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What changed in OneWater Marine Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of OneWater Marine Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+389 added−407 removedSource: 10-K (2024-12-10) vs 10-K (2023-12-14)

Top changes in OneWater Marine Inc.'s 2024 10-K

389 paragraphs added · 407 removed · 315 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

62 edited+2 added−6 removed166 unchanged
Biggest changeFor the years ended September 30, 2021, interest on new boats and for rental units was calculated using the legacy one month London Inter-Bank Offering Rate (“LIBOR”). Our Inventory Financing Facility requires us to pay the benchmark rate plus an applicable margin of 2.75% to 5.00% depending on the age of the inventory.
Biggest changeOur Inventory Financing Facility requires us to pay the benchmark rate plus an applicable margin of 2.75% to 5.00% depending on the age of the inventory. The interest rate for pre-owned boats is calculated using the new boat rate set forth above plus 0.25%.
Each location is managed by a general manager, often a former owner, who oversees the day-to-day operations and financial performance of that particular individual location. Typically, each retail location also has a staff consisting of sales representatives, a finance & insurance manager, a service manager, a parts manager, maintenance and repair technicians and additional support personnel.
Each location is managed by a general manager, often a former owner, who oversees the day-to-day operations and financial performance of that particular individual location. Each retail location also has a staff typically consisting of sales representatives, a finance & insurance manager, a service manager, a parts manager, maintenance and repair technicians and additional support personnel.
Schraudenbach serves on the board of Printpack, Inc a private manufacturer of packaging materials for consumer products and other industries. Mr. Schraudenbach also serves on the University of Georgia Foundation Board as well as various other civic organizations. Mr. Schraudenbach received both a Bachelor and Masters of Accounting from the University of Georgia. He was a Certified Public Accountant.
He also serves on the board of Printpack, Inc a private manufacturer of packaging materials for consumer products and other industries. Mr. Schraudenbach also serves on the University of Georgia Foundation Board as well as various other civic organizations. Mr. Schraudenbach received both a Bachelor and Masters of Accounting from the University of Georgia. He was a Certified Public Accountant.
Ezzell has over 25 years of accounting and finance experience, with over 19 years of experience in the boating industry specifically. Immediately prior to beginning his tenure as Chief Financial Officer of OneWater LLC, Mr. Ezzell was a General Manager at MarineMax (NYSE: HZO), where he oversaw all dealership operations at MarineMax’s Clearwater and St. Petersburg, Florida locations.
Ezzell has over 25 years of accounting and finance experience, with over 20 years of experience in the boating industry specifically. Immediately prior to beginning his tenure as Chief Financial Officer of OneWater LLC, Mr. Ezzell was a General Manager at MarineMax (NYSE: HZO), where he oversaw all dealership operations at MarineMax’s Clearwater and St. Petersburg, Florida locations.
We offer products from a broad variety of manufacturers and brands without relying on any one manufacturer or brand in particular. No single brand accounted for more than 8% of our total sales volume in fiscal year 2023. We also sell pre-owned versions of the brands we offer and pre-owned boats of other brands we take as trade-ins or acquire.
We offer products from a broad variety of manufacturers and brands without relying on any one manufacturer or brand in particular. No single brand accounted for more than 8% of our total sales volume in fiscal year 2024. We also sell pre-owned versions of the brands we offer and pre-owned boats of other brands we take as trade-ins or acquire.
We offer a variety of some of the most innovative, luxurious, and premium pontoon models to fit boaters’ needs, from brands such as Bennington, Barletta and Harris. Our runabouts, such as Cobalt, Regal and Chris-Craft, target the family recreational boating markets and come in a variety of configurations to suit each customer’s particular recreational boating style.
We offer a variety of some of the most innovative, luxurious, and premium pontoon models to fit boaters’ needs, from brands such as Bennington and Barletta. Our runabouts, such as Cobalt, Regal, Chris-Craft and Yamaha, target the family recreational boating markets and come in a variety of configurations to suit each customer’s particular recreational boating style.
Additionally, we operate 18 marina locations that provide fueling, docking and indoor and outdoor storage. Our focus on customer service, which we believe is one of our core competitive advantages in the retail marine industry, is critical to our efforts in creating and maintaining long-term customers.
Additionally, we operate 20 marina locations that provide fueling, docking and indoor and outdoor storage. Our focus on customer service, which we believe is one of our core competitive advantages in the retail marine industry, is critical to our efforts in creating and maintaining long-term customers.
Lamkin Director 54 John G. Troiano Director 53 Executive Officers P. Austin Singleton has served as our Chief Executive Officer and Director since April 2019, the Chief Executive Officer of OneWater LLC since its formation in 2014, and the Chief Executive Officer of Singleton Marine, which later merged with Legendary Marine to form OneWater LLC, since 2006. Mr.
Lamkin Director 55 John G. Troiano Director 54 Executive Officers P. Austin Singleton has served as our Chief Executive Officer and Director since April 2019, the Chief Executive Officer of OneWater LLC since its formation in 2014, and the Chief Executive Officer of Singleton Marine, which later merged with Legendary Marine to form OneWater LLC, since 2006. Mr.
Revenue from motors, trailers, PWC, wholesale and other sales comprised 5% of our new boat revenue for fiscal year 2023. The motors and trailers we offer range in size, horsepower, length and style dependent upon the type of boat our customers may own.
Revenue from motors, trailers, PWC, wholesale and other sales comprised 5% of our new boat revenue for fiscal year 2024. The motors and trailers we offer range in size, horsepower, length and style dependent upon the type of boat our customers may own.
Relative demand for new and late-model boats has increased in recent years in part due to the continuous evolution of boat technology and design including, but not limited to, seating configurations, power, efficiency, instrumentation and electronics, and wakesurf gates, each of which represents a material design improvement that cannot be matched by more dated boat models.
Relative demand for new and late-model boats has remained strong in recent years in part due to the continuous evolution of boat technology and design including, but not limited to, seating configurations, power, efficiency, instrumentation and electronics, and wakesurf gates, each of which represents a material design improvement that cannot be matched by more dated boat models.
With a variety of designs and options, the pontoon boats and runabouts we offer appeal to a broad audience of boat enthusiasts and existing customers. Wake/Ski Boats . Revenue from wake/ski boats comprised 4% of our new boat revenue for fiscal year 2023.
With a variety of designs and options, the pontoon boats and runabouts we offer appeal to a broad audience of boat enthusiasts and existing customers. Wake/Ski Boats . Revenue from wake/ski boats comprised 4% of our new boat revenue for fiscal year 2024.
We routinely evaluate our sales performance and consumer demand to ensure that the economic relationship we have in place with our manufacturers and suppliers optimizes our profitability. We were formed in 2014 as OneWater LLC through the combination of Singleton Marine and Legendary Marine, which created a marine retail platform that collectively owned and operated 19 dealerships.
We routinely evaluate our sales performance and consumer demand to ensure that the economic relationship we have in place with our manufacturers and suppliers optimizes our profitability. 3 Table of Contents We were formed in 2014 as OneWater LLC through the combination of Singleton Marine and Legendary Marine, which created a marine retail platform that collectively owned and operated 19 dealerships.
We believe we are currently a top-three customer for 29 of our 70 brands and the single largest customer for each of our top five highest-selling brands. While we believe our order volume amounts to between 10% to 40% of total sales for those top five brands, no single brand accounts for more than 8% of our total sales volume.
We believe we are currently a top-three customer for 25 of our brands and the single largest customer for each of our top five highest-selling brands. While we believe our order volume amounts to between 10% to 40% of total sales for those top five brands, no single brand accounts for more than 8% of our total sales volume.
We believe we are currently a top-three customer for 29 of our 70 brands and the single largest customer for each of our top five highest-selling brands. While we believe our order volume amounts to between 10% to 40% of total sales for those top five brands, no single brand accounts for more than 8% of our total sales volume.
We believe we are currently a top-three customer for 25 of our brands and the single largest customer for each of our top five highest-selling brands. While we believe our order volume amounts to between 10% to 40% of total sales for those top five brands, no single brand accounts for more than 8% of our total sales volume.
Additionally, the recent acquisitions of T-H Marine Supplies, LLC (“T-H Marine”) and Ocean Bio-Chem, Inc. ("Ocean Bio-Chem") have significantly expanded our sales of marine-related parts and accessories.
Additionally, the acquisitions of T-H Marine Supplies, LLC (“T-H Marine”) and Ocean Bio-Chem, Inc. (now Ocean Bio-Chem, LLC) ("Ocean Bio-Chem") have significantly expanded our sales of marine-related parts and accessories.
Additionally, hurricanes and other storms may cause disruptions to our business operations or damage to our inventories and facilities. We believe our geographic diversity is likely to reduce the overall impact to us of adverse weather conditions in any one market area.
Additionally, hurricanes, tornadoes and other storms have and in the future may cause disruptions to our business operations or damage to our inventories and facilities. We believe our geographic diversity is likely to reduce the overall impact to us of adverse weather conditions in any one market area.
Non-boat sales include aftermarket accessories ( 21% of total 2022 boating retail sales) and finance & insurance products and ancillary services, such as insurance, maintenance and fuel ( 20% of total 2022 boating retail sales). The strategic acquisitions we made in our Distribution segment have increased our presence in the significant aftermarket accessories market.
Non-boat sales include aftermarket accessories ( 21% of total 2023 boating retail sales) and finance & insurance products and ancillary services, such as insurance, maintenance and fuel ( 21% of total 2023 boating retail sales). The strategic acquisitions we made in our Distribution segment have increased our presence in the significant aftermarket accessories market.
The boat dealership market is highly fragmented with approximately 4,200 dealerships nationwide, and the majority of retailers are owner-operated with three stores or fewer.
The boat dealership market is highly fragmented with approximately 4,000 dealerships nationwide, and the majority of retailers are owner-operated with three stores or fewer.
We believe our status as a consolidator of choice is based on the expertise we have developed through completing 33 acquisitions (80 dealerships, 12 distribution centers/warehouses acquired) since the combination of Singleton Marine and Legendary Marine in 2014, our growing cash flow and financial profile, and our footprint of retailers within prime markets.
We believe our status as a consolidator of choice is based on the expertise we have developed through completing 34 acquisitions (81 dealerships, 12 distribution centers/warehouses acquired) since the combination of Singleton Marine and Legendary Marine in 2014, our growing cash flow and financial profile, and our footprint of retailers within prime markets.
Each dealership generally includes an indoor showroom and an outside display area for our new and pre-owned boat inventories, along with a business office to facilitate finance & insurance products and repair and maintenance services facilities. We also have 11 locations spanning 6 states in our Distribution segment.
Each dealership generally includes an indoor showroom and an outside display area for our new and pre-owned boat inventories, along with a business office to facilitate finance & insurance products and repair and maintenance services facilities. We also have 10 locations spanning 5 states in our Distribution segment.
We believe that the product lines and brands we offer are among the highest quality within their respective market categories, with well-established brand recognition and reputations for quality, performance, styling and innovation. Fishing Boats . Revenue from fishing boats comprised 39% of our new boat revenue for fiscal year 2023.
We believe that the product lines and brands we offer are among the highest quality within their respective market categories, with well-established brand recognition and reputations for quality, performance, styling and innovation. Fishing Boats . Revenue from fishing boats comprised 38% of our new boat revenue for fiscal year 2024.
The fishing boats we offer typically feature livewells, in-deck fishboxes, rodholders, rigging stations, cockpit coaming pads and fresh and saltwater washdowns. Pontoon Boats and Runabouts . Revenue from pontoon boats and runabouts comprised 30% of our new boat revenue for fiscal year 2023.
The fishing boats we offer typically feature livewells, in-deck fishboxes, rodholders, rigging stations, cockpit coaming pads and fresh and saltwater washdowns. Pontoon Boats and Runabouts . Revenue from pontoon boats and runabouts comprised 29% of our new boat revenue for fiscal year 2024.
Our limited ability to participate in boat shows in our existing target markets, including cancellation of boat shows for any reason, including a pandemic, could have an impact on our seasonality. To the extent boat shows may be delayed or cancelled, we intend to hold complementary sales events on a smaller, more personalized scale.
Our limited ability to participate in boat shows in our existing target markets, including cancellation of boat shows for any reason, including weather events or a global health crisis, could have an impact on our seasonality. To the extent boat shows may be delayed or cancelled, we intend to hold complementary sales events on a smaller, more personalized scale.
We continue to strategically evaluate potential acquisitions and as a result of our reputation in the marketplace, we expect our pipeline of potential acquisitions to grow over time. Industry Trends and Market Opportunity U.S. Recreational Boating Industry Recreational boating is a well-established American pastime that attracts millions of people each year to the water.
We continue to strategically evaluate potential acquisitions and as a result of our reputation in the marketplace, we expect our pipeline of potential acquisitions to remain strong. Industry Trends and Market Opportunity U.S. Recreational Boating Industry Recreational boating is a well-established American pastime that attracts millions of people each year to the water.
We compete primarily with local marine retailers who own three or fewer stores, as well as with a limited number of larger operators, including MarineMax and Bass Pro Shops. Additionally, with respect to sales of marine parts, accessories, and equipment, we also compete with national specialty marine parts and accessory stores, online catalog retailers, sporting goods stores, and mass merchants.
We compete primarily with local marine retailers who own three or fewer stores, as well as with a limited number of larger operators. Additionally, with respect to sales of marine parts, accessories, and equipment, we also compete with national specialty marine parts and accessory stores, online catalog retailers, sporting goods stores, and mass merchants.
Revenue from yachts comprised 22% of our new boat revenue for fiscal year 2023. The yachts we offer range from traditional models to advanced models, from brands such as Absolute, Riviera, Tiara and Sunseeker.
Revenue from yachts comprised 24% of our new boat revenue for fiscal year 2024. The yachts we offer range from traditional models to advanced models, from brands such as Absolute, Riviera, Tiara and Sunseeker.
Since the combination in 2014, we have acquired a total of 80 additional dealerships, 12 distribution centers/warehouses and multiple online marketplaces through 33 acquisitions. Our current portfolio as of September 30, 2023 consists of multiple brands which are recognized on a local, regional or national basis.
Since the combination in 2014, we have acquired a total of 81 additional dealerships, 12 distribution centers/warehouses and multiple online marketplaces through 34 acquisitions. Our current portfolio as of September 30, 2024 consists of multiple brands which are recognized on a local, regional or national basis.
As of November 28, 2023, OneWater Inc. owned 91.0% of OneWater LLC. Certain of the Legacy Owners hold one share of our Class B common stock, par value $0.01 per share (the “Class B common stock”), for each OneWater LLC Unit such person holds.
As of November 26, 2024, OneWater Inc. owned 91.2% of OneWater LLC. Certain of the Legacy Owners hold one share of our Class B common stock, par value $0.01 per share (the “Class B common stock”), for each OneWater LLC Unit such person holds.
Additionally, our top brand only accounts for approximately 12% of new boat sales. However, sales of new boats from the top ten brands represent approximately 39.4% of our total sales volume for fiscal year 2023. As part of our business, we enter into renewable annual dealer agreements with boat manufacturers.
Additionally, our top brand only accounts for approximately 12% of new boat sales. However, sales of new boats from the top ten brands represent approximately 41.7% of our total sales volume for fiscal year 2024. As part of our business, we enter into renewable annual dealer agreements with boat manufacturers.
