ONEW - Earnings call 4 2023 | OneWater Marine Inc.

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Jack Ezzell

Good morning, and welcome to OneWater Marine's Fiscal Fourth Quarter and Full Year 2023 Earnings Conference Call. I am joined on the call today by Austin Singleton, Chief Executive Officer; and Anthony Aisquith, President and Chief Operating Officer.

Before we begin, I'd like to remind you that certain statements made by management in this morning's conference call regarding OneWater Marine and its operations may be considered forward-looking statements under securities law and involve a number of risks and uncertainties.

As a result, the company cautions you that there are a number of factors, many of which are beyond the company's control, which could cause actual results and events to differ materially from those described in the forward-looking statements. Factors that might affect the future results are discussed in the company's earnings release, which can be found in the Investor Relations section on the company's website and in its SEC filings. The company disclaims any obligation or undertaking to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made, except as required by law. And with that, I'd like to turn the call over to Austin Singleton, who will begin with a few opening remarks. Austin?

Philip Singleton

operating we everyone, by XX% today's for thanking full execution the patterns the growth in XXXX, you, top like in I their Thank return of same-store in year. sales XXXX. Furthermore, X% record which and begin the to delivered revenue the the XX% challenging Jack. for buying increased call. joining normalized would on solid to delivered for Thanks, pricing, historical despite growth environment OneWater of the team team

with in For the fourth to various stabilized. OneWater's to will parts the third record industry the year through the economic quarter, in indicated which high significantly grew the the margins of quarter, us during same-store proven but cycles normalized new fluctuate does XXXX. to service in sales returned decline were seasonality mix, helped the digits. Full encouraging. other that margins and well of was boat continue managing were we Margins industry, XX.X% outperformed which like model margins revenue boat single higher-margin it quarter offset XX%, believe data as line track Overall, which our served pricing. sales from is feel market in us down expected seem

year, hand to industry compared approach Over to XX levels on weeks on inventory our hand. aggressive past proactive and inventory average the XX management resulted at in weeks of

of sales capacity that same-store total difficult facility as results in announce noncurrent increased This set provides support inventory, on by to compared have down of with boats compelling of a completed I'm aggressively XXXX This over note the terms today the this floor and has banking to success continue the model to interest will up positioning competitive opportunity. This us a inventory more the especially $XXX recent were supply This which noncurrent us environment, we a a us to work business million while on good to flexibility, increase we a positioned plan in flooded sales our to units other XXXX in compared years. $XXX earlier despite pleased able to in expense a inventory We come. costs. prime week, quarters saving the and million. for that important with XXXX, than past it we additional carrying year integrate more capacity is market dollar greater acquired dealers few XX% to provides basis. has acquisitions. It's driven

agreement and to used flow from West acquire to focus Florida. which completed Yacht operations. The Boats XX% Roscioli also Coast us pay portion a Quality Sunseeker of and sales, our to located on a down our Center, long-term service leaseback for debt bolstered Yachting of cash the remaining interest sale proceeds our sale We and in warranty the allows on sharpen were the

As building pleased a the in the interest reminder, markets we Quality's been of and in country. with XXXX first performance most one major acquired December back in attractive have of a

And our attractive. balance powder On deal. the the for strong right be pipeline continues provides deal M&A sheet the to front, dry

are our add operating seeing proud return to we to dealership our we scrutinize a summary, While as the find extremely industry selective normalized right are I'm every opportunity navigating we challenges to of and execution to [indiscernible] environment. portfolio. In activity, and being team's more

discuss to on our their our position Anthony it we'll nimble boat continue market continue changing operations. business with We customers turn OneWater to for strategic to success. With of our focus dreams. in efforts the dynamics to provide long-term that priorities tirelessly We that, work to and remain over to response

