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OneWater Marine Inc. Announces Fiscal Fourth Quarter and Record Full-Year 2020 Results

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·17 min read
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Strong top- and bottom-line growth driven by solid execution and an industry-leading digital platform

Fiscal Year 2020 Highlights

  • Record revenue of $1.0 billion increased 33%

  • Same-store sales increased 24%

  • Net income increased 30% to $48.5 million

  • Adjusted EBITDA1 rose 80% to $83.3 million

BUFORD, Ga., Nov. 19, 2020 (GLOBE NEWSWIRE) -- OneWater Marine Inc. (NASDAQ: ONEW) (“OneWater” or the “Company”) today announced results for its fiscal fourth quarter and full-year ended September 30, 2020.

“The OneWater team delivered exceptional results in our first year as a publicly traded company, including record full year revenues and profitability. Our performance highlighted the strength of our team and its execution, as well as our industry-leading market position. Our investments in innovative technology continue to set us apart, as we captured the surge of new customers to the marine industry in 2020. Further, our custom CRM, inventory management tools and operational dashboards have enabled us to remain agile and outperform the industry,” commented Austin Singleton, Chief Executive Officer at OneWater. “During the fourth quarter, retail demand remained elevated, resulting in substantial growth across our core business segments, including new and pre-owned boat sales, which grew by 29% and 47%, respectively. I am really proud of the entire OneWater team for their commitment to the Company and their relentless focus on our customers.”

“Looking ahead, we expect strong retail demand to continue into the 2021 boating season. Our M&A pipeline remains robust and is a cornerstone to our long-term growth strategy, and we anticipate returning to the cadence of transactions that we routinely completed prior to our IPO. We remain focused on executing our growth strategy and driving long-term shareholder value,” Mr. Singleton concluded.

For the Three Months
Ended September 30

2020

2019

$ Change

% Change

(unaudited, $ in thousands)

Revenues

New boat sales

$

186,844

$

144,436

$

42,408

29.4

%

Pre-owned boat sales

56,180

38,145

18,035

47.3

%

Finance & insurance income

7,745

7,626

119

1.6

%

Service, parts & other sales

20,267

18,545

1,722

9.3

%

Total revenues

$

271,036

$

208,752

$

62,284

29.8

%

Fiscal Fourth Quarter 2020 Results

Revenue for the fiscal fourth quarter 2020 was $271.0 million, an increase of 29.8% compared to $208.8 million in fiscal fourth quarter 2019, primarily driven by an increase in the average unit price of new and pre-owned boats sold and the continued execution of operational improvements on previously acquired dealers. During the fiscal fourth quarter 2020 same-store sales increased 25%, on top of a 20% increase in the comparable period of 2019. In the current year, the Company realized a 29.4% increase in new boat sales to $186.8 million from $144.4 million in the fiscal fourth quarter of 2019, and an increase of 47.3% in pre-owned boat sales to $56.2 million from $38.1 million in the fiscal fourth quarter of 2019. Service, parts & other sales increased 9.3% to $20.3 million from $18.5 million in the fiscal fourth quarter of 2019.

Gross profit totaled $64.1 million for the fiscal fourth quarter 2020, compared to $46.4 million for the fiscal fourth quarter 2019. Gross profit margin of 23.6% increased 140 basis points compared to the prior year primarily due to a shift in the mix and size of boat models sold, the Company’s focus on dynamic pricing, the increase in service, parts & other sales, and the emphasis on meeting customer demand.

Fiscal fourth quarter 2020 selling, general and administrative expenses totaled $39.7 million, or 14.6% of revenue, compared to $32.6 million, or 15.6% of revenue, in the fiscal fourth quarter of 2019. The decrease in selling, general and administrative expenses as a percentage of revenue was due mainly to leverage on the significant increase in sales and the cost reduction actions enacted following the acceleration of COVID-19 at the end of March of this year.

Net income for the fiscal fourth quarter of 2020 totaled $6.0 million, compared to net income of $5.0 million in the fiscal fourth quarter of 2019, an increase of 18.9%. The increase is primarily due to the increase in sales, leveraging our expense structure and a reduction in interest expense, partially offset by a $6.6 million loss from the extinguishment of debt and a $6.8 million loss on contingent consideration.

Fiscal fourth quarter 2020 Adjusted EBITDA (see reconciliation of Non-GAAP financial measures) increased 108.0% to $23.0 million, compared to $11.1 million for the fiscal fourth quarter of 2019.

