3,222				7,392
Income tax expense			11,498				4,737				20,559				5,209
Depreciation and amortization			1,475				824				3,816				2,375
Loss on contingent consideration			-				-				377				-
Transaction costs			65				31				633				3,393
Change in fair value of warrant liability			-				-				-				(771	)
Other (income) expense, net			(158	)			(43	)			(247	)			22
Adjusted EBITDA		$	65,520			$	49,253			$	122,283			$	60,154