Anthony Aisquith

sales up active boat our growth in environment, was sentiment the to summer quarter. XX% close Customer sales the in normalizing the delivering holding selling supported pre-owned Same-store and by season. solid strength new Despite from Austin. over team is sales. Thanks, remains the was a fourth

new excitement premium Show, the building Lauderdale manufacturing boat very on innovative at in which models shows, We be that the this firsthand saw Boat to segment Fort partners recent that long International with continue activity. including Our exciting [indiscernible] customers unique want. features

we're boat season conclusion, off While to a a we draw the on too are early in to start. good show

generally outperform Their to interest quarter financing. portion somewhat in customers be interest from rate. over our to to pay that high the not degree continues of financials customer in some the the adjusting to the remain to cost of sales our seems higher the side to that, and a The we with available majority point, boat From September go positioned their on was where purchases financing directly Jack used. We to retail rates Finance to be the continue economic of getting rates the our is purchase. credit boats are To the headwinds. slightly, Turning industry. With higher us I'll used and and for the us, to current financed new boat portion quarter approximately to up we this to of for though of of higher sit has believe use the the turn Overall, spread strategy income due believe XX% today, to margin insurance businesses. proportionately customers insulated averages. fourth which intend more on call widely detail. also and customers historical interest their widely average of over

Jack Ezzell

from increased in to fourth Anthony. year Fiscal revenue prior million $XXX XX% the Thanks, XXXX in $XXX quarter. million quarter

while increased preowned boat grew $XX to million to in million. New sales sales fourth $XXX XX% XX% fiscal the boat quarter,

our to when to over margin million $XXX XX.X%, quarter, the acquired These slower June compared the and X% quarter. the [ with lower ASP basis to appears quarter points driven prior volumes margins quarter the growth boat normalization quarter overall to year, strategy. in fourth from the generated where same-store prior long-term $XXX down segment winter Gross increased from lower parts will prior are price administrative that to was decreased higher higher realized and reported million. boats we driven reports as XXXX mix in for part sales the be ASP the the and shifts and quarter, a of charge the million. by from valuation. declined decline Distribution industry macroeconomic variable finance the other and has have to typically seasonal margins outperformed were and as to to gains that Distribution revenue to to the be as services outpaced challenging compared X% noncash unit in results, profit environment. Revenue the from to opposed recent general sold. of the segment, tremendous of fourth the company SG&A with stabilizing a industry. Gross those increased shift profit integration that $XX despite million percentage is by value goodwill on was tangible fourth from $XX quarter and $XXX of efforts margins primarily the cost quarter selling we margins. Fourth impairment million structure million growth the historical reported We which selling, $XX sales pace The parts the charge and mix. In for and of identifiable of X% largely in stronger grew $XX the sales benefited year compared now service sales fluctuate which We the our pre-COVID a with months, of and era, assets stock of believe the there's and year, insurance XX% optimization to patterns by XXX the to driven businesses segment year. write-down pleased the in cost mix the the sales our related of during last business, ]. In expect in We with model the fourth expenses the the months summer million significantly

per in loss a $XXX million share compared compared year. we $XXX As or $X.XX or million diluted $XX prior per loss million of $X.XX posted $XX income Net operating of quarter for prior fourth fiscal to income million totaled the to in an the the year. share result, net of

Excluding the year. we million the EBITDA other compared to reported $XX $XX adjustments, impairment adjusted million charge and in of prior

to introduced quarter per the diluted of in results. adjusted XXXX. share fourth for share earnings adjusted to a $X.XX was the our have fiscal with XXXX, comparability new Accordingly, metric, of We earnings $X.XX per also assist compared

year prior of increase and sales sales our X% the pre-owned full of increase the to XX% the an Turning Total in year, driven pre-owned revenue to new XXXX. results. unit and year average increased higher-margin boats, to increased an businesses. Same-store unit price fiscal from XXXX boats growth both billion sales the in compared for in by $X.X

in general XXX or of of million $XXX XX.X% by compared acquired recently meaningful to $XXX million administrative industry-wide the $XXX XXXX, XXXX decline to acquired gross of a expenses other X% million, year basis from fiscal revenue points and fiscal fiscal from increased XXXX. Selling, profit $XXX XX.X% increased fiscal profit revenue and fiscal a our or in offset million, operations. Full businesses. 'XX. associated and traditional businesses service result by contributions The revenue normalization return contributions driven boat to increase parts with driven year for Gross service partially prior XX.X%, and environment costs Additionally, the acquired service was SG&A decreased revenue our and XXXX of other compared margin to more of as parts business. higher for to and XXXX was as by in the percentage of promotional a dealer of XX% pricing, of parts

businesses with investments continue by fell higher year's latest $XXX of expense acquired charge compared fiscal compared of compared the $X.XX to prior income our of income year share business will the the million variable or in per XXXX operating XXXX. was in in diluted bring The million for generated impairment million, EBITDA year in structures year to year and XXXX prior diluted driven million per and reported adjusted per $XX.XX $XX to million for structure primarily share share $XXX of $X.XX with fiscal operating line moderate Net million income the fiscal [ of the We the or $XX to ]. Full XXXX. cost loss earnings year. $XXX $X.XX share per $XXX the adjusted XXXX net expense