Our inventory turnover ratio, which is calculated as cost of goods sold for the period divided by the average inventory over the same period, was 2.9x and 4.6x for fiscal years 2023 and 2022, respectively.
Our inventory turnover ratio, which is calculated as cost of goods sold for the period divided by the average inventory over the same period, was 2.2x and 2.9x for fiscal years 2024 and 2023, respectively.
Overview We believe that we are one of the largest and fastest-growing marine retailers in the United States with 98 dealership locations, 11 distribution centers/warehouses and multiple online marketplaces as of September 30, 2023.
Overview We believe that we are one of the largest and fastest-growing marine retailers in the United States with 96 dealership locations, 10 distribution centers/warehouses and multiple online marketplaces as of September 30, 2024.
In 2022, $59.3 billion was spent on retail boating sales, which has contributed to annual growth in excess of 6% percent since 2011. Consumer marine spending includes purchases of new and pre-owned boats; marine products such as engines, trailers, equipment, and accessories; and related expenditures, such as fuel, insurance, docking, storage, and repairs.
In 2023, $57.7 billion was spent on retail boating sales, which has contributed to annual growth of 6% percent since 2012. Consumer marine spending includes purchases of new and pre-owned boats; marine products such as engines, trailers, equipment, and accessories; and related expenditures, such as fuel, insurance, docking, storage, and repairs.
As of September 30, 2023, the Dealerships segment includes operations of 98 dealerships in 15 states including Florida, Texas, Alabama and Georgia, among others, and represents approximately 91% of revenues for the year ended September 30, 2023.
As of September 30, 2024, the Dealerships segment includes operations of 96 dealerships in 16 states including Florida, Texas, Alabama and Georgia, among others, and represents approximately 91% of revenues for the year ended September 30, 2024.
Locations In our Dealership segment, we offer new and pre-owned recreational boats and other related marine products and boat services through 98 dealerships in 15 states as of September 30, 2023.
Locations In our Dealership segment, we offer new and pre-owned recreational boats and other related marine products and boat services through 96 dealerships in 16 states as of September 30, 2024.
We also display a select number of boats and yachts through consignment agreements, including with related parties. We offer a wide array of new boats at various price points through relationships with 49 manufacturers covering 70 brands.
We also display a select number of boats and yachts through consignment agreements, including with related parties. We offer a wide array of new boats at various price points through relationships with over 35 manufacturers covering more than 50 brands.
Non-boat sales were approximately 19.5% of revenue and 35.6% of gross profit in fiscal year 2023, 17.8% of revenue and 30.1% of gross profit in fiscal year 2022 and 11.3% of revenue and 25.8% of gross profit in fiscal year 2021.
Non-boat sales were approximately 19.3% of revenue and 40.0% of gross profit in fiscal year 2024, 19.5% of revenue and 35.6% of gross profit in fiscal year 2023 and 17.8% of revenue and 30.1% of gross profit in fiscal year 2022.
After the significant growth in 2020 and 2021, pre-owned traditional powerboat sales have started to normalize following the COVID-19 pandemic but still remain well in excess of pre-pandemic sales. With the exception of 2020 - 2022, pre-owned traditional powerboat sales have remained relatively consistent seen since 2006 and through economic cycles.
After the significant growth in 2020 and 2021, pre-owned traditional powerboat sales have normalized following the COVID-19 pandemic but still remain well in excess of the pre-pandemic level of $9.2 billion in 2019. With the exception of 2020 - 2022, pre-owned traditional powerboat sales have remained relatively consistent seen since 2006 and through economic cycles.
Service, Parts & Other Service, parts & other accounted for approximately $321.8 million or 16.6% of our revenue during fiscal year 2023 and is comprised of revenues generated from our Dealerships and Distribution reporting segments. Dealerships We provide repair and maintenance services at most of our dealerships.
Service, Parts & Other Service, parts & other accounted for approximately $290.7 million or 16.4% of our revenue during fiscal year 2024 and is comprised of revenues generated from our Dealerships and Distribution reporting segments. Dealerships We provide repair and maintenance services at most of our dealerships.
Ocean Bio-Chem also manufactures, markets and distributes chlorine dioxide-based deodorizing disinfectant, and sanitizing products under the Star brite® and Performacide® brand names, utilizing a patented delivery system for use with products containing chlorine dioxide. 7 Table of Contents We believe this segment will advance our strategic growth and diversification strategies and is expected to materially expand our addressable market in the parts and accessories business.
Ocean Bio-Chem also manufactures, markets and distributes chlorine dioxide-based deodorizing disinfectant, and sanitizing products under the Star brite® and Performacide® brand names, utilizing a patented delivery system for use with products containing chlorine dioxide. 7 Table of Contents This segment has advanced our strategic growth and diversification strategies and has expanded our addressable market in the parts and accessories business.
Human Capital Resources As of September 30, 2023, we had 2,319 employees, 2,076 of whom were in location-level operations and 243 of whom were in corporate administration and management. We are not a party to any collective bargaining agreements. We consider our relations with our employees to be excellent.
Human Capital Resources As of September 30, 2024, we had 2,203 employees, 1,965 of whom were in location-level operations and 238 of whom were in corporate administration and management. We are not a party to any collective bargaining agreements. We consider our relations with our employees to be excellent.
Austin Singleton Founder, Chief Executive Officer and Director 50 Anthony Aisquith President, Chief Operating Officer and Director 56 Jack Ezzell Chief Financial Officer and Secretary 53 John F. Schraudenbach Director and Chairman of the Board of Directors 64 Bari A. Harlam Director 62 Carmen Bauza Director 61 Christopher W. Bodine Director 68 J. Steven Roy Director 63 Jeffery B.
Austin Singleton Founder, Chief Executive Officer and Director 51 Anthony Aisquith President, Chief Operating Officer and Director 57 Jack Ezzell Chief Financial Officer and Secretary 54 John F. Schraudenbach Director and Chairman of the Board of Directors 65 Bari A. Harlam Director 63 Carmen Bauza Director 62 Christopher W. Bodine Director 69 J. Steven Roy Director 64 Jeffery B.
New boat sales and pre-owned boat sales constituted 37% and 22% of 2022 boating retail sales, respectively, based on industry data from the National Marine Manufacturers Association (“NMMA”). The NMMA estimates that approximately 998,000 pre-owned boats were sold in 2022.
New boat sales and pre-owned boat sales constituted 38% and 20% of 2023 boating retail sales, respectively, based on industry data from the National Marine Manufacturers Association (“NMMA”). The NMMA estimates that approximately 940,000 pre-owned boats were sold in 2023.
Roy has served on the University of Alabama President’s Cabinet, and as a Director at the Business Council of Alabama and the Dothan Area Chamber of Commerce. Mr. Roy earned his B.S. in Accounting from the University of Alabama. Our Board of Directors believes that Mr.
Roy currently serves on the University of Alabama System Board of Trustees and previously served as a Director at the Business Council of Alabama and the Dothan Area Chamber of Commerce. Mr. Roy earned his B.S. in Accounting from the University of Alabama. Our Board of Directors believes that Mr.
Despite our size, we comprise less than 3% of total industry sales. Our scale and business model allow us to leverage our extensive inventory to provide consumers with the ability to find a boat that matches their preferences (e.g., make, model, color, configuration and other options) and to deliver the boat within days while providing a personalized sales experience.
Our scale and business model allow us to leverage our extensive inventory to provide consumers with the ability to find a boat that matches their preferences (e.g., make, model, color, configuration and other options) and to deliver the boat within days while providing a personalized sales experience.
During fiscal year 2023, new boat sales accounted for approximately $1,223.7 million or 63.2% of our consolidated revenue, and pre-owned boat sales accounted for approximately $334.5 million or 17.3% of our consolidated revenue. We offer new and pre-owned recreational boats in a broad range of product categories.
During fiscal year 2024, new boat sales accounted for approximately $1,118.3 million or 63.1% of our consolidated revenue, and pre-owned boat sales accounted for approximately $312.2 million or 17.6% of our consolidated revenue. We offer new and pre-owned recreational boats in a broad range of product categories.
Fee income generated from finance & insurance products accounted for approximately $56.3 million or 2.9% of our revenue during fiscal year 2023.
Fee income generated from finance & insurance products accounted for approximately $51.5 million or 2.9% of our revenue during fiscal year 2024.
As of September 30, 2023, the Distribution segment includes the activity of three of our fully-owned businesses, PartsVu, Ocean Bio-Chem and T-H Marine and its subsidiaries, which together operate 11 distribution centers/warehouses in Alabama, Florida, Oklahoma, Indiana, Tennessee and Illinois and represents approximately 9% of revenues.
As of September 30, 2024, the Distribution segment includes the activity of three of our fully-owned businesses, Central Assets & Operations, LLC d/b/a PartsVu ("PartsVu"), Ocean Bio-Chem and its subsidiaries and T-H Marine and its subsidiaries, which together operate 10 distribution centers/warehouses in Alabama, Florida, Oklahoma, Indiana and Tennessee and represents approximately 9% of revenues.
In fiscal year 2023, we sold over 10,000 new and pre-owned boats, many of which were sold to customers who had a trade-in or with whom we otherwise had established relationships. We offer a wide array of new boats at various price points through relationships with 49 manufacturers covering 70 brands.
In fiscal year 2024, we sold over 9,500 new and pre-owned boats, many of which were sold to customers who had a trade-in or with whom we otherwise had established relationships. We offer a wide array of new boats at various price points through relationships with over 35 manufacturers covering more than 50 brands.
Over the three-year period ended September 30, 2023, the average revenue for the quarters ended December 31, March 31, June 30 and September 30 represented approximately 19%, 26%, 32%, and 23%, respectively, of our average annual revenues.
Over the three-year period ended September 30, 2024, the average revenue for the quarters ended December 31, March 31, June 30 and September 30 represented approximately 20%, 27%, 31%, and 22%, respectively, of our average annual revenues.
We believe non-boat sales will be a driver of our organic growth strategy in the future. We have completed acquisitions and implemented a targeted marketing strategy across our platform focused on growing new and existing customer awareness and usage of our finance & insurance products, repair and maintenance services, and parts and accessories products.
We have completed acquisitions and implemented a targeted marketing strategy across our platform focused on growing new and existing customer awareness and usage of our finance & insurance products, repair and maintenance services, and parts and accessories products.
Schraudenbach is a partner with The Goodwin Group, an executive retained search firm. Prior to joining Goodwin, Mr. Schraudenbach held various positions at Ernst & Young for 37 years until his retirement in June 2019.
Schraudenbach is a partner with The Goodwin Group, an executive retained search firm. Prior to joining Goodwin, Mr. Schraudenbach held various positions at Ernst & Young for 37 years until his retirement in June 2019. Mr. Schraudenbach serves on the board of Proficient Auto Logistics, Inc. (NASDAQ: PAL), a company in the auto hauling industry.
We believe the increasing pace of innovation in technology and design will result in more frequent upgrade purchases and ultimately higher sales volumes of new and late-model, pre-owned boat sales.
We believe the increasing pace of innovation in technology and design will result in more frequent upgrade purchases and ultimately higher sales volumes of new and late-model, pre-owned boat sales. The boat dealership market is highly fragmented and is comprised of approximately 4,000 dealerships nationwide.
We believe that our financing arrangements with manufacturers are standard within the industry. We are party to our Inventory Financing Facility (as defined below). For the years ended September 30, 2023 and 2022, interest on new boats and for rental units was calculated using the Adjusted 30-Day Average SOFR (as defined in the Inventory Financing Facility section below).
For the years ended September 30, 2024, 2023 and 2022 , interest on new boats and for rental units was calculated using the Adjusted 30-Day Average SOFR (as defined in the Inventory Financing Facility section below) .
Additionally, we are able to leverage our potential customer database to garner new sales. Sales growth from our existing dealerships is a core component of our current and future strategy. We may also develop a greenfield location if an attractive acquisition is not available in a market we choose to target.
Sales growth from our existing dealerships is a core component of our current and future strategy. We may also develop a greenfield location if an attractive acquisition is not available in a market we choose to target. We believe non-boat sales will be a driver of our organic growth strategy in the future.
By comparison, our average selling price for a new boat in fiscal year 2023 was $232,000. Growth Strategy Organic Growth Strategy : Our business model utilizes our unique scale to drive profitable Dealership same-store sales growth. We seek to gain market share by delivering high-quality products and services, with customized attributes tailored to our customers’ product specifications.
Growth Strategy Organic Growth Strategy : Our business model utilizes our unique scale to drive profitable Dealership same-store sales growth. We seek to gain market share by delivering high-quality products and services, with customized attributes tailored to our customers’ product specifications. Additionally, we are able to leverage our potential customer database to garner new sales.
Our strategic growth in this area is also expected to materially expand our addressable market in the parts and accessories business.
The acquisitions of T-H Marine and Ocean Bio-Chem have significantly expanded our sales of marine parts and accessories. Our strategic growth in this area is also expected to materially expand our addressable market in the parts and accessories business.
New powerboat sales have driven market growth and reached $16.0 billion in 2022, resulting in a 12% average annual growth rate since 2011. Of the approximately 1,016,000 powerboats sold in the United States in 2022, 81% of total units sold (approximately 826,000 ) were pre-owned.
New powerboat sales have driven market growth and reached $15.8 billion in 2023, resulting in an 11% average annual growth rate since 2012. Of the approximately 959,000 powerboats sold in the United States in 2023, 82% of total units sold (approximately 783,000 ) were pre-owned.
The boat dealership market is highly fragmented and is comprised of approximately 4,200 dealerships nationwide. Most competing boat retailers are operated by local business owners who own three or fewer stores; however we do have two large competitors – MarineMax and Bass Pro Shops. We believe we are one of the largest and fastest-growing marine retailers in the United States.
Most competing boat retailers are operated by local business owners who own three or fewer stores; however we do have other large competitors. We believe we are one of the largest and fastest-growing marine retailers in the United States. Despite our size, we comprise less than 4% of total industry sales.
Innovation, including updated boat configurations, hull designs, wake gates and other electronics, have contributed to shorter boat upgrade cycles which result in higher unit sales volume prior to the current year decrease. Pre-owned traditional powerboat sales were approximately $12.2 billion in 2022, which represents a decrease of 7.1% compared to 2021.
Boat sales volumes are correlated with consumer confidence and the availability of consumer credit. Innovation, including updated boat configurations, hull designs, wake gates and other electronics, contribute to shorter boat upgrade cycles which typically results in higher unit sales volume. Pre-owned traditional powerboat sales were approximately $10.3 billion in 2023, which represents a decrease of 15.3% compared to 2022.
As the sole managing member of OneWater LLC, OneWater Inc. operates and controls all of the business and affairs of OneWater LLC, and through OneWater LLC and its subsidiaries, conducts its business.
References in this Form 10-K to the “Legacy Owners” refer to the owners of OneWater LLC as they existed immediately prior to the Reorganization. As the sole managing member of OneWater LLC, OneWater Inc. operates and controls all of the business and affairs of OneWater LLC, and through OneWater LLC and its subsidiaries, conducts its business.