For the Twelve Months
Ended September 30

2020

2019

$ Change

% Change

(unaudited, $ in thousands)

Revenues

New boat sales

$

717,093

$

526,774

$

190,319

36.1

%

Pre-owned boat sales

205,650

153,010

52,640

34.4

%

Finance & insurance income

36,792

26,151

10,641

40.7

%

Service, parts & other sales

63,435

61,689

1,746

2.8

%

Total revenues

$

1,022,970

$

767,624

$

255,346

33.3

%

Fiscal Year Ended September 30, 2020 Results

Revenue for the fiscal year ended September 30, 2020 increased 33.3% to $1,023.0 million from $767.6 million for the fiscal year ended September 30, 2019 driven by an increase in unit sales and average unit price of new and pre-owned boats and a 40.7% increase in finance & insurance sales compared to the prior year. Same store sales increased 24% compared to the prior year.

Gross profit totaled $235.5 million for the fiscal year 2020, compared to $172.1 million for the fiscal year 2019. Gross profit margin of 23.0% increased 60 basis points compared to the prior year primarily due to the increase in the margin achieved on boat sales, increases in finance & insurance income and increases in service, parts & other gross profit.

Fiscal year 2020 selling, general and administrative expenses totaled $143.4 million, or 14.0% of revenue, compared to $116.5 million, or 15.2% of revenue in fiscal year 2019. The decrease in selling, general and administrative expenses as a percentage of revenue was due mainly to leverage achieved on the significant increase in sales and the cost reduction actions enacted following the acceleration of COVID-19 in March of 2020.

Net income for fiscal year 2020 totaled $48.5 million compared to $37.3 million in fiscal year 2019, an increase of 30.2%. The increase is primarily due to the increase in sales we experienced in 2020.

Fiscal 2020 Adjusted EBITDA (see reconciliation of Non-GAAP financial measures) increased 80.1% to $83.3 million, compared to $46.2 million in fiscal year 2019.

As of September 30, 2020, the Company’s cash and cash equivalents balance was $68.2 million, an increase of $56.7 million compared to $11.5 million as of September 30, 2019. The Company also had in excess of $40.0 million of availability on its revolving line of credit and floor plan credit facility as of September 30, 2020. Total inventory as of September 30, 2020 decreased to $150.1 million compared to $277.3 million on September 30, 2019, primarily due to the increased retail sales volume in the year and the lower level of manufacturer replenishments.

Fiscal Year 2021 Guidance

For fiscal full year 2021, OneWater anticipates same store sales to be up mid-single digits and Adjusted EBITDA to be up low- to mid-single digits, excluding acquisitions completed during the year.

Conference Call and Webcast

OneWater will host a conference call to discuss its fiscal fourth quarter and full-year 2020 earnings on Thursday, November 19, 2020 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 #5366308. 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 61 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 because certain items that impact these measures are unavailable or cannot be reasonably predicted without unreasonable efforts.

Adjusted EBITDA

We define Adjusted EBITDA as net income (loss) before interest expense – other, income taxes, 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: changes in demand for our products and services, 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, effects of the COVID-19 pandemic on the Company’s business, 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 Registration Statement on Form S-1 (File No. 333-248774), filed on September 14, 2020. 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




ONEWATER MARINE INC.
CONSOLIDATED STATEMENTS OF OPERATIONS

($ in thousands except per share data)
(Unaudited)

For the Years Ended September 30,

2020

2019

2018

Revenues

New boat sales

$

717,093

$

526,774

$

398,586

Pre-owned boat sales

205,650

153,010

140,931

Finance & insurance income

36,792

26,151

16,623

Service, parts & other sales

63,435

61,689

46,665

Total revenues

1,022,970

767,624

602,805

Gross profit

New boat

131,373

92,532

76,461

Pre-owned boat

37,389

25,992

24,473

Finance & insurance

36,792

26,151

16,623

Service, parts & other

29,970

27,451

20,097

Total gross profit

235,524

172,126

137,654

Selling, general and administrative expenses

143,396

116,503

91,297

Depreciation and amortization

3,249

2,682

1,685

Transaction costs

3,648

1,323

438

Loss (gain) on contingent consideration

6,762

(1,674

)

-

Income from operations

78,469

53,292

44,234

Other expense (income)

Interest expense – floor plan

8,861

9,395

5,534

Interest expense – other

8,828

6,568

3,836

Change in fair value of warrant liability

(771

)

(1,336

)

33,187

Loss (gain) on extinguishment of debt

6,559

-

(209

)

Other expense (income), net

155

1,402

(60

)

Total other expense (income), net

23,632

16,029

42,288

Income before income tax expense

54,837

37,263

1,946

Income tax expense

6,329

-

-

Net income

48,508

37,263

1,946

Less: Net income attributable to non-controlling interests

(350

)

(1,606

)

(830

)

Net income attributable to One Water Marine Holdings, LLC

$

35,657

$

1,116

Less: Net income attributable to non-controlling interests of One Water Marine Holdings, LLC

(30,733

)

Net income attributable to OneWater Marine Inc.