On to total million Turning the balance of and September $XXX under excess million, credit our sheet. be including $XX of now facilities. in XXXX, the continues liquidity XX, availability cash to

September on October we our the in disclosed year. leaseback million XX a of receivable at earlier, into access that sale mentioned Austin the As transaction to Xnd, fund as close proceeds books reflected not $XX did a on entered

September negative increases XX, to Quality impact purchase Boats. Total 'XX. the at the While $XX the down inventory long-term slightly an to used we to on and annual balance $XXX debt pay compared million Subsequent million EBITDA, year-end, has on to overall, of was $XXX it September of interest a proceeds on sale adjusted flow noncontrolling basis. cash XX million

times returned As a ratio lead to boat levels, XXXX our less on than and pre-COVID compared fiscal same-store million net adjusted both at result improved debt inventory of to up has industry and basis. Long-term a currently $XXX EBITDA to stands X% X.Xx. are normalization, is of debt units

the with monitor We our we position, and our are macro leverage liquidity sheet. to environment we'll as comfortable continue and balance manage

Looking economic as downturn or expect and traditional continue margins mid-single be and outlook. to cycle sales same-store ahead to assuming our low demand XXXX, digits. are a to up moderate recovery of more major seasonal to not part We we anticipate to to a

note fiscal to our million, range guidance in EBITDA this per line to to to the with calculation a in million $XXX of share be and to of for the go-forward $X.XX We and EBITDA the insight will methodology results would basis. in expect our diluted compensation industry company's $XXX that adjusted better of range to true remain definition XXXX, in stock-based earnings standards on like year $X.XX. We be feel is part beginning performance. and will We exclude provides more and both adjusted

provided but fourth press this under these for the our year I would direct morning's to factors. definition, reconciliation fiscal quarter and like Our results further tables in release XXXX investors historical to full of the explanation

priorities Finally, unchanged. remain our allocation capital

we to opportunities continue conservatively to deploy environment cash. as monitor the will We macroeconomic evaluate

you balance the and We unwavering will opportunities to leaseback the flows. our for improved approach line concludes drive explore sales for open our questions. remarks. prepared like cash also will and our shareholders. This in transactions, We annual sheet commitment remain long-term disciplined value Operator, continue please to which

Operator

Securities. with Our the Instructions] line question Michael of from Swartz Truist first [Operator comes

Michael Swartz

to purchase -- with could I static a of sale guidance leaseback, to in what, combined the guess, terms XXXX? for a quality, so I comments, quantify was of There But the on line the P&L that the noncontrolling few or -- missed did the prerecorded transaction, you interest the things. the or actually the during in apologize. I quantify of guess, means I you lot

Jack Ezzell

so divestitures our you was that look look had at right, a EBITDA. two hit about There's late you million when September, to we $X in no the When Yes. it, certainly -- portion Quality remaining having that it the through business flow, EBITDA, doesn't to impact of of of will because cash purchase we distribution. pay out right, but -- impacts were it earnings at

the $X you the out about nets when and million transactions those out we up though even those to a it whole distributions So cost netting at lost two positive reduced million look the a reduced $X flow end interest cash earnings. -- have

Michael Swartz

Okay.

pertains boat margins. you high And on kind level new then mean, normalization expect a on be thinking fiscal you that to going forward? boat seasonality I new teens, awesome. about XX% XX%, I back about That's we I commentary whether it side, your Should we 'XX thinking getting Okay. of broader to should maybe said just that's as the guess, in margins of be think guidance,

Jack Ezzell

Yes.

if I X you we've We've right quarters, last that's of think the look around at where been. been kind XX%.