While we have opportunistically opened new dealerships in select markets, or launched additional parts and accessory products, we believe that it is generally more effective economically and operationally to acquire existing businesses with experienced staff and established reputations. 3 Table of Contents Our Market and Our Customer Consumer spending in the United States on boats, engines, services, parts, accessories and related purchases reached $59.3 billion in 2022, up 4.4% from 2021, and has, on average, grown in excess of 6% annually since 2011.
While we have opportunistically opened new dealerships in select markets, or launched additional parts and accessory products, we believe that it is generally more effective economically and operationally to acquire existing businesses with experienced staff and established reputations.
Our inventory and product selection allow us to cater to a highly diverse customer base with price points and boat types that appeal to a broad spectrum of budgets and preferences. The boating industry’s and MarineMax’s average selling prices for a new boat were $84,000 in calendar year 2022 and $306,000 in fiscal year 2023, respectively.
Our inventory and product selection allow us to cater to a highly diverse customer base with price points and boat types that appeal to a broad spectrum of budgets and preferences. In addition to boat sales, we also generate sales from related products including finance & insurance and service, parts & other sales.
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While we continue to monitor the impact of the macro-economic environment, including challenges related to inflation and consumer demand, our financial position through September 30, 2023 suggests that spending in our regions and across product lines has proven resilient as families continue to focus on outdoor recreation, driving increased sales.
Added
Our Market and Our Customer Consumer spending in the United States on boats, engines, services, parts, accessories and related purchases reached $57.7 billion in 2023, down 2.6% from 2022, and has, on average, grown 6% annually since 2012.
Removed
In addition to boat sales, we also generate sales from related products including finance & insurance and service, parts & other sales. The recent acquisitions of T-H Marine and Ocean Bio-Chem have significantly expanded our sales of marine parts and accessories.
Added
We believe that our financing arrangements with manufacturers are standard within the industry. We are party to our Inventory Financing Facility (as defined below).
Removed
Boat sales volumes are correlated with consumer confidence and the availability of consumer credit. Recent increase in spending has been driven by the rising average selling prices partially offset by a decrease in units sold.
Removed
The interest rate for pre-owned boats is calculated using the new boat rate set forth above plus 0.25%.
Removed
References in this Form 10-K to the “Legacy Owners” refer to the owners of OneWater LLC as they existed immediately prior to the Reorganization, including, but not limited to, certain affiliates of Goldman Sachs & Co. LLC, affiliates of The Beekman Group and certain members of our management team.
Removed
He served as the Americas Senior Client Service Partner at Ernst & Young beginning in 2014, where he established structure and policies for Ernst & Young’s Americas Assurance practice. Prior to this, Mr. Schraudenbach was the Managing Partner of Business Development for the Southeast U.S. Region and an Audit Partner. Mr.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

113 edited+32 added−41 removed290 unchanged
Biggest changeMany of our dealerships sell boats to customers for use on reservoirs, which could be subject to reduced capacity as a result of drought, extreme temperatures, or other climatic changes, thereby subjecting our business to the continued viability of these reservoirs for boating use. 28 Table of Contents In addition, the physical effects of climatic events, including wintry conditions, increased frequency and severity of tropical storms or hurricanes, tornadoes, fires, floods and other natural disasters, as well as sea level rise, could result in the disruption of our operations and/or third party supply chain vendors on whom we rely upon for products and services, including boat deliveries from manufacturers, or damage to or the loss of our boat inventories and facilities as has been the case when the Southeast and Gulf Coast regions and other markets have been affected by hurricanes.
Biggest changeIn addition, the physical effects of climatic events, including wintry conditions, increased frequency and severity of tropical storms or hurricanes, tornadoes, fires, floods and other natural disasters, as well as sea level rise, could result in the disruption of our operations and/or third party supply chain vendors on whom we rely upon for products and services, including boat deliveries from manufacturers, damage to or inadvertent releases from fueling stations, or damage to or the loss of our boat inventories and facilities as has been the case when the Southeast and Gulf Coast regions and other markets have been affected by hurricanes such as Hurricane Helene, and Hurricane Milton in 2024.
These provisions include: • providing that all vacancies, including newly created directorships, may, except as otherwise required by law or, if applicable, the rights of holders of a series of preferred stock, only be filled by the affirmative vote of a majority of directors then in office, even if less than a quorum; 34 Table of Contents • permitting any action by stockholders to be taken only at an annual meeting or special meeting rather than by a written consent of the stockholders, subject to the rights of any series of preferred stock with respect to such rights; • permitting special meetings of our stockholders to be called only by our Chief Executive Officer, the chairman of our Board of Directors and our Board of Directors pursuant to a resolution adopted by the affirmative vote of a majority of the total number of authorized directors whether or not there exist any vacancies in previously authorized directorships; • subject to the rights of the holders of shares of any series of our preferred stock, requiring the affirmative vote of the holders of at least a majority in voting power of all then outstanding common stock entitled to vote generally in the election of directors, voting together as a single class, to remove any of all of the directors from office at any time; • prohibiting cumulative voting in the election of directors; • establishing advance notice provisions for stockholder proposals and nominations for elections to the Board of Directors to be acted upon at meetings of stockholders; and • providing that the Board of Directors is expressly authorized to adopt, or to alter or repeal our bylaws.
These provisions include: • providing that all vacancies, including newly created directorships, may, except as otherwise required by law or, if applicable, the rights of holders of a series of preferred stock, only be filled by the affirmative vote of a majority of directors then in office, even if less than a quorum; • permitting any action by stockholders to be taken only at an annual meeting or special meeting rather than by a written consent of the stockholders, subject to the rights of any series of preferred stock with respect to such rights; • permitting special meetings of our stockholders to be called only by our Chief Executive Officer, the chairman of our Board of Directors and our Board of Directors pursuant to a resolution adopted by the affirmative vote of a majority of the total number of authorized directors whether or not there exist any vacancies in previously authorized directorships; 33 Table of Contents • subject to the rights of the holders of shares of any series of our preferred stock, requiring the affirmative vote of the holders of at least a majority in voting power of all then outstanding common stock entitled to vote generally in the election of directors, voting together as a single class, to remove any of all of the directors from office at any time; • prohibiting cumulative voting in the election of directors; • establishing advance notice provisions for stockholder proposals and nominations for elections to the Board of Directors to be acted upon at meetings of stockholders; and • providing that the Board of Directors is expressly authorized to adopt, or to alter or repeal our bylaws.
The following factors could affect our stock price: • quarterly variations in our financial and operating results; • the public reaction to our press releases, our other public announcements and our filings with the SEC; • strategic actions by our competitors or suppliers; • changes in revenue, Dealership same-store sales or earnings estimates, or changes in recommendations or withdrawal of research coverage, by equity research analysts; • acquisitions or integration of acquired marine retailers or other businesses; • the failure of our operating results to meet the expectations of equity research analysts and investors; • speculation in the press or investment community; • the failure of research analysts to continue to cover our Class A common stock; • sales of our Class A common stock by us or other stockholders, or the perception that such sales may occur; • changes in accounting principles, policies, guidance, interpretations or standards; 33 Table of Contents • additions or departures of key management personnel; • actions by our stockholders; • general market conditions, including fluctuations in commodity prices; • the publication of boating industry sales data or new boat registration data; • domestic and international economic, legal and regulatory factors unrelated to our performance; and • the realization of any risks described under this “Risk Factors” section.
The following factors could affect our stock price: • quarterly variations in our financial and operating results; • the public reaction to our press releases, our other public announcements and our filings with the SEC; • strategic actions by our competitors or suppliers; • changes in revenue, Dealership same-store sales or earnings estimates, or changes in recommendations or withdrawal of research coverage, by equity research analysts; • acquisitions or integration of acquired marine retailers or other businesses; • the failure of our operating results to meet the expectations of equity research analysts and investors; • speculation in the press or investment community; • the failure of research analysts to continue to cover our Class A common stock; • sales of our Class A common stock by us or our stockholders, or the perception that such sales may occur; • changes in accounting principles, policies, guidance, interpretations or standards; • additions or departures of key management personnel; • actions by our stockholders; • general market conditions, including fluctuations in commodity prices; 32 Table of Contents • the publication of boating industry sales data or new boat registration data; • domestic and international economic, legal and regulatory factors unrelated to our performance; and • the realization of any risks described under this “Risk Factors” section.
In addition, such an increase or adverse change could reduce the availability or increase the costs of obtaining new debt and refinancing existing indebtedness or negatively impact the market price of our common stock. 17 Table of Contents Risks Related to Our Industry and Competition Our success depends to a significant extent on our manufacturers, and the loss of certain manufacturers could have an adverse effect on our business, financial condition, and results of operations.
In addition, such an increase or adverse change could reduce the availability or increase the costs of obtaining new debt and refinancing existing indebtedness or negatively impact the market price of our Class A common stock. 17 Table of Contents Risks Related to Our Industry and Competition Our success depends to a significant extent on our manufacturers, and the loss of certain manufacturers could have an adverse effect on our business, financial condition, and results of operations.
Factors that could cause us to curtail or abandon one of such products include unexpected or increased costs or delays in development or manufacturing, excessive demands on management resources, legal or regulatory constraints, changes in consumer demands, preferences and shopping patterns regarding boat parts and accessories, or a determination that consumer demand no longer supports the product.
Factors that could cause us to curtail or abandon one of such products include unexpected or increased costs or tariffs, delays in development or manufacturing, excessive demands on management resources, legal or regulatory constraints, changes in consumer demands, preferences and shopping patterns regarding boat parts and accessories, or a determination that consumer demand no longer supports the product.
Our competitors may have e-commerce businesses that are substantially larger and more developed than ours, which could place us at a competitive disadvantage. If we are unable to expand our online platforms, our growth plans could suffer, and the price of our common stock could decline.
Our competitors may have e-commerce businesses that are substantially larger and more developed than ours, which could place us at a competitive disadvantage. If we are unable to expand our online platforms, our growth plans could suffer, and the price of our Class A common stock could decline.
We cannot assure you that there will not be material weaknesses or significant deficiencies in our disclosure controls or our internal controls over financial reporting in the future. An active, liquid and orderly trading market for our Class A common stock may not develop or be maintained, and our stock price may be volatile.
We cannot assure you that there will not be material weaknesses or significant deficiencies in our disclosure controls or our internal controls over financial reporting in the future. An active, liquid and orderly trading market for our Class A common stock may not be maintained, and our stock price may be volatile.
Interest rates rose throughout 2022 and 2023 and may continue to rise, and there can be no assurance as to what actions the Federal Reserve System will take in the future. Any change in interest rates or the market expectation of such change may result in significantly higher long-term interest rates.
Interest rates rose throughout 2022 and 2023 and may rise in the future, and there can be no assurance as to what actions the Federal Reserve System will take in the future. Any change in interest rates or the market expectation of such change may result in significantly higher long-term interest rates.
Increased competition for acquisition candidates or increased asking prices by acquisition candidates may increase purchase prices for acquisitions to levels beyond our financial capability or to levels that would not result in expected returns required by our acquisition criteria to be in the best interest of stockholders or bondholders.
Increased competition for acquisition candidates or increased asking prices by acquisition candidates may increase purchase prices for acquisitions to levels beyond our financial capability or to levels that would not result in expected returns required by our acquisition criteria to be in the best interest of stockholders.
The ability of OneWater Inc.'s direct and/or indirect wholly owned subsidiaries that are OneWater Unit Holders and/or OneWater LLC, its subsidiaries and other entities in which it directly or indirectly holds an equity interest to make such distributions is subject to, among other things, (i) the applicable provisions of Delaware law (or other applicable jurisdiction) that may limit the amount of funds available for distribution and (ii) restrictions in relevant debt instruments issued by OneWater Inc.'s direct and/or indirect wholly owned subsidiaries that are OneWater Unit Holders or OneWater LLC or its subsidiaries and other entities in which it directly or indirectly holds an equity interest.
The ability of OneWater Inc.'s direct and/or indirect subsidiaries that are OneWater Unit Holders and/or OneWater LLC, its subsidiaries and other entities in which it directly or indirectly holds an equity interest to make such distributions is subject to, among other things, (i) the applicable provisions of Delaware law (or other applicable jurisdiction) that may limit the amount of funds available for distribution and (ii) restrictions in relevant debt instruments issued by OneWater Inc.'s direct and/or indirect subsidiaries that are OneWater Unit Holders or OneWater LLC or its subsidiaries and other entities in which it directly or indirectly holds an equity interest.
These fluctuations could adversely affect the market price of our common stock. 20 Table of Contents Our ability to continue to grow through the acquisition of additional marine retailers will depend upon various factors, including the following: • the availability of suitable acquisition candidates at attractive purchase prices; • the ability to compete effectively for available acquisition opportunities; • the availability of cash on hand, borrowed funds, common stock with a sufficient market price or other sources of financing to complete the acquisitions; • the ability to obtain any requisite manufacturer, governmental or other required approvals; • the ability to obtain approval of our lenders under our current credit agreements; and • the absence of one or more manufacturers attempting to impose unsatisfactory restrictions on us in connection with their approval of acquisitions.
These fluctuations could adversely affect the market price of our Class A common stock. 20 Table of Contents Our ability to continue to grow through the acquisition of additional marine businesses will depend upon various factors, including the following: • the availability of suitable acquisition candidates at attractive purchase prices; • the ability to compete effectively for available acquisition opportunities; • the availability of cash on hand, borrowed funds, common stock with a sufficient market price or other sources of financing to complete the acquisitions; • the ability to obtain any requisite manufacturer, governmental or other required approvals; • the ability to obtain approval of our lenders under our current credit agreements; and • the absence of one or more manufacturers attempting to impose unsatisfactory restrictions on us in connection with their approval of acquisitions.
In certain cases, the prospective acquisition candidate agrees not to discuss a potential acquisition with any other party for a specific period of time, grants us an option to purchase the prospective marine retailers for a designated price during a specific time period, and agrees to take other actions designed to enhance the possibility of the acquisition, such as preparing audited financial information and converting its accounting system to the system specified by us.
In certain cases, the prospective acquisition candidate agrees not to discuss a potential acquisition with any other party for a specific period of time, grants us an option to purchase the prospective marine businesses for a designated price during a specific time period, and agrees to take other actions designed to enhance the possibility of the acquisition, such as preparing audited financial information and converting its accounting system to the system specified by us.
Under Sections 3(a)(1)(A) and (C) of the 1940 Act, a company generally will be deemed to be an “investment company” for purposes of the 1940 Act if (i) it is, or holds itself out as being, engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting or trading in securities or (ii) it engages, or proposes to engage, in the business of investing, reinvesting, owning, holding or trading in securities and it owns or proposes to acquire investment securities having a value exceeding 40% of the value of its total assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis.
Under Sections 3(a)(1)(A) and (C) of the 1940 Act, a company generally will be deemed to be an “investment company” for purposes of the 1940 Act if (i) it is, or holds itself out as being, engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting or trading in securities or (ii) it engages, or proposes to engage, in the business of investing, reinvesting, owning, holding or 37 Table of Contents trading in securities and it owns or proposes to acquire investment securities having a value exceeding 40% of the value of its total assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis.
Moreover, because OneWater Inc. has no independent means of generating revenue, OneWater Inc.’s ability to make tax payments and payments under the Tax Receivable Agreement is dependent on the ability of OneWater LLC to make distributions to OneWater Inc. and/or its direct and/or indirect wholly owned subsidiaries that are OneWater Unit Holders in an amount sufficient to cover OneWater Inc.’s tax obligations and obligations under the Tax Receivable Agreement.