$

17,425

Earnings per share of Class A common stock – basic (1)

$

2.79

Earnings per share of Class A common stock – diluted (1)

$

2.77

Basic weighted-average shares of Class A common stock outstanding (1)

6,243

Diluted weighted-average shares of Class A common stock outstanding (1)

6,287


(1)

Represents earnings per share of Class A common stock and weighted-average shares of Class A common stock outstanding for the period from February 11, 2020 through September 30, 2020, the period following the Organizational Transactions (as defined below) and OneWater Marine Inc.’s initial public offering. See Note 1.




ONEWATER MARINE INC.
CONDENSED CONSOLIDATED BALANCE SHEETS

($ in thousands, except par value and share data)
(Unaudited)

September 30,
2020

September 30,
2019

Cash

$

66,087

$

11,108

Restricted cash

2,066

384

Accounts receivable

18,479

15,294

Inventories

150,124

277,338

Prepaid expenses and other current assets

15,302

9,969

Total current assets

252,058

314,093

Property and equipment, net

18,442

15,954

Other assets:

Deposits

350

345

Deferred tax asset

12,854

-

Identifiable intangible assets

61,304

61,304

Goodwill

113,059

113,059

Total other assets

187,567

174,708

Total assets

$

458,067

$

504,755

Accounts payable

$

12,781

$

5,546

Other payables and accrued expenses

24,221

16,567

Customer deposits

17,280

4,880

Notes payable – floor plan

124,035

225,377

Current portion of long-term debt

7,419

11,124

Total current liabilities

185,736

263,494

Other long-term liabilities

1,482

1,598

Warrant liability

-

50,887

Tax receivable agreement liability

15,585

-

Long-term debt, net of current portion and unamortized debt issuance costs

81,977

64,789

Total liabilities

284,780

380,768

Redeemable preferred interest in subsidiary

-

86,018

Members' equity

-

31,770

Preferred stock, $0.01 par value, 1,000,000 shares authorized, none issued and outstanding as of September 30, 2020 and September 30, 2019

-

-

Class A common stock, $0.01 par value, 40,000,000 shares authorized, 10,391,661 shares issued and outstanding as of September 30, 2020 and none issued and outstanding as of September 30, 2019

104

-

Class B common stock, $0.01 par value, 10,000,000 shares authorized, 4,583,637 shares issued and outstanding as of September 30, 2020 and none issued and outstanding as of September 30, 2019

46

-

Additional paid-in capital

105,947

-

Retained earnings

16,757

-

Total stockholders’ equity attributable to OneWater Marine Inc. and members’ equity

122,854

31,770

Equity attributable to non-controlling interests

50,433

6,199

Total stockholders’ and members’ equity

173,287

37,969

Total liabilities, stockholders’ and members' equity

$

458,067

$

504,755




ONEWATER MARINE INC.
Reconciliation of Net Income to Adjusted EBITDA

($ in thousands)
(Unaudited)

For the Years Ended September 30,

Description

2020

2019

2018

Net income

$

48,508

$

37,263

$

1,946

Interest expense – other

8,828

6,568

3,836

Income tax expense

6,329

-

-

Depreciation and amortization

3,249

2,682

1,685

Loss (gain) on contingent consideration

6,762

(1,674

)

-

Transaction costs(1)

3,648

1,323

438

Change in fair value of warrant liability(2)

(771

)

(1,336

)

33,187

Loss (gain) on extinguishment of debt

6,559

-

(209

)

Other expense (income), net

155

1,402

(60

)

Adjusted EBITDA

$

83,267

$

46,228

$

40,823


(1)

Consists of transaction costs related to the Company’s fiscal year 2019 and 2018 acquisitions and certain costs related to the Company’s IPO.

(2)

Represents the non-cash (income) expense recognized during the period for the change in the fair value of the warrants, which were exercised at the IPO, that were previously accounted for as a liability on our balance sheets.