margins. think June seems feels go I that -- on the we quarters, forward, that is September that it is new and as kind it boat where it's Certainly, had what high like normalizing. we So reset of in means teens

of So now next as against in up much QX comps we year, look that we're into terms and QX higher margin. boat new of right,

those and to think got think half kind the the will of on still margin I so out reset year certainly, And you about that the remember of you as lay those, -- we you need modeling to quarters, standpoint. as first

And December just to of And up then things you pick we'll net can be winter probably of so normal go quarter. Mike, EBITDA as you've we're I been we spring we boat at summer. back the from around QX, the the with years, the earnings perspective. But kind a I look when of know where the positive per quarter, that means if going that's the many QX slow was that to business, and times environment. while, certainly, seasonality type breakeven back income, an share, getting But in remember think into shows type they and a

Michael Swartz

the of your I in or outlook a share? for the give is, are guess, there sales, Great. store sense final of And just then comp with one -- price comp outlook Okay. year for market store versus sorry, me us just new the versus or Maybe new volume what pieces maybe ahead. terms industry

Jack Ezzell

sure. don't we're we mean, look, think unit and to industry gain For is volume always expecting the anybody looking I I about the think and be I as dramatically. exceed think market industry share up

I looking that's around probably not unit best bit flat of it. It's a the characterize way increase. think I to we're a volume, price more -- think at little probably

Operator

Craig Our W. Kennison next from line Baird. comes of question with the R.

Craig Kennison

somewhat the that that interest like rate profile I'm reacting profile increases the a really that's recently. last interest seems and a in big to immune has rise your months And consumer It then is the the on if rates payment. consumer monthly until story in to impact just been you see few wondering profile, in those

if data your might be. wondering demarcation that line see Just you where in of

Philip Singleton

of number. Craig, out in the lot products is in, I mean, little to He's playing bit insulated -- training around I but has to time -- is little more and sure buyer want now. One with we it's we have him they're we've think not mid-XX% and affecting really as didn't I on still a in place enforced And do mean I much Anthony iron making even we financing, a process been is I'll we -- don't think that the the their be would in spend and and don't we a more from gives that think thing and high for that I customers work the Yes. of keeps that us somewhere industry a had the years I effort that that. And with process majority mean much let money we, of as we if the jump good is, this. the think penetration think, than are the in I a our we where are else. are, I much, point bit best feel getting I point. we're buyer financing, the insulated don't carry high. just industry fist, lower more deal that rate -- us as I little a that kind

you on stuff So of Anthony, in you that playing with. jump around that want to kind

Anthony Aisquith

Yes. I X the ago they it's month the people And mark about from $XXX all years in we're ago. out, the month a boats to than when payment. from or take did look really, away basically of difference mean if at at a more years $XXX X seeing X back $XXX,XXX noise you you big is today, it not

comes that's down take So the really what over XXX percentage ] month to that X math having consumers $XXX pay. more [ the a it's to months, you when points

or back we're away So anybody seeing at falter from that not all.

Craig Kennison

for your heard very I And penetration know with think rate. curious guess I'm I time? during a I it's respect I F&I remarks, change F&I rate over the penetration number to Anthony, you. how good And does prepared something the

I see bit. situation who boat, have take But or little option to not rather slip if on just own said of based XX%. a than penetration kind curious think I'm need if you personal the the it your to consumers over you their finance a

Anthony Aisquith

home for their through the at against We HELOC customers maybe money, They're in all fully not about our own they're the believe you. XX%. just their what borrowing honestly boat. actually that have new paying Actually, not borrowing against cash or penetration on their all quarter, boat finance, was they're No. us, of XX%

-- new our years, we way a -- And the always quarter fourth our for our try process It's sell. been has in percent. just So place rate -- XX-plus boat actually the to we over target just finance penetration we've XX%. was the in is

Philip Singleton

I but think you the not hard beginning, hey, penalty. interest this sales real talk about and not when this manager, easy simple the setting guys, you we business tell loan, only quick, got talk it's is from Craig, process, to a it's one prepayment if if start this up thing no train pretty like they and the somebody,

boat, somewhere buying you're $XXX,XXX a here else. $XXX,XXX If you've sitting sir, got over

amount, off else boat a somewhere used you always it uses. think that So that, pay you at could you that can but be $XXX,XXX paid always don't can better tomorrow,