Moreover, because OneWater Inc. has no independent means of generating revenue, OneWater Inc.’s ability to make tax payments and payments under the Tax Receivable Agreement is dependent on the ability of OneWater LLC to make distributions to OneWater Inc. and/or its direct and/or indirect subsidiaries that are OneWater Unit Holders in an amount sufficient to cover OneWater Inc.’s tax obligations and obligations under the Tax Receivable Agreement.
Unforeseen expenses, difficulties and delays frequently encountered in connection with expansion through acquisitions could inhibit our growth and negatively impact our profitability. Our growth strategy of acquiring additional marine retailers involves significant risks. This strategy entails reviewing and potentially reorganizing acquired business operations, corporate infrastructure and systems, and financial controls.
Unforeseen expenses, difficulties and delays frequently encountered in connection with expansion through acquisitions could inhibit our growth and negatively impact our profitability. Our growth strategy of acquiring additional marine businesses involves significant risks. This strategy entails reviewing and potentially reorganizing acquired business operations, corporate infrastructure and systems, and financial controls.
As part of our growth strategy, we generally retain existing key staff, including senior management, when we complete an acquisition. There can be no assurance that we will be able to retain marine retailers’ key staff, including senior management, when we complete an acquisition in the future and failure to do so could adversely affect our businesses.
As part of our growth strategy, we generally retain existing key staff, including senior management, when we complete an acquisition. There can be no assurance that we will be able to retain marine businesses’ key staff, including senior management, when we complete an acquisition in the future and failure to do so could adversely affect our businesses.
If we are unable to maintain those leases or locate alternative sites for our locations in our target markets and on terms that are acceptable to us, our revenues and profitability could be adversely affected. We currently lease 106 of the real properties where we conduct operations.
If we are unable to maintain those leases or locate alternative sites for our locations in our target markets and on terms that are acceptable to us, our revenues and profitability could be adversely affected. We currently lease 102 of the real properties where we conduct operations.
OneWater Inc.’s only material asset is its equity interest in OneWater LLC directly or indirectly through its equity ownership in other wholly owned subsidiaries, and OneWater Inc. is accordingly dependent upon distributions from OneWater LLC to pay taxes, make payments under the Tax Receivable Agreement and cover OneWater Inc.’s corporate and other overhead expenses.
OneWater Inc.’s only material asset is its equity interest in OneWater LLC directly or indirectly through its equity ownership in other subsidiaries, and OneWater Inc. is accordingly dependent upon distributions from OneWater LLC to pay taxes, make payments under the Tax Receivable Agreement and cover OneWater Inc.’s corporate and other overhead expenses.
For additional information relating to the terms of our Inventory Financing Facility including the entrance into the Eighth Amended and Restated Inventory Financing Agreement on November 14, 2023, please see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Debt Agreements—Inventory Financing Facility.” Effective August 9, 2022, we entered into the A&R Credit Facility (together with the Inventory Financing Facility, the “Credit Facilities”), which provides for, among other things, (i) a single tranche of Revolving Commitments in an amount equal to $65.0 million (the “Revolving Facility”) and (ii) a single tranche of Initial Term Loans in an aggregate principal amount equal to $445.0 million (the “Term Facility”).
For additional information relating to the terms of our Inventory Financing Facility including the entrance into the Consent, Waiver and Second Amendment to Eighth Amended and Restated Inventory Financing Agreement on November 14, 2023, please see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Debt Agreements—Inventory Financing Facility.” Effective August 9, 2022, we entered into the A&R Credit Facility (together with the Inventory Financing Facility, the “Credit Facilities”), which provides for, among other things, (i) a single tranche of Revolving Commitments in an amount equal to $65.0 million (the “Revolving Facility”) and (ii) a single tranche of Initial Term Loans in an aggregate principal amount equal to $445.0 million (the “Term Facility”).
The economic, political and other risks we face resulting from these foreign purchases include the following: • compliance with U.S. and local laws and regulatory requirements as well as changes in those laws and requirements; • transportation delays or interruptions and other effects of less developed infrastructures; • limitations on imports and exports; • foreign exchange rate fluctuations; • imposition of restrictions on currency conversion or the transfer of funds; • maintenance of quality standards; • unexpected changes in regulatory requirements; • differing labor regulations; • potentially adverse tax consequences; • possible employee turnover or labor unrest; • the burdens and costs of compliance with a variety of foreign laws; and • political or economic conflicts, instability or civil unrest.
The economic, political and other risks we face resulting from these foreign purchases include the following: • compliance with U.S. and local laws and regulatory requirements as well as changes in those laws and requirements; • transportation delays or interruptions and other effects of less developed infrastructures; • limitations on imports and exports; • foreign exchange rate fluctuations; 25 Table of Contents • imposition of restrictions on currency conversion or the transfer of funds; • imposition of tariffs; • maintenance of quality standards; • unexpected changes in regulatory requirements; • differing labor regulations; • potentially adverse tax consequences; • possible employee turnover or labor unrest; • the burdens and costs of compliance with a variety of foreign laws; and • political or economic conflicts, instability or civil unrest.
In addition, we may encounter difficulties in integrating the operations of acquired marine retailers with our own operations, in retaining employees, in retaining and maintaining relationships with customers, suppliers or other business contacts, and in managing acquired marine retailers profitably without substantial costs, delays or other operational or financial problems.
In addition, we may encounter difficulties in integrating the operations of acquired marine businesses with our own operations, in retaining employees, in retaining and maintaining relationships with customers, suppliers or other business contacts, and in managing acquired marine businesses profitably without substantial costs, delays or other operational or financial problems.
The extent to which we will be able and willing to use our common stock or membership interests in OneWater LLC for acquisitions will depend on the market value of our common stock and the willingness of potential sellers to accept our common stock or membership interests in OneWater LLC as full or partial consideration.
The extent to which we will be able and willing to use our Class A common stock or membership interests in OneWater LLC for acquisitions will depend on the market value of our Class A common stock and the willingness of potential sellers to accept our Class A common stock or membership interests in OneWater LLC as full or partial consideration.
Our inability to use our common stock or membership interests in OneWater LLC as consideration, to generate cash from operations or to obtain additional funding through debt or equity financings in order to pursue our acquisition program could materially limit our growth.
Our inability to use our Class A common stock or membership interests in OneWater LLC as consideration, to generate cash from operations or to obtain additional funding through debt or equity financings in order to pursue our acquisition program could materially limit our growth.
OneWater Inc. is a holding company and has no material assets other than its equity interest in OneWater LLC which it holds directly and through other direct and/or indirect wholly owned subsidiaries. OneWater Inc. has no independent means of generating revenue.
OneWater Inc. is a holding company and has no material assets other than its equity interest in OneWater LLC which it holds directly and through other direct and/or indirect subsidiaries. OneWater Inc. has no independent means of generating revenue.
Most locations operate under long-term leases with an initial term of at least 10 years and one or more renewal options for an additional 5 to 10 years. Additionally, we have entered into location leases with certain related parties for which we incurred $2.1 million in lease expense in the fiscal year ended September 30, 2023.
Most locations operate under long-term leases with an initial term of at least 10 years and one or more renewal options for an additional 5 to 10 years. Additionally, we have entered into location leases with certain related parties for which we incurred $2.5 million in lease expense in the fiscal year ended September 30, 2024.
Acquisitions also may become more difficult or less attractive in the future as we acquire more of the most attractive marine retailers that best align with our culture and focus on customer service.
Acquisitions also may become more difficult or less attractive in the future as we acquire more of the most attractive marine businesses that best align with our culture and focus on customer service.
In addition, other countries may limit their trade with the United States or retaliate through their own restrictions and/or increased tariffs which would affect our ability to export products and therefore adversely affect our sales. 25 Table of Contents Our foreign purchase of boats and boat components creates a number of logistical and communications challenges.
In addition, other countries may limit their trade with the United States or retaliate through their own restrictions and/or increased tariffs which would affect our ability to export products and therefore adversely affect our sales. Our foreign purchase of boats and boat components creates a number of logistical and communications challenges.
This ability, in turn, may depend on the ability of OneWater LLC’s subsidiaries to make distributions to it and of OneWater Inc.'s direct and/or indirect wholly owned subsidiaries that are OneWater Unit Holders ability to make ultimate distributions to OneWater Marine Inc.
This ability, in turn, may depend on the ability of OneWater LLC’s subsidiaries to make distributions to it and of OneWater Inc.'s direct and/or indirect subsidiaries that are OneWater Unit Holders ability to make ultimate distributions to OneWater Marine Inc.
Please read “— In certain cases, payments under the Tax Receivable Agreement may be accelerated and/or significantly exceed the actual benefits, if any, OneWater Inc. realizes in respect of the tax attributes subject to the Tax Receivable Agreement.” OneWater Inc. will not be reimbursed for any payments made under the Tax Receivable Agreement in the event that any tax benefits are subsequently disallowed.
Please read “— In certain cases, payments under the Tax Receivable Agreement may be accelerated and/or significantly exceed the actual benefits, if any, OneWater Inc. realizes in respect of the tax attributes subject to the Tax Receivable Agreement.” 36 Table of Contents OneWater Inc. will not be reimbursed for any payments made under the Tax Receivable Agreement in the event that any tax benefits are subsequently disallowed.
As a part of our acquisition strategy, we frequently engage in discussions with various marine retail groups regarding their potential acquisition by us. In connection with these discussions, we and each potential acquisition candidate exchange confidential operational and financial information, conduct due diligence inquiries and consider the structure, terms, and conditions of the potential acquisition.
As a part of our acquisition strategy, we frequently engage in discussions with various marine businesses regarding their potential acquisition by us. In connection with these discussions, we and each potential acquisition candidate exchange confidential operational and financial information, conduct due diligence inquiries and consider the structure, terms, and conditions of the potential acquisition.
Laws and regulations regarding the prevention of pollution or remediation of environmental contamination generally apply regardless of whether we lease or purchase the land and facilities. Additionally, certain of our locations and/or repair facilities utilize USTs and ASTs, primarily for storing and dispensing petroleum-based products.
Laws and regulations 28 Table of Contents regarding the prevention of pollution or remediation of environmental contamination generally apply regardless of whether we lease or purchase the land and facilities. Additionally, certain of our locations and/or repair facilities utilize USTs and ASTs, primarily for storing and dispensing petroleum-based products.
Economic conditions in areas in which we operate dealerships, particularly the Southeast and Gulf Coast regions in which we generated approximately 81%, 79% and 80% of our revenue during fiscal years 2023, 2022 and 2021, respectively, could have a major impact on our operations.
Economic conditions in areas in which we operate dealerships, particularly the Southeast and Gulf Coast regions in which we generated approximately 79%, 81% and 79% of our revenue during fiscal years 2024, 2023 and 2022, respectively, could have a major impact on our operations.
The reduction of profit margins on sales of finance & insurance products or the lack of demand for or the unavailability of these products could have a material adverse effect on our operating margins. Our operations are dependent upon key personnel and team members.
The reduction of profit margins on sales of finance & insurance products or the lack of demand for or the unavailability of these products could have a material adverse effect on our operating margins. 24 Table of Contents Our operations are dependent upon key personnel and team members.
Since the combination of Singleton Marine and Legendary Marine in 2014, we have acquired 80 additional dealerships and 12 warehouses/distribution centers through 33 acquisitions. Additionally, we actively evaluate and pursue acquisitions on an ongoing basis. We continue to strategically evaluate and monitor our pipeline for potential acquisitions. Each acquired marine retailer operated independently prior to our acquisition.
Since the combination of Singleton Marine and Legendary Marine in 2014, we have acquired 81 additional dealerships and 12 warehouses/distribution centers through 34 acquisitions. Additionally, we actively evaluate and pursue acquisitions on an ongoing basis. We continue to strategically evaluate and monitor our pipeline for potential acquisitions. Each acquired marine retailer operated independently prior to our acquisition.
For example, if the Tax Receivable Agreement were terminated immediately after the date hereof, and taking into account any redemptions that occurred prior thereto, the estimated early termination payment would, in the aggregate, be approximately $25.4 million (determined by applying a discount rate equal to the twelve-month SOFR published by CME Group Benchmark Administration Limited plus 171.513 basis points, applied against an undiscounted liability of $45.8 million calculated based on certain assumptions, including but not limited to a $25.62 per share price, an estimated blended statutory U.S. federal, state and local corporate income tax rate of 24.8%, no material change in U.S. federal income tax law, and that OneWater Inc. will have sufficient taxable income to utilize such estimated tax benefits).
For example, if the Tax Receivable Agreement were terminated immediately after the date hereof, and taking into account any redemptions that occurred prior thereto, the estimated early termination payment would, in the aggregate, be approximately $29.0 million (determined by applying a discount rate equal to the twelve-month SOFR published by CME Group Benchmark Administration Limited plus 171.513 basis points, applied against an undiscounted liability of $42.7 million calculated based on certain assumptions, including but not limited to a $23.91 per share price, an estimated blended statutory U.S. federal, state and local corporate income tax rate of 24.8%, no material change in U.S. federal income tax law, and that OneWater Inc. will have sufficient taxable income to utilize such estimated tax benefits).
Further, in October 2023 California passed climate disclosure laws that, among other requirements, will require public and private companies that do business in California with total annual revenues exceeding certain thresholds to make disclosures including GHG emission data and climate-related financial risks.
Further, in October 2023 California passed climate disclosure laws that, among other requirements, will require public and private companies that do business in 30 Table of Contents California with total annual revenues exceeding certain thresholds to make disclosures including GHG emission data and climate-related financial risks.
At the international level, there exists the United Nations-sponsored “Paris Agreement,” which requires nations to submit non-binding GHG emissions reduction goals every five years after 2020. President Biden announced in April 2021 a new, more rigorous nationally determined emissions reduction level of 50-52% reduction from 2005 levels in economy-wide net GHG emissions by 2030.
At the international level, there exists the United Nations-sponsored “Paris Agreement,” which requires nations to submit non-binding GHG emissions reduction goals every five years after 2020. In April 2021, the Biden Administration established a more rigorous nationally determined emissions reduction level of 50-52% reduction from 2005 levels in economy-wide net GHG emissions by 2030.
Additionally, various states and groups of states have adopted or are considering adopting legislation, regulations or other regulatory initiatives that are focused on such areas as GHG cap and trade programs, carbon taxes, reporting and tracking programs, and restriction of emissions.
Additionally, various states and groups of states have adopted or are considering adopting legislation, regulations or other regulatory initiatives that are focused on such areas as GHG cap and trade programs, carbon taxes, reporting and tracking programs, disclosure of climate risk management, and restriction of emissions.
We depend on our manufacturers for the sale of new boats. Sales of new boats from our top ten brands represents approximately 39.4%, 41.8% and 42.9% of total sales for the fiscal years ended September 30, 2023, 2022 and 2021, respectively, making them major suppliers of our company.
We depend on our manufacturers for the sale of new boats. Sales of new boats from our top ten brands represents approximately 41.7%, 39.4% and 41.8% of total sales for the fiscal years ended September 30, 2024, 2023 and 2022, respectively, making them major suppliers of our company.
Similarly, decreases in the availability of credit and increases in the cost of credit could adversely affect the ability of our customers to purchase boats from us and thereby adversely affect our ability to sell our products and impact the profitability of our finance & insurance activities.
Similarly, decreases in the availability of credit and increases in the cost of credit could adversely affect the ability of our customers to purchase boats from us and thereby adversely affect our ability to sell our products and impact the profitability of our finance & insurance activities. Increases in fuel prices may adversely affect our business.
Of this amount, Malibu Boats, Inc., including its brands Malibu, Axis, Cobalt, Pursuit, Maverick, Hewes, Cobia and Pathfinder accounted for 13.9%, 15.6% and 17.0% of our consolidated revenue for the fiscal years ended September 30, 2023, 2022 and 2021, respectively.
Of this amount, Malibu Boats, Inc., including its brands Malibu, Axis, Cobalt, Pursuit, Maverick, Hewes, Cobia and Pathfinder accounted for 13.1%, 13.9% and 15.6% of our consolidated revenue for the fiscal years ended September 30, 2024, 2023 and 2022, respectively.
Governmental and public concern arising from GHG emissions has resulted in increasing regulatory, political, financial and litigation risks in the United States and globally that target predominantly fossil fuel-related energy entities or their operations, which may have indirect adverse effects on other companies or industries, such as the retail recreational boat industry, for example, whose services or products generate GHGs or rely upon motor fuels refined from fossil fuels, which effects could be material. 30 Table of Contents In the United States, no comprehensive federal climate change legislation has been implemented.
Governmental and public concern arising from GHG emissions has resulted in increasing regulatory, political, financial and litigation risks in the United States and globally that target predominantly fossil fuel-related energy entities or their operations, which may have indirect adverse effects on other companies 29 Table of Contents or industries, such as the retail recreational boat industry, for example, whose services or products generate GHGs or rely upon motor fuels refined from fossil fuels, which effects could be material.
Any real or perceived failure by us or our third-party service providers to comply with any applicable federal, state or similar foreign law, rule, regulation, industry standard, policy, certification or order relating to data privacy and security, or any compromise of security that results in the theft, unauthorized access, acquisition, use, disclosure, or misappropriation of personal data or other customer data, could result in significant awards, fines, civil or criminal penalties or judgments, proceedings or litigation by governmental agencies or customers, including class action privacy litigation in certain jurisdictions and negative publicity and reputational harm, one or all of which could have an adverse effect on our reputation, business, financial condition and results of operations. 40 Table of Contents We may be named in litigation, which may result in substantial costs and reputational harm and divert management’s attention and resources.
Any real or perceived failure by us or our third-party service providers to comply with any applicable federal, state or similar foreign law, rule, regulation, industry standard, policy, certification or order relating to data privacy and security, or any compromise of security that results in the theft, unauthorized access, acquisition, use, disclosure, or misappropriation of personal data or other customer data, could result in significant awards, fines, civil or criminal penalties or judgments, proceedings or litigation by governmental agencies or customers, including class action privacy litigation in certain jurisdictions and negative publicity and reputational harm, one or all of which could have an adverse effect on our reputation, business, financial condition and results of operations.
All of the recreational boats we sell are powered by gasoline or diesel engines. Consequently, a significant increase in the price or tax on the sale of fuel on a regional or national basis could have a material adverse effect on our sales and operating results.
All of the recreational boats we sell are powered by gasoline or diesel engines. Consequently, a significant increase in the price or tax on the sale of fuel on a regional or national basis could have a material adverse effect on our sales and operating results. Increases in fuel prices may negatively impact boat sales.
Our business is dependent upon the successful operation of our information technology systems. Our information technology systems enhance cross-selling opportunities and integrate each level of operations on a company-wide basis, including but not limited to purchasing, inventory, receivables, payables, financial reporting, budgeting, marketing and sales management.
Our business is dependent upon the successful operation of our information technology systems. Our information technology systems enhance cross-selling opportunities and integrate each level of operations on a company-wide basis, including but not limited to purchasing, inventory, receivables, payables, financial reporting, budgeting, marketing and sales management. Our information systems are also used to prepare our consolidated financial and operating data.
We are subject to various complex and evolving U.S. federal, state and local taxes. U.S. federal, state and local tax laws, policies, statutes, rules, regulations or ordinances could be interpreted, changed, modified or applied adversely to us, in each case, possibly with retroactive effect, and may have an adverse effect on our business and future profitability.
U.S. federal, state and local tax laws, policies, statutes, rules, regulations or ordinances could be interpreted, changed, modified or applied adversely to us, in each case, possibly with retroactive effect, and may have an adverse effect on our business and future profitability.
On July 1, 2022, the first offering period began under the 2021 Employee Stock Purchase Plan (the “ESPP”). The ESPP provides for a maximum issuance of 449,257 shares of Class A common stock, subject to certain adjustments set forth in the ESPP.
On July 1, 2022, the first offering period began under the 2021 Employee Stock Purchase Plan (the “ESPP”). As of September 30, 2024, the ESPP provides for a maximum issuance of 453,870 shares of Class A common stock, subject to certain adjustments set forth in the ESPP.
Accordingly, while we traditionally maintain property and casualty insurance coverage for damage caused by climatic events such as severe weather or other natural disasters, there can be no assurance that such insurance coverage is adequate to cover losses that we may sustain as a result thereof.
Accordingly, while we traditionally maintain property and casualty insurance coverage for damage caused by climatic events such as severe weather or other natural disasters, there can be no assurance that such insurance coverage is adequate to cover losses that we may sustain as a result thereof or that we will be able to procure coverage on commercially reasonable terms for such events in the future.
While we do not believe there is currently a reasonable likelihood that there will be a change in the judgments and assumptions used in our assessments of goodwill and long-lived assets which would result in any further material effect on our operating results, we cannot predict whether events or circumstances will change in the future that could result in non-cash impairment charges that could adversely impact our financial results and net worth. 27 Table of Contents Our Dealership same-store sales may fluctuate and may not be a meaningful indicator of future performance.
While we do not believe there is currently a reasonable likelihood that there will be a change in the judgments and assumptions used in our assessments of goodwill and long-lived assets which would result in a material effect on our operating results, we cannot predict whether events or circumstances will change in the future that could result in non-cash impairment charges that could adversely impact our financial results and net worth.
We may sell additional shares of Class A common stock in subsequent public offerings. We may also issue additional shares of Class A common stock or convertible securities. We have 14,539,056 outstanding shares of Class A common stock and 1,429,940 outstanding shares of Class B common stock as of November 28, 2023.
We may sell additional shares of Class A common stock in subsequent public offerings. We may also issue additional shares of Class A common stock or convertible securities. We have 14,826,496 outstanding shares of Class A common stock and 1,429,940 outstanding shares of Class B common stock as of November 26, 2024.
Consequently, your only opportunity to achieve a return on your investment is if the price of our Class A common stock appreciates. We do not plan to declare cash dividends on shares of our Class A common stock in the foreseeable future. Additionally, the Credit Facilities place certain restrictions on our ability to pay cash dividends.
We do not intend to pay cash dividends on our Class A common stock, and our Credit Facilities place certain restrictions on our ability to do so. Consequently, your only opportunity to achieve a return on your investment is if the price of our Class A common stock appreciates.
Additional risks relating to such product offerings include product liability and product recalls for which we do not have third-party indemnification and contractual rights or remedies; increasing costs for labor or raw materials used to manufacture products; our ability to successfully protect our proprietary rights (e.g., defending against counterfeit or otherwise unauthorized goods) and intellectual property rights; our ability to successfully navigate and avoid claims related to the proprietary rights of third parties; and our ability to successfully administer and comply with obligations under license agreements that we have with third-party licensors of certain brands.
Additional risks relating to such product offerings include product liability and product recalls for which we do not have third-party indemnification and contractual rights or remedies; increasing costs for labor or raw materials used to manufacture products; our ability to successfully protect our proprietary rights (e.g., defending against counterfeit or otherwise unauthorized goods) and intellectual property rights; our ability to successfully navigate and avoid claims related to the proprietary rights of third parties; and our ability to successfully administer and comply with obligations under license agreements that we have with third-party licensors of certain brands. 22 Table of Contents Risks Related to Our Operations The availability and costs of borrowed funds can adversely affect our ability to obtain adequate boat inventory, the ability and willingness of our customers to finance boat purchases and our ability to fund future acquisitions.
We continue to integrate acquired marine retailers, including T-H Marine and Ocean Bio-Chem, and these activities may require management to devote significant attention and resources to integrating acquired businesses with our business.
We continue to integrate acquired marine businesses and these activities may require management to devote significant attention and resources to integrating acquired businesses with our business.
There is no guarantee that the price of our Class A common stock that will prevail in the market will ever exceed the price that you paid. 35 Table of Contents Future sales or issuances of our Class A common stock in the public market, or the perception that such sales or issuances may occur, could reduce our stock price, and any additional capital raised by us through the sale or issuance of equity or convertible securities may dilute your ownership in us.
Future sales or issuances of our Class A common stock in the public market, or the perception that such sales or issuances may occur, could reduce our stock price, and any additional capital raised by us through the sale or issuance of equity or convertible securities may dilute your ownership in us.
Over the three-year period ended September 30, 2023, the average revenue for the quarterly periods ended December 31, March 31, June 30 and September 30 represented approximately 19%, 26%, 32% and 23%, respectively, of our average annual revenue.
Over the three-year period ended September 30, 2024, the average revenue for the quarterly periods ended December 31, March 31, June 30 and September 30 represented approximately 20%, 27%, 31% and 22%, respectively, of our average annual revenue.
Our information systems are also used to prepare our consolidated financial and operating data. 39 Table of Contents Increased global cybersecurity vulnerabilities and cyber-related attacks pose a risk to the security of our and our customers’, suppliers’ and third-party service providers’ products, systems and networks and the confidentiality, availability and integrity of our data.
Increased global cybersecurity vulnerabilities and cyber-related attacks pose a risk to the security of our and our customers’, suppliers’ and third-party service providers’ products, systems and networks and the confidentiality, availability and integrity of our data.
The stock markets in general have experienced extreme volatility that has often been unrelated to the operating performance of particular companies. For some companies this volatility was exacerbated by the continued wide ranging impacts of the COVID-19 pandemic. These broad market fluctuations may adversely affect the trading price of our Class A common stock.
The stock markets in general have experienced extreme volatility that has often been unrelated to the operating performance of particular companies. These broad market fluctuations may adversely affect the trading price of our Class A common stock.
In addition, OneWater Inc. may not be able to realize tax benefits covered under the Tax Receivable Agreement, and OneWater Inc. would not be able to recover any payments previously made by it under the Tax Receivable Agreement, even if the corresponding tax benefits (including any claimed increase in the tax basis of OneWater LLC’s assets) were subsequently determined to have been unavailable. 38 Table of Contents Changes to applicable tax laws and regulations or exposure to additional income tax liabilities could affect our business and future profitability.
In addition, OneWater Inc. may not be able to realize tax benefits covered under the Tax Receivable Agreement, and OneWater Inc. would not be able to recover any payments previously made by it under the Tax Receivable Agreement, even if the corresponding tax benefits (including any claimed increase in the tax basis of OneWater LLC’s assets) were subsequently determined to have been unavailable.
Any future credit agreements or financing arrangements may also contain restrictions on our ability to pay cash dividends. Consequently, your only opportunity, while such dividend restrictions remain in place, to achieve a return on your investment in us may be to sell your Class A common stock at a price greater than you paid for it.
Consequently, your only opportunity, while such dividend restrictions remain in place, to achieve a return on your investment in us may be to sell your Class A common stock at a price greater than you paid for it.
Any distributions made by OneWater LLC to OneWater Inc. in order to enable OneWater Inc. to make payments under the Tax Receivable Agreement, as well as any corresponding pro rata distributions made to the other OneWater Unit Holders could have an adverse impact on our liquidity.
Any distributions made by OneWater LLC to OneWater Inc. in order to enable OneWater Inc. to make payments under the Tax Receivable Agreement, as well as any corresponding pro rata distributions made to the other OneWater Unit Holders could have an adverse impact on our liquidity. 35 Table of Contents The payments under the Tax Receivable Agreement are not conditioned upon a TRA Holder's having a continued ownership interest in OneWater Inc. or OneWater LLC.
Please read “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Tax Receivable Agreement” in this Form 10-K. 37 Table of Contents In the event that OneWater Inc.’s payment obligations under the Tax Receivable Agreement are accelerated upon certain mergers, other forms of business combinations or other changes of control, the consideration payable to holders of OneWater Inc.’s Class A common stock could be substantially reduced.
In the event that OneWater Inc.’s payment obligations under the Tax Receivable Agreement are accelerated upon certain mergers, other forms of business combinations or other changes of control, the consideration payable to holders of OneWater Inc.’s Class A common stock could be substantially reduced.
There is a risk that we will not be able to obtain and perfect our own intellectual property rights, or, where appropriate, license from others intellectual property rights.
We cannot assure that our intellectual property rights will be effectively utilized, maintained, or, if necessary, successfully enforced against third parties. There is a risk that we will not be able to obtain and perfect our own intellectual property rights, or, where appropriate, license from others intellectual property rights.
Additionally, due to pandemic or other external factors, our seasonal trends may also change as a result of, among other things, dealership closures, disruptions to the supply chain and inventory availability, manufacturer delays, or cancellation of boat shows. The failure to receive rebates and other manufacturer incentives on inventory purchases or retail sales could substantially reduce our margins.
Additionally, due to a global health crisis or other external factors, our seasonal trends may also change as a result of, among other things, dealership closures, disruptions to the supply chain and inventory availability, manufacturer delays, or cancellation of boat shows.
Such disruptions in our supply chain could damage our on-site inventory at our locations or cause serious limitations or delays in the operations of our locations. We maintain hurricane and casualty insurance, subject to deductibles.
Such disruptions in our supply chain could damage our on-site inventory at our locations, result in remedial liability or administrative penalties, or cause serious limitations or delays in the operations of our locations. We maintain hurricane and casualty insurance, subject to deductibles, but such coverage may become signifciantly more expensive or impossible to procure in the future.
Payments under the Tax Receivable Agreement commenced in 2022 and, in the event that the Tax Receivable Agreement is not terminated, are anticipated to continue until after the date of the last redemption of the OneWater LLC Units. 36 Table of Contents The payment obligations under the Tax Receivable Agreement are OneWater Inc.’s obligations and not obligations of OneWater LLC, and we expect that the payments OneWater Inc. will be required to make under the Tax Receivable Agreement will be substantial.
Payments under the Tax Receivable Agreement commenced in 2022 and, in the event that the Tax Receivable Agreement is not terminated, are anticipated to continue until after the date of the last redemption of the OneWater LLC Units.
If we experience any material weaknesses in the future or otherwise fail to develop or maintain an effective system of internal controls in the future, we may not be able to accurately report our financial condition or results of operations, which may adversely affect investor confidence in us and, as a result, the value of our Class A common stock.
To the extent that OneWater Inc. is unable to make payments under the Tax Receivable Agreement for any reason, such payments will be deferred and will accrue interest until paid. 31 Table of Contents If we experience any material weaknesses in the future or otherwise fail to develop or maintain an effective system of internal controls in the future, we may not be able to accurately report our financial condition or results of operations, which may adversely affect investor confidence in us and, as a result, the value of our Class A common stock.