I that just and stuff to So and crafting can like, of yes, pay that, the we way don't time. people put liquidity. a I why in I it kind we why It's of take more this I money script just it's Well, it? it luxury. talk Or off my don't the market? keep and do any a with boat Or like the as fresh don't why

that story closing the things again, build that's going to -- things And starting you So to goes the X the through you from just increase is that just the the I to It's years over it that's to our you're process, really that why process that we've rate. whole higher. customer. you this And kind as back us the allowed kind on process the of of sales little think boat. minute through get add that penetration meet it's of done one last and the

Operator

of next Raymond with Our Joe line Altobello the from comes James. question

Unknown Analyst

Joe. for on Martin is This

year. guidance wondering we next more for I you are color get comps. the And believe stock-based a EBITDA Just can around now including if little

around wondering of get as well. direction So if that kind some or can we a number just

Jack Ezzell

problem. no Yes,

this you When half and a through first and the look we next it's number comp, year. the Just for about on normalizing of the at $X stock-based year, you year margins. at look where the think printed you right, guide, million

a back you -- you that back So go of Roscioli gets margin $X that to gets in what's out differential that for number. that Lookout about it the think if to million process mentioned million $XXX calculating you divestiture. before I kind through It and when I

X. news next type about I got moderation excited are we're later, some cautiously day information out fair we're good else in a the day and year, comes back some X one a it headwinds. inflationary like in it news recently different seems here optimistic while or of there But people last is camp. then think or We days that amount really about So and something inflation of are

we We're we as can boats inventory that, stay So to hyper right can the on and making available as many going right going stay on control. we're hyper sure what ready to that control we and focused focused locations sale. for the at it's sell have

Unknown Analyst

It's very Got helpful. it.

another into when question, assume comes will fiscal trends that year? it summer? think the to improving does it throughout retail the guidance, Or Just current start you

Jack Ezzell

Yes.

with Lauderdale, lot I the of as point shows just the at Fort a towards unknowns I think year certainly encouraged, year think this most it's with early too recent look to a but there's little we're boat we in tell. and recently

through get shows, boat type Miami look the you we going of time as and the often think what like. look show the what to frame season winter rest for good is going the is I kind to to Lauderdale boat sentiment November, year a season from that typically like of gives

said type And so is, cautiously flat mid-single-digit earlier, low assuming to optimistic. I like environment. basically a this The was unit I we're guide

just with macro cautious. the But against -- said, unknowns I like headwinds a there's us. that So there's of we're lot being be could

Operator

with comes Griffin question from D.A. Bryan the next Our Davidson. of line

Griffin Bryan

to on Brandon. Griffin out category heading anything is season. This XX the ] show you days. over [ there trends to as you've call Can about And recent just any seen we talk XX the for to last

Philip Singleton

good Fort don't show, a mix. there's Yes, boat bigger coming last XX think a any well, been change. I changed, significant over Lauderdale the anything XX has Obviously, out that's mean I boat good the we've of I days had to mean,

a of XX to the XX not last evaluation fair it's So days.

broad the -- a trend across the -- that shopping makes we're any I model all consumer if brands, seeing really is been it's that there's consumer it's it's bit and pretty segments. think little is harder,

you probably let It's know, is to the the that of got of everything SSI it I'm segments doing stars shining the we wrong, to at the look you at Anthony, have when than kind others. But anything industry, "Oh best data, but get of speaks it's better it when of think these we're or are certain us, my me look generalization we kind I if I don't but don't have like there, any -- things." seems battle just like, that hard-fought rid a you -- line. have out gosh, just toeing

Anthony Aisquith

No, be that all. we boat. -- our have very several to people not at There's but continue nothing that still make innovative of the manufacturers want to buy

So are there's boats very to continue new that doing out well. come that

Griffin Bryan

then promotions on Okay. seen Great. And how you years? any promotions of versus as just previous compare can color give OEM and you've may those late

Anthony Aisquith

are in didn't they We and them manufacturers making plentiful The yes, year. are through moving standing the inventory. the dealers previous we're now. behind sure have And

Philip Singleton

Yes.