If any of our competitors successfully provides a broader, more efficient or attractive combination of services, protection plans, products and resources to our target customers, our business results could be materially adversely affected.
In particular, an increase in the number of aggregator and price comparison sites for our products may negatively impact our sales of these products. If any of our competitors successfully provides a broader, more efficient or attractive combination of services, protection plans, products and resources to our target customers, our business results could be materially adversely affected.
For example, the physical effects of unseasonably wet weather, extended periods of below freezing weather, tropical storms, hurricanes or other natural disasters occurring on land or in the Gulf of Mexico or Atlantic Ocean may force boating areas to close or render boating dangerous or inconvenient, which could result in curtailment of customer demand for our products and services.
For example, the physical effects of unseasonably wet weather, drought conditions, extended periods of below freezing weather, tropical storms, hurricanes, flooding, or other natural disasters have forced and may in the future force boating areas to close or render boating dangerous. This has resulted in and, in the future, could result in reduced customer demand for our products and services.
Changes resulting from these new standards may result in materially different financial results and may require that we change how we process, analyze and report financial information and that we change financial reporting controls. Such changes in accounting standards may have an adverse effect on our business, financial position, and income, which may negatively impact our financial results.
Changes resulting from these new standards may result in materially different financial results and may require that we change how we process, analyze and report financial information and that we change financial reporting controls.
On September 7, 2021, we filed a registration statement with the SEC on Form S-3 providing for the registration of (i) an indeterminate number of shares of Class A common stock to be offered, on a primary basis, at indeterminate prices with an aggregate initial offering price not to exceed $250,000,000 and (ii) 375,000 shares of Class A common stock that may be sold in one or more secondary offerings by the selling stockholders named therein.
On September 7, 2021, we filed a registration statement with the SEC on Form S-3 providing for, among other things, the registration of 375,000 shares of Class A common stock that may be sold in one or more secondary offerings by the selling stockholders named therein.
Consequently, operating results for any quarter may not be indicative of the results that may be achieved for any subsequent quarter or for a full fiscal year.
The size, timing, and integration of any future acquisitions may cause substantial fluctuations in operating results from quarter to quarter. Consequently, operating results for any quarter may not be indicative of the results that may be achieved for any subsequent quarter or for a full fiscal year.
Even if intellectual property claims do not result in litigation or are resolved in our favor, these claims, and the time and resources necessary to resolve them, could divert our resources and require significant expenditures. Any of the foregoing could prevent us from competing effectively and could have a material adverse effect on our business, operations, and financial condition.
Even if intellectual property claims do not result in litigation or are resolved in our favor, these claims, and the time and resources necessary to resolve them, could divert our resources and require significant expenditures.
Risks Related to Environmental and Geographic Factors Climatic events may adversely impact our operations, disrupt the business of our third party vendors on whom we rely upon for products and services, and may not be adequately covered by our insurance.
These hazards can cause personal injury and loss of life, severe damage to, or destruction of, property and equipment and business interruption and could adversely affect our financial condition. 27 Table of Contents Risks Related to Environmental and Geographic Factors Climatic events may adversely impact our operations, disrupt the business of our third party vendors on whom we rely upon for products and services, and may not be adequately covered by our insurance.
With our growth and diversification strategy into marine related parts, products and accessories, we now import, assemble and/or manufacturer marine parts, products and accessories, which could expose us to potential increased costs and certain additional risks.
We import, assemble and/or manufacturer marine parts, products and accessories, which could expose us to potential increased costs and certain additional risks. Our business includes the import, assembly, manufacture and sale of marine parts and accessories.
Increasingly, various jurisdictions are considering or implementing increased disclosure data for companies related to climate change and GHG emissions. In March of 2022, the SEC released a proposed rule that would establish a framework for reporting of climate risks, targets, and metrics. The final rule has not yet been released and we cannot predict what any such rule may require.
Increasingly, various jurisdictions are considering or implementing increased disclosure data for companies related to climate change and GHG emissions. In March of 2024, the SEC released a rule establishing a framework for reporting of climate risks, targets, and metrics. However, the rule is currently paused pending litigation and we cannot predict the final outcome.
Our inability to participate in boat shows in our existing or targeted markets, including due to cancellations of boat shows, could have a material adverse effect on our business, financial condition and results of operations.
Our inability to participate in boat shows in our existing or targeted markets, including due to cancellations of boat shows, could have a material adverse effect on our business, financial condition and results of operations. We compete primarily with local marine retailers who own three or fewer stores, as well as with a limited number of larger operators.
As of September 30, 2023, we had $428.3 million outstanding under the Term Facility and $30.0 million outstanding under the Revolving Facility.
As of September 30, 2024, we had $375.5 million outstanding under the Term Facility and $51.2 million outstanding under the Revolving Facility.
We compete in each of our markets with retailers of brands of boats and engines we do not sell in that market. In addition, several of our competitors, especially those selling marine equipment and accessories, are large national or regional chains that have substantial financial, marketing, and other resources. Private sales of pre-owned boats represent an additional source of competition.
In addition, several of our competitors, especially those selling marine equipment and accessories, are large national or regional chains that have substantial financial, marketing, and other resources. Private sales of pre-owned boats represent an additional source of competition. Additional competitors, including boat clubs, may enter the businesses in which we currently operate or intend to expand.
Controls employed by our information technology department and our customers and third-party service providers could prove inadequate. We are subject to laws, rules, regulations and policies regarding data privacy and security, and may be subject to additional related laws and regulations in jurisdictions in which we operate or expand.
We are subject to laws, rules, regulations and policies regarding data privacy and security, and may be subject to additional related laws and regulations in jurisdictions in which we operate or expand.
The implementing regulations for the law have not yet been drafted and the requirements are currently set to begin taking effect in 2026, with additional requirements phasing in through 2030.
The implementing regulations for the law have not yet been drafted and the requirements are currently set to begin taking effect in 2026, with additional requirements phasing in through 2030. Moreover, some other states in which we operate, such as Illinois and New York, are considering adopting climate disclosure laws.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeAdditionally, as part of our Dealership segment, we own or lease the following material retail facilities as of September 30, 2023: Location & Dealer Group Dealerships Leased Dealerships Owned Alabama Harbor Point Marina 1 — Harbor View Marine 1 — Legendary Marine 1 — Rambo Marine 3 — Singleton Marine 3 1 Sunrise Marine 1 — California Denison Yachting 5 — Delaware Taylor Marine Centers 1 — Florida Caribee Boat 1 — Central Marine 3 — Denison Yachting 8 — Harbor View Marine 1 — Legendary Marine 3 — Marina Mike’s 1 — Naples Boat Mart 1 — Ocean Blue Yacht Sales 3 — OneWater Yacht Group 5 — Quality Boats 4 — Sundance Marine 4 — Sunrise Marine 2 — Tom George Yacht Group 2 — Walker’s Marine 6 — Georgia American Boat Brokers 1 — Singleton Marine 7 — Massachusetts Bosuns Marine 2 — Maryland Bosuns Marine 1 — Denison Yachting 1 — OneWater Yacht Group 1 — Taylor Marine Centers 1 — Monaco Denison Yachting 1 — North Carolina OneWater Yacht Group 1 — New Jersey OneWater Yacht Group 1 — Stone Harbor Marina 1 — Ohio South Shore Marine 1 — Spend-A-Day Marina 2 — Rhode Island Denison Yachting 1 — South Carolina Captain’s Choice Marine 2 — Denison Yachting 1 — Singleton Marine 2 — Texas Phil Dill Boats 1 — Slalom Shop 2 — SMG Boats 2 — Texas Marine 3 — Virginia Norfolk Marine Company 1 — Washington Denison Yachting 1 — As part of our Distribution segment, we own or lease the following material warehouses and distribution facilities as of September 30, 2023: Location & Group Locations Leased Locations Owned Alabama T-H Marine 3 — Ocean Bio-Chem — 1 Florida PartsVu 1 — T-H Marine 1 — Ocean Bio-Chem — 1 Illinois T-H Marine 1 — Indiana T-H Marine 1 — Oklahoma T-H Marine 1 — Tennessee T-H Marine 1 — We believe that our facilities are adequate for our current operations.
Biggest changeAdditionally, as part of our Dealership segment, we own or lease the following material retail facilities as of September 30, 2024: Location & Dealer Group Dealerships Leased Dealerships Owned Alabama Harbor Point Marina 1 — Harbor View Marine 1 — Legendary Marine 2 — Rambo Marine 3 — Singleton Marine 3 1 Sunrise Marine 1 — California Denison Yachting 5 — Delaware Taylor Marine Centers 1 — Florida Caribee Boat 1 — Central Marine 3 — Denison Yachting 5 — Harbor View Marine 1 — Legendary Marine 3 — Marina Mike’s 1 — Naples Boat Mart 1 — Ocean Blue Yacht Sales 3 — OneWater Yacht Group 5 — Quality Boats 4 — Sundance Marine 4 — Sunrise Marine 2 — Tom George Yacht Group 2 — Walker’s Marine 6 — Georgia Singleton Marine 7 — Massachusetts Bosuns Marine 2 — Maryland Bosuns Marine 1 — Denison Yachting 1 — OneWater Yacht Group 1 — Taylor Marine Centers 1 — Monaco Denison Yachting 1 — North Carolina OneWater Yacht Group 1 — New Jersey OneWater Yacht Group 1 — Stone Harbor Marina 1 — Ohio South Shore Marine 1 — Spend-A-Day Marina 2 — Rhode Island Denison Yachting 1 — South Carolina Captain’s Choice Marine 2 — Denison Yachting 1 — Singleton Marine 2 — Tennessee Rambo Marine — 1 Texas Phil Dill Boats 1 — Slalom Shop 2 — SMG Boats 2 — Texas Marine 3 — Virginia Norfolk Marine Company 1 — Washington Denison Yachting 1 — As part of our Distribution segment, we own or lease the following material warehouses and distribution facilities as of September 30, 2024: Location & Group Locations Leased Locations Owned Alabama T-H Marine 3 — Ocean Bio-Chem — 1 Florida PartsVu 1 — T-H Marine 1 — Ocean Bio-Chem — 1 Indiana T-H Marine 1 — Oklahoma T-H Marine 1 — Tennessee T-H Marine 1 — We believe that our facilities are adequate for our current operations.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeRegardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors. In the opinion of our management, none of the pending litigation, disputes or claims against us, if decided adversely, would have a material adverse effect on our financial condition, cash flows or results of operations.
Biggest changeIn the opinion of management, it is not reasonably probable that the pending litigation, disputes or claims against the Company as of September 30, 2024, will have a material adverse effect on its financial condition, results of operations or cash flows.
Removed
Item 3. Legal Proceedings. Due to the nature of our business, we are, from time to time, involved in other routine litigation or subject to disputes or claims related to our business activities, including workers’ compensation claims and employment related disputes.
Added
Item 3. Legal Proceedings. We are involved in various legal proceedings as either the defendant or plaintiff. Due to their nature, such legal proceedings involve inherent uncertainties including, but not limited to, court rulings, negotiations between the affected parties and other actions.
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Item 4. Mine Safety Disclosures. Not applicable. 42 Table of Contents PART II
Added
Management assess the probability of losses or gains for such contingencies and accrues a liability and/or discloses the relevant circumstances as appropriate.
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However, the outcome of any matter cannot be predicted with certainty, and an unfavorable resolution of one or more matters presently known or arising in the future could have a material adverse effect on the Company's financial condition, liquidity or results of operations. Item 4. Mine Safety Disclosures. Not applicable. 42 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeConsequently, your only opportunity to achieve a return on your investment is if the price of our Class A common stock appreciates.” Recent Sales of Unregistered Securities None.
Biggest changeConsequently, your only opportunity to achieve a return on your investment is if the price of our Class A common stock appreciates.” Recent Sales of Unregistered Securities None. Issuer’s Purchases of Equity Securities On March 30, 2022, the Board of Directors authorized a share repurchase program of up to $50 million of outstanding shares of Class A common stock.
Our future dividend policy is within the discretion of our Board of Directors and will depend upon then-existing conditions, including our results of operations, financial condition, capital requirements, investment opportunities, statutory restrictions on our ability to pay dividends and other factors our Board of Directors may deem relevant.
Our future dividend policy is within the discretion of our Board of Directors and will depend upon then-existing conditions, including our results of operations, financial condition, capital requirements, investment opportunities, statutory and contractual restrictions on our ability to pay dividends and other factors our Board of Directors may deem relevant.
Performance Graph The following graph illustrates a comparison of the total cumulative stockholder return for our Class A common stock since February 7, 2020, which is the date our shares began trading, through September 30, 2023, to two indices: the Russell 2000 Index and the S&P 500 Retail Index.
Performance Graph The following graph illustrates a comparison of the total cumulative stockholder return for our Class A common stock since February 7, 2020, which is the date our shares began trading, through September 30, 2024, to two indices: the Russell 2000 Index and the S&P 500 Retail Index.
COMPARISON OF 47 MONTH CUMULATIVE TOTAL RETURN* Among OneWater Marine Inc., the Russell 2000 Index, the NASDAQ Retail Trade Index and the S&P 500 Consumer Staples Distribution & Retail Index * *$100 invested on 2/7/20 in stock or 1/31/20 in index, including reinvestment of dividends. Fiscal year ending September 30. Copyright© 2023 Russell Investment Group. All rights reserved.
COMPARISON OF 56 MONTH CUMULATIVE TOTAL RETURN* Among OneWater Marine Inc., the Russell 2000 Index and the S&P 500 Consumer Staples Distribution & Retail Index * *$100 invested on 2/7/20 in stock or 1/31/20 in index, including reinvestment of dividends. Fiscal year ending September 30. Copyright© 2024 Russell Investment Group. All rights reserved.
Repurchases under the share repurchase program may be made at any time or from time to time, without prior notice, in the open market or in privately negotiated transactions at prevailing market prices, or such other means as will comply with applicable state and federal securities laws and regulations, including the provisions of the Securities Exchange Act of 1934, including Rule 10b5-1 and, to the extent practicable or advisable, Rule 10b-18 thereunder, and consistent with the Company’s contractual limitations and other requirements. 44 Table of Contents Item 6.
Repurchases under the share repurchase program may be made at any time or from time to time, without prior notice, in the open market or in privately negotiated transactions at prevailing market prices, or such other means as will comply with applicable state and federal securities laws and regulations, including the provisions of the Securities Exchange Act of 1934, including Rule 10b5-1 and Rule 10b-18 thereunder, and consistent with the Company’s contractual limitations and other requirements.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market Information Our Class A common stock is traded on Nasdaq under the symbol “ONEW.” As of November 28, 2023 , there were 14,539,056 shares of Class A common stock and 1,429,940 shares of Class B common stock outstanding.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market Information Our Class A common stock is traded on Nasdaq under the symbol “ONEW.” As of November 26, 2024 , there were 14,826,496 shares of Class A common stock and 1,429,940 shares of Class B common stock outstanding.
Copyright© 2023 Standard & Poor's, a division of S&P Global.
Copyright© 2024 Standard & Poor's, a division of S&P Global.
We do not anticipate declaring or paying any cash dividends to holders of our Class A common stock in the foreseeable future. We currently intend to retain future earnings, if any, to finance the growth of our business. Holders of our Class B common stock are not entitled to participate in any dividends declared by our Board of Directors.
We currently intend to retain future earnings, if any, to finance the growth of our business. Holders of our Class B common stock are not entitled to participate in any dividends declared by our Board of Directors.
Holders of Record As of November 28, 2023 there were 6 and 4 stockholders of record of our Class A common stock and Class B common stock, respectively.
Holders of Record As of November 26, 2024 there were 3 and 4 stockholders of record of our Class A common stock and Class B common stock, respectively.
All rights reserved. 43 Table of Contents 2/7/20 9/30/20 9/30/21 9/30/22 9/30/23 OneWater Marine Inc. 100.00 135.34 277.33 207.67 176.70 Russell 2000 100.00 94.34 139.32 106.58 116.10 S&P 500 Retail 100.00 112.05 131.38 128.74 137.27 NASDAQ Retail Trade 100.00 148.95 157.28 117.10 Dividends On June 17, 2021, our Board of Directors declared a one-time special cash dividend of $1.80 per share.
All rights reserved. 43 Table of Contents 2/7/20 9/30/20 9/30/21 9/30/22 9/30/23 9/30/24 OneWater Marine Inc. 100.00 135.34 277.33 207.67 176.70 164.91 Russell 2000 100.00 94.34 139.32 106.58 116.10 147.17 S&P 500 Retail 100.00 136.50 157.00 120.59 137.83 193.04 Dividends We do not anticipate declaring or paying any cash dividends to holders of our Class A common stock in the foreseeable future.
Removed
In fiscal year 2023, we added the S&P 500 Retail Index as the NASDAQ Retail Trade index is not a widely recognized or easily accessible index and was discontinued.
Added
The Company made no repurchases during the year ended September 30, 2024. The Company has $48.1 million remaining under the share repurchase program. Item 6. [RESERVED]
Removed
The cash dividend of approximately $27.1 million was paid on July 19, 2021 to holders of Class A common stock and OneWater Unit Holders. Additionally, a $1.0 million cash dividend for restricted stock unit holders was accrued for payment to holders upon future vesting of restricted stock unit awards outstanding on the date the dividend was declared.
Removed
During the year ended September 30, 2023, $0.3 million of the previously accrued balance was paid to restricted stock unit holders. The remaining $0.5 million is recorded in other payables and accrued expenses in the consolidated balance sheet as of September 30, 2023.
Removed
In addition, under our Credit Facilities, OWAO is restricted from paying cash dividends, and we expect these restrictions to continue in the future, which may in turn limit our ability to pay cash dividends on our Class A common stock.
Removed
Our ability to pay cash dividends may also be restricted by the terms of any future credit agreement or any future debt or preferred equity securities that we or our subsidiaries may issue.
Removed
Issuer’s Purchases of Equity Securities Issuer’s Purchases of Equity Securities (1) (a) (b) (c) (d) Period Total number of shares purchased Average price paid per share Total number of Shares purchased as part of publicly announced plans or programs Maximum dollar value of shares that may yet be purchased under the plans or programs (in millions) July 1, 2023 through July 31, 2023 — $ — — $ 48.1 August 1, 2023 through August 31, 2023 — — — 48.1 September 1, 2023 through September 30, 2023 — — — 48.1 Total — $ — — $ 48.1 (1) On March 30, 2022, the Board of Directors authorized a share repurchase program of up to $50 million of outstanding shares of Class A common stock.
Removed
Selected Financial Data. Part II, Item 6 is no longer required due to amendments to Regulation S-K that eliminate Item 301.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

124 edited+33 added−36 removed143 unchanged
Biggest changeThe $242.7 million decrease in cash provided by financing activities was primarily attributable to a $382.5 million decrease in proceeds of long term debt, partially offset by a $66.8 million increase in net borrowing from our Inventory Financing Facility and a $69.7 million decrease in payments on long-term debt for the year ended September 30, 2023 as compared to the year ended September 30, 2022. 63 Table of Contents Analysis of Cash Flow Changes Between the Year Ended September 30, 2022 and 2021 The following table summarizes our cash flows for the periods indicated: Year Ended September 30, Description 2022 2021 Change ($ in thousands, unaudited) Net cash provided by operating activities $ 7,447 $ 159,423 $ (151,976) Net cash used in investing activities (476,844) (117,130) (359,714) Net cash provided by (used in) financing activities 456,403 (36,497) 492,900 Effect of exchange rate changes on cash and restricted cash (8) — $ (8) Net change in cash $ (13,002) $ 5,796 $ (18,798) Operating Activities .
Biggest changeThe $327.8 million increase in cash used in financing activities was primarily attributable to a $265.3 million decrease in net borrowing from our Inventory Financing Facility and a $60.0 million increase in payments on long-term debt, partially offset by a $13.4 million increase in proceeds of long term debt for the year ended September 30, 2024 as compared to the year ended September 30, 2023.
How We Evaluate Our Operations Revenue We have a diversified revenue profile that is comprised of new boat sales, pre-owned boat sales, finance & insurance products, repair and maintenance services, and parts and accessories.
How We Evaluate Our Operations Revenue We have a diversified revenue profile that is comprised of new boat sales, pre-owned boat sales, finance & insurance products, repair and maintenance services, and parts and accessories sales.
The decrease in gross profit margin was due to a shift in the mix of revenue towards parts & accessories which has a lower gross profit percentage than service and other sales, as well as rising labor costs.
The decrease in gross profit margin was due to a shift in the mix of revenue towards parts and accessories which has a lower gross profit percentage than service and other sales, as well as rising labor costs.
Loss on Impairment During the year ended September 30, 2023, we recognized a loss on impairment of $147.4 as a result of the quantitative assessment of the fair values compared to the carrying values of goodwill and identifiable intangible assets for the Dealerships and Distribution segments.
During the year ended September 30, 2023, we recognized a loss on impairment of $147.4 as a result of the quantitative assessment of the fair values compared to the carrying values of goodwill and identifiable intangible assets for the Dealerships and Distribution segments.
We sell a wide range of brands and sizes of pre-owned boats under different types of sales arrangements (e.g., trade-ins, brokerage, consigned and wholesale), which causes periodic and seasonal fluctuations in the average sales price.
We sell a wide range of brands and sizes of pre-owned boats under different types of sales arrangements (e.g., trade-ins, brokerage, consigned and wholesale), which causes periodic and seasonal fluctuations in the average sales price.
Finance & insurance income is recorded net of related fees, including fees charged back due to any early cancellation of loan or insurance contracts by a customer. Since finance & insurance income is fee-based, we do not incur any related cost of sale.
Finance & insurance income is recorded net of related fees, including fees charged back due to any early cancellation of loan or insurance contracts by a customer. Since finance & insurance income is fee-based, we do not incur any related cost of sale.
We sell a wide range of brands and sizes of pre-owned boats under different types of sales arrangements (e.g., trade-ins, brokerage, consignment and wholesale), which may cause periodic and seasonal fluctuations in pre-owned boat gross profit as a percentage of revenue.
We sell a wide range of brands and sizes of pre-owned boats under different types of sales arrangements (e.g., trade-ins, brokerage, consignment and wholesale), which may cause periodic and seasonal fluctuations in pre-owned boat gross profit as a percentage of revenue.
Net income (loss) attributable to OneWater Marine Inc. is the GAAP measure most directly comparable to Adjusted Net Income Attributable to OneWater Marine Inc. and Net (loss) earnings per share of Class A common stock - diluted is the GAAP measure most directly comparable to Adjusted Diluted Earnings Per Share.
Net income (loss) attributable to OneWater Marine Inc. is the GAAP measure most directly comparable to Adjusted Net Income Attributable to OneWater Marine Inc. and Net earnings (loss) per share of Class A common stock - diluted is the GAAP measure most directly comparable to Adjusted Diluted Earnings Per Share.
Because Adjusted Net Income Attributable to OneWater Marine Inc. and Adjusted Diluted Earnings Per Share may be defined differently by other companies in our industry, our definition of these non-GAAP financial measures may not be comparable to similarly titled measures of other companies, thereby diminishing their utility. 60 Table of Contents The following tables present a reconciliation of Adjusted Net Income Attributable to OneWater Marine Inc. to our net (loss) income attributable to OneWater Marine Inc. and Adjusted Diluted Earnings Per Share to our net (loss) earnings per share of Class A common stock - diluted, which are the most directly comparable GAAP measures for the periods presented.
Because Adjusted Net Income Attributable to OneWater Marine Inc. and Adjusted Diluted Earnings Per Share may be defined differently by other companies in our industry, our definition of these non-GAAP financial measures may not be comparable to similarly titled measures of other companies, thereby diminishing their utility. 60 Table of Contents The following tables present a reconciliation of Adjusted Net Income Attributable to OneWater Marine Inc. to our net income (loss) attributable to OneWater Marine Inc. and Adjusted Diluted Earnings Per Share to our net earnings (loss) per share of Class A common stock - diluted, which are the most directly comparable GAAP measures for the periods presented.
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. Net income (loss) is the GAAP measure most directly comparable to Adjusted EBITDA.
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. Net income is the GAAP measure most directly comparable to Adjusted EBITDA.
The combination of our significant scale, diverse inventory, access to premium boat brands, access to a broad array of parts and accessories and meaningful group brand equity enables us to provide a consistently professional experience as reflected in the number of our repeat customers and Dealership same-store sales growth.
The combination of our significant scale, diverse inventory, access to premium boat brands, access to a broad array of parts and accessories and meaningful brand equity enables us to provide a consistently professional experience as reflected in the number of our repeat customers and Dealership same-store sales growth.
Each of these adjustments are subsequently adjusted for income tax at an estimated effective tax rate. Management also reports adjusted diluted earnings per share which presents all of the adjustments to net income attributable to OneWater Marine Inc. noted above on a per share basis.
Each of these adjustments are subsequently adjusted for income tax at an estimated effective tax rate. Management also reports Adjusted Diluted Earnings Per Share which presents all of the adjustments to net income (loss) attributable to OneWater Marine Inc. noted above on a per share basis.
Cash Flows Analysis of Cash Flow Changes Between the Year Ended September 30, 2023 and 2022 The following table summarizes our cash flows for the periods indicated: Year Ended September 30, Description 2023 2022 Change ($ in thousands, unaudited) Net cash (used in) provided by operating activities $ (129,760) $ 7,447 $ (137,207) Net cash used in investing activities (51,601) (476,844) 425,243 Net cash provided by financing activities 213,715 456,403 (242,688) Effect of exchange rate changes on cash and restricted cash 9 (8) 17 Net change in cash $ 32,363 $ (13,002) $ 45,365 Operating Activities .
Analysis of Cash Flow Changes Between the Year Ended September 30, 2023 and 2022 The following table summarizes our cash flows for the periods indicated: Year Ended September 30, ($ in thousands) 2023 2022 Change Net cash (used in) provided by operating activities $ (129,760) $ 7,447 $ (137,207) Net cash used in investing activities (51,601) (476,844) 425,243 Net cash provided by financing activities 213,715 456,403 (242,688) Effect of exchange rate changes on cash and restricted cash 9 (8) $ 17 Net change in cash $ 32,363 $ (13,002) $ 45,365 Operating Activities .
In addition to boat sales, we also generate sales from related products including finance & insurance and service, parts & other sales. The recent acquisitions of T-H Marine and Ocean Bio-Chem have significantly expanded our sales of marine parts and accessories.
In addition to boat sales, we also generate sales from related products including finance & insurance and service, parts & other sales. The acquisitions of T-H Marine and Ocean Bio-Chem have significantly expanded our sales of marine parts and accessories.
In addition to boat sales, we also generate sales from related products including finance & insurance and service, parts & other sales. The recent acquisitions of T-H Marine and Ocean Bio-Chem significantly expanded our sales of marine parts and accessories.
In addition to boat sales, we also generate sales from related products including finance & insurance and service, parts & other sales. The acquisitions of T-H Marine and Ocean Bio-Chem significantly expanded our sales of marine parts and accessories.
Our Board of Directors, management team and lenders use Adjusted Net Income Attributable to OneWater Marine Inc. and Adjusted Diluted Earnings Per Share 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 unusual or one time charges and other items (such as the change in fair value of contingent consideration, intangible amortization, loss on impairment and transaction costs) that impact the comparability of financial results from period to period.
Our Board, management team and lenders use Adjusted Net Income Attributable to OneWater Marine Inc. and Adjusted Diluted Earnings Per Share 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 unusual or one time charges and other items (such as the change in fair value of contingent consideration, intangible amortization, restructuring and impairment and transaction costs) that impact the comparability of financial results from period to period.
The decrease in new boat gross profit and gross profit margin is due primarily to the normalization of new boat pricing following the COVID-19 pandemic and the return of seasonality. 52 Table of Contents Pre-owned Boat Gross Profit Pre-owned boat gross profit decreased by $5.7 million, or 7.0%, to $76.0 million for the year ended September 30, 2023 from $81.7 million for the year ended September 30, 2022.
The decrease in new boat gross profit and gross profit margin is due primarily to the normalization of new boat pricing following the COVID-19 pandemic and the return of seasonality. 56 Table of Contents Pre-owned Boat Gross Profit Pre-owned boat gross profit decreased by $5.7 million, or 7.0%, to $76.0 million for the year ended September 30, 2023 from $81.7 million for the year ended September 30, 2022.
The impairment was largely driven by a decline in the Distribution segment's results as well as a decrease in the Company's market capitalization. 53 Table of Contents Income from Operations Income from operations decreased $199.8 million, or 91.7%, to $18.1 million for the year ended September 30, 2023 compared to $217.8 million for the year ended September 30, 2022.
The impairment was largely driven by a decline in the Distribution segment's results as well as a decrease in the Company's market capitalization. 57 Table of Contents Income from Operations Income from operations decreased $199.8 million, or 91.7%, to $18.1 million for the year ended September 30, 2023 compared to $217.8 million for the year ended September 30, 2022.
Share Repurchase Program On March 30, 2022, the Board of Directors authorized a share repurchase program of up to $50 million of outstanding shares of Class A common stock.
Share Repurchase Program On March 30, 2022, the Board authorized a share repurchase program of up to $50 million of outstanding shares of Class A common stock.
For the years ended September 30, 2022 and 2021, the Company determined that it was more likely than not that the fair value of the goodwill and identifiable intangible assets was greater than its carrying amount, and as a result, no impairment for goodwill and identifiable intangible assets was required.
For the years ended September 30, 2024 and 2022, the Company determined that it was more likely than not that the fair value of the goodwill and identifiable intangible assets was greater than its carrying amount, and as a result, no impairment for goodwill and identifiable intangible assets was required.
For more information, see “Risk Factors—Risks Related to Industry and Competition—Our business, as well as the entire retail marine industry, is highly seasonal, with seasonality varying in different geographic markets” and “Business—Seasonality.” 62 Table of Contents Liquidity and Capital Resources Overview OneWater Inc. is a holding company with no operations and is the sole managing member of OneWater LLC.
For more information, see “Risk Factors—Risks Related to Industry and Competition—Our business, as well as the entire retail marine industry, is highly seasonal, with seasonality varying in different geographic markets” and “Business—Seasonality.” Liquidity and Capital Resources Overview OneWater Inc. is a holding company with no operations and is the sole managing member of OneWater LLC.