think June, They're was in they manufacturers right? -- think about were a healthy the was the trend the that that think got very going ago. that we conversations the the the can And couple June we've end to was of I can -- was we into and good reckoning we're I year, of I much not compared at And to the going industry I XXXXs, just the next about XX continuing the month ] that thought go into building. that last continue with selling that -- and so And ordering their field, days out that what the end of -- think into feeling I'm a and good it year, industry looks business that lot nervous I than pretty Lauderdale today, that think I do many dealers if mean not last inventory and it's summer. all. plan lot they knowing Wells out -- came understand really aggressive more sign. I as this. season into We're to Fargo they're of the we a inventories get with positive us Everybody got have going was the are floor looking If actually a coming of not this. And momentum on better. to they through to continues quarter. Having and how weeks of do there. of of for book end [ of through we're a

So got happens see -- year that be a light that of we the to the could and over through a just end of January. or through bright shining little wait star kind what

Operator

[Operator question of Noah Instructions] Markets. KeyBanc line Our from the with next comes Zatzkin Capital

Noah Zatzkin

Maybe just than maybe dealer one on the to differently the that thoughts inventory the of strength attribute consumer operating versus the How broader relative same-store you helpful. much industry Just industry would customer during strength broader your would relative quarter. the to to versus sales industry base? the any be around

Philip Singleton

that or to our talk beat a continue I we Well, we're I'm we processes that of that they are there pricing to water, that think take want near why or mean the going boats to didn't -- boater I of on out boat. lot a the moving knew the because so of that of when would water. And during people want still to to wait on or they how that the competition, consumer a is on churn -- drum the little there And grow. I is still people and and and want that's near And I but got move call then the in bit still you've then over what share didn't going up able to kind still it be system, market the our gives appears They owns it active. things they of mean, of do course, jump about long. forever. weren't CRM we the feel us our leg a want COVID was professional several market happening.

it's first time, out processes help we're with what an then along it's mean, incentives. X manufacturers -- that in just our there think market. And And rebates and the procedures I just years good our I for overall the like that. with us So from as promotional coming

lot, that helps too. So a

industry of So OneWater things helping are market two that gain think buck I kind and the those share.

Anthony Aisquith

I know how around relatedly, you than touched M&A, months Really outperformance the full is you ago? -- taking just just this, thoughts do think the relative thoughts in maybe in next more kind year? of but Or of given helpful. And X your share, was like in opportunity it the pipeline terms about on

Philip Singleton

held the it of didn't No, just didn't I jump up, It's kind is steady. been of just pipeline kind it steady, like decrease. think

pipeline, think we X, the said that when the what an which aged pipeline, with no is the since behind you exit it's driver I industry look strategy. at day main

day every as so that And by, goes things change.

next little pipeline, more we look we that room a at For still adjust to now normalize. we like looking it. the to year margins were of than about because at cautious the some the us, X they as should we probably dealers higher earlier, other first need for last These spoke -- to right look today quarters because bit X what we some there's in those we're they Jack feel are the way are quarters, for like we at be

And to or no, some whatever. dealers hold, convinced back going they're they'll are their in just still come head,

things that need these really kind of to So normalize. all there's little

EBITDA. yes, have I'm kind couple of talking so hey, of guys the come we're to going to to as And much not we have that do realization a that, that have

and sure floor changed. interest So trying make hasn't stuff be the It's higher we on, sure we're in what to is are the basis. how multiple yearly to across comfortable our margins a on they're what and look that we're paying -- a on line really board, making and that's a rates get going approach normalizing normalization to multiple everybody plan with at is and the our with

go want biggest weeks than sure inventory. So we and is hand buy have issue that they brings to somebody XX down the are. And don't up clean to their that further to on number of even wanting outdated we're then make

XX. of inventory is of things that a we've lot So on the and kind -- through. now, I things of going pause months know given normalize little months are got what's And -- bit think come going is or to been to continue to from trailing kind we that back is from flush that's now, that a X EBITDA pause X on to going a right more look that the to different now year-to-year a continue in that us money

just we're at anything do there just So to right stuff jump out now. rushing and some looking we're and not in

Operator

further Mr. remarks. Singleton questions to back Instructions] [Operator for hand not conference showing like this time. closing I'd any at over the Austin I'm to

Philip Singleton

Well, thank I on any don't call, remarks. everybody We have closing and the appreciate just really all. you

Operator

and you thank participation gentlemen, conference. Ladies in for your today's

may now day. have Everyone, wonderful a You disconnect.

OneWater Marine (ONEW) 16 Nov 232023 Q4 Earnings call transcript