The cost of new and pre-owned boat inventory is determined using the specific identification method. New and pre-owned boat sales histories indicated that the overwhelming majority of such boats are sold for, or in excess of, the cost to purchase those boats.
The cost of new and pre-owned boat inventory is determined using the specific identification method. New and pre-owned boat sales histories indicate that the overwhelming majority of such boats are sold for, or in excess of, the cost to purchase those boats.
Consumer spending on discretionary goods may also decline as a result of lower consumer confidence levels, higher interest rates or higher fuel costs, even if prevailing economic conditions are otherwise favorable. Economic conditions in areas in which we operate dealerships, particularly in the Southeast, can have a major impact on our overall results of operations.
Consumer spending on discretionary goods may also decline as a result of lower consumer confidence levels, higher interest rates or higher fuel costs, even if prevailing economic conditions are otherwise favorable. Economic conditions in areas in which we operate dealerships, 45 Table of Contents particularly in the Southeast, can have a major impact on our overall results of operations.
The following tables present a reconciliation of Adjusted EBITDA to our net income (loss), which is the most directly comparable GAAP measure for the periods presented. Year Ended September 30, 2023, Compared to Year Ended September 30, 2022.
The following tables present a reconciliation of Adjusted EBITDA to our net (loss) income, which is the most directly comparable GAAP measure for the periods presented. Year Ended September 30, 2024, Compared to Year Ended September 30, 2023.
Hurricanes and other storms could result in disruptions of our operations or damage to our boat inventories and facilities, as has been the case when Florida and other markets were affected by hurricanes. We believe our geographic diversity is likely to reduce the overall impact to us of adverse weather conditions in any one market area.
Hurricanes, tornadoes, and other storms have and could result in disruptions of our operations or damage to our boat inventories and facilities, as has been the case when Florida, Texas, and other markets were affected by hurricanes. We believe our geographic diversity is likely to reduce the overall impact to us of adverse weather conditions in any one market area.
See “—Comparison of Non-GAAP Financial Measure” for more information and a reconciliation of Adjusted EBITDA to net income (loss), the most directly comparable financial measure calculated and presented in accordance with GAAP.
See “—Comparison of Non-GAAP Financial Measures” for more information and a reconciliation of Adjusted EBITDA to net income (loss), the most directly comparable financial measure calculated and presented in accordance with GAAP.
The decrease in Adjusted Diluted Earnings Per Share resulted from the decrease in Adjusted Net Income Attributable to OneWater Marine Inc. 61 Table of Contents Year Ended September 30, 2022, Compared to Year Ended September 30, 2021.
The decrease in Adjusted Diluted Earnings Per Share resulted from the decrease in Adjusted Net Income Attributable to OneWater Marine Inc. 61 Table of Contents Year Ended September 30, 2023, Compared to Year Ended September 30, 2022.
Impairment testing requires the assessment of both qualitative and quantitative factors, including, but not limited to whether there has been a significant or adverse change in the business climate that could affect the value of an asset and/or significant or adverse changes in cash flow projections or earnings forecasts.
Impairment testing requires the assessment of both qualitative and quantitative factors, including, but not limited to whether there has been a significant or adverse change in the business climate that could affect the value of an asset and/or significant or adverse changes in 46 Table of Contents cash flow projections or earnings forecasts.
We define Adjusted Net Income Attributable to OneWater Marine Inc. as net income (loss) attributable to OneWater Marine Inc. before transaction costs, intangible amortization, change in fair value of contingent consideration, loss on impairment and other expense (income), all of which are then adjusted for an allocation to the non-controlling interest of OneWater Marine Holdings, LLC.
We define Adjusted Net Income Attributable to OneWater Marine Inc. as net income (loss) attributable to OneWater Marine Inc. before transaction costs, intangible amortization, change in fair value of contingent consideration, restructuring and impairment and other expense (income), all of which are then adjusted for an allocation to the non-controlling interest of OneWater LLC.
OneWater Inc’s principal asset consists of common units of OneWater LLC. Our earnings and cash flows and ability to meet our obligations under the A&R Credit Facility, and any other debt obligations will depend on the cash flows resulting from the operations of our operating subsidiaries, and the payment of distributions by such subsidiaries.
OneWater Inc.’s principal asset consists of common units of OneWater LLC. Our earnings and cash flows and ability to meet our obligations under the A&R Credit Facility, and any other debt obligations will depend on the cash flows resulting from the operations of our operating subsidiaries, and the payment of distributions by such subsidiaries.
In addition to seasonality, revenue and operating results may be significantly affected by quarter-to-quarter changes in economic conditions, manufacturer incentive programs, adverse weather conditions and other developments outside of our control. Gross Profit We calculate gross profit as revenue less cost of sales.
In addition to seasonality, revenue and operating results may be significantly affected by quarter-to-quarter changes in economic conditions, manufacturer incentive programs, adverse weather conditions and other developments outside of our control. 47 Table of Contents Gross Profit We calculate gross profit as revenue less cost of sales.
Years Ended September 30, Description 2023 2022 Change ($ in thousands) Net (loss) income attributable to OneWater Marine Inc. $ (38,592) $ 130,944 $ (169,536) Transaction costs 1,839 7,724 (5,885) Intangible amortization 13,436 7,515 5,921 Change in fair value of contingent consideration (1,604) 10,380 (11,984) Loss on impairment 147,402 — 147,402 Other expense (income), net 953 3,793 (2,840) Net (loss) income attributable to non-controlling interests of One Water Marine Holdings, LLC (1) (14,744) (2,676) (12,068) Adjustments to income tax (benefit) expense (2) (33,875) (6,149) (27,726) Adjusted net income attributable to OneWater Marine Inc. 74,815 151,531 (76,716) Net (loss) earnings per share of Class A common stock - diluted $ (2.69) $ 9.13 $ (11.82) Transaction costs 0.13 0.54 (0.41) Intangible amortization 0.94 0.52 0.42 Change in fair value of contingent consideration (0.11) 0.72 (0.83) Loss on impairment 10.29 — 10.29 Other expense (income), net 0.07 0.26 (0.19) Net (loss) income attributable to non-controlling interests of One Water Marine Holdings, LLC (1) (1.03) (0.19) (0.84) Adjustments to income tax (benefit) expense (2) (2.36) (0.43) (1.93) Adjustment for dilutive shares (3) (0.14) — (0.14) Adjusted earnings per share of Class A common stock - diluted $ 5.10 $ 10.53 $ (5.43) (1) Represents an allocation of the impact of reconciling items to our non-controlling interest at a rate of 9.1%.
Years Ended September 30, Description 2023 2022 Change ($ in thousands, except per share data) Net (loss) income attributable to OneWater Marine Inc. $ (38,592) $ 130,944 $ (169,536) Transaction costs 1,839 7,724 (5,885) Intangible amortization 13,436 7,515 5,921 Change in fair value of contingent consideration (1,604) 10,380 (11,984) Restructuring and impairment 147,402 — 147,402 Other expense (income), net 953 3,793 (2,840) Net income attributable to non-controlling interests of One Water Marine Holdings, LLC (1) (14,744) (2,676) (12,068) Adjustments to income tax expense (2) (33,875) (6,149) (27,726) Adjusted net income attributable to OneWater Marine Inc. 74,815 151,531 (76,716) Net (loss) earnings per share of Class A common stock - diluted $ (2.69) $ 9.13 $ (11.82) Transaction costs 0.13 0.54 (0.41) Intangible amortization 0.94 0.52 0.42 Change in fair value of contingent consideration (0.11) 0.72 (0.83) Restructuring and impairment 10.29 — 10.29 Other expense (income), net 0.07 0.26 (0.19) Net income attributable to non-controlling interests of One Water Marine Holdings, LLC (1) (1.03) (0.19) (0.84) Adjustments to income tax expense (2) (2.36) (0.43) (1.93) Adjustment for dilutive shares (3) (0.14) — (0.14) Adjusted earnings per share of Class A common stock - diluted $ 5.10 $ 10.55 $ (5.45) (1) Represents an allocation of the impact of reconciling items to our non-controlling interest.
We refer to the fiscal year 2022 acquisitions described above collectively as the “2022 Acquisitions.” The 2022 Acquisitions are fully reflected in our consolidated financial statements for the year ended September 30, 2023. Naples Boat Mart is fully reflected in our consolidated statements of operations for the year ended September 30, 2022.
We refer to the fiscal year 2022 acquisitions described above collectively as the “2022 Acquisitions.” The 2022 Acquisitions are fully reflected in our consolidated financial statements for the years ended September 30, 2024 and 2023. Naples Boat Mart is fully reflected in our consolidated statements of operations for the year ended September 30, 2022.
We were formed in 2014 as OneWater LLC through the combination of Singleton Marine and Legendary Marine, which created a marine retail platform that collectively owned and operated 19 dealerships. Since the combination in 2014, we have acquired a total of 80 additional dealerships, 12 distribution centers/warehouses and multiple online marketplaces through 33 acquisitions.
We were formed in 2014 as OneWater LLC through the combination of Singleton Marine and Legendary Marine, which created a marine retail platform that collectively owned and operated 19 dealerships. Since the combination in 2014, we have acquired a total of 81 additional dealerships, 12 distribution centers/warehouses and multiple online marketplaces through 34 acquisitions.
Adjusted EBITDA We define Adjusted EBITDA as net income (loss) before interest expense – other, income tax (benefit) 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, loss on extinguishment of debt, loss on impairment and transaction costs.
Adjusted EBITDA We define Adjusted EBITDA as net income (loss) before interest expense – other, income tax (benefit) 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, loss on extinguishment of debt, transaction costs, stock-based compensation and restructuring and impairment.
The remaining 2023 Acquisitions are partially reflected in our consolidated statements of operations for the year ended September 30, 2023, beginning on the date of acquisition. None of our 2023 Acquisitions impact our results of operations for the years ended September 30, 2022 and 2021.
The remaining 2023 Acquisitions are partially reflected in our consolidated statements of operations for the year ended September 30, 2023, beginning on the date of acquisition. None of our 2023 Acquisitions impact our results of operations for the year ended September 30, 2022.
Our future results will depend on our ability to efficiently manage our combined operations and execute our business strategy. 50 Table of Contents Results of Operations Year Ended September 30, 2023, Compared to Year Ended September 30, 2022 For the Year Ended September 30, 2023 2022 Description Amount % of Revenue Amount % of Revenue $ Change % Change ($ in thousands) Revenues: New boat $ 1,223,691 63.2 % $ 1,139,331 65.3 % $ 84,360 7.4 % Pre-owned boat 334,477 17.3 % 294,832 16.9 % 39,645 13.4 % Finance & insurance income 56,325 2.9 % 55,977 3.2 % 348 0.6 % Service, parts & other 321,817 16.6 % 254,682 14.6 % 67,135 26.4 % Total revenues 1,936,310 100.0 % 1,744,822 100.0 % 191,488 11.0 % Gross Profit New boat 268,469 13.9 % 305,305 17.5 % (36,836) -12.1 % Pre-owned boat 75,953 3.9 % 81,665 4.7 % (5,712) -7.0 % Finance & insurance 56,325 2.9 % 55,977 3.2 % 348 0.6 % Service, parts & other 134,379 6.9 % 110,708 6.3 % 23,671 21.4 % Total gross profit 535,126 27.6 % 553,655 31.7 % (18,529) -3.3 % Selling, general and administrative expenses 345,524 17.8 % 302,113 17.3 % 43,411 14.4 % Depreciation and amortization 23,898 1.2 % 15,605 0.9 % 8,293 53.1 % Transaction costs 1,839 0.1 % 7,724 0.4 % (5,885) -76.2 % Change in fair value of contingent consideration (1,604) -0.1 % 10,380 0.6 % (11,984) -115.5 % Loss on impairment 147,402 7.6 % — — % 147,402 100.0 % Income from operations 18,067 0.9 % 217,833 12.5 % (199,766) -91.7 % Interest expense – floor plan 25,080 1.3 % 4,647 0.3 % 20,433 439.7 % Interest expense – other 34,557 1.8 % 13,201 0.8 % 21,356 161.8 % Loss on extinguishment of debt — — % 356 — % (356) -100.0 % Other expense (income), net 953 — % 3,793 0.2 % (2,840) -74.9 % Net (loss) income before income tax (benefit) expense (42,523) -2.2 % 195,836 11.2 % (238,359) -121.7 % Income tax (benefit) expense (3,412) -0.2 % 43,225 2.5 % (46,637) -107.9 % Net (loss) income (39,111) -2.0 % 152,611 8.7 % (191,722) -125.6 % Net income attributable to non-controlling interests (3,810) (2,998) Net loss (income) attributable to non-controlling interests of One Water Marine Holdings, LLC 4,329 (18,669) Net (loss) income attributable to OneWater Marine Inc. $ (38,592) $ 130,944 51 Table of Contents Revenue Overall, revenue increased by $191.5 million, or 11.0%, to $1,936.3 million for the year ended September 30, 2023 from $1,744.8 million for the year ended September 30, 2022.
The decrease was primarily attributable to the decrease in restructuring and impairment charges and selling, general and administrative expenses, partially offset by the decrease in gross profit and increase in interest expense – floor plan during the same periods. 54 Table of Contents Results of Operations Year Ended September 30, 2023, Compared to Year Ended September 30, 2022 For the Year Ended September 30, 2023 2022 Description Amount % of Revenue Amount % of Revenue $ Change % Change ($ in thousands) Revenues: New boat $ 1,223,691 63.2 % $ 1,139,331 65.3 % $ 84,360 7.4 % Pre-owned boat 334,477 17.3 % 294,832 16.9 % 39,645 13.4 % Finance & insurance income 56,325 2.9 % 55,977 3.2 % 348 0.6 % Service, parts & other 321,817 16.6 % 254,682 14.6 % 67,135 26.4 % Total revenues 1,936,310 100.0 % 1,744,822 100.0 % 191,488 11.0 % Gross Profit New boat 268,469 13.9 % 305,305 17.5 % (36,836) -12.1 % Pre-owned boat 75,953 3.9 % 81,665 4.7 % (5,712) -7.0 % Finance & insurance 56,325 2.9 % 55,977 3.2 % 348 0.6 % Service, parts & other 134,379 6.9 % 110,708 6.3 % 23,671 21.4 % Total gross profit 535,126 27.6 % 553,655 31.7 % (18,529) -3.3 % Selling, general and administrative expenses 345,524 17.8 % 302,113 17.3 % 43,411 14.4 % Depreciation and amortization 23,898 1.2 % 15,605 0.9 % 8,293 53.1 % Transaction costs 1,839 0.1 % 7,724 0.4 % (5,885) -76.2 % Change in fair value of contingent consideration (1,604) -0.1 % 10,380 0.6 % (11,984) -115.5 % Restructuring and impairment 147,402 7.6 % — — % 147,402 100.0 % Income from operations 18,067 0.9 % 217,833 12.5 % (199,766) -91.7 % Interest expense – floor plan 25,080 1.3 % 4,647 0.3 % 20,433 439.7 % Interest expense – other 34,557 1.8 % 13,201 0.8 % 21,356 161.8 % Loss on extinguishment of debt — 0.0 % 356 0.0 % (356) -100.0 % Other expense (income), net 953 — % 3,793 0.2 % (2,840) -74.9% Income before income tax expense (42,523) -2.2 % 195,836 11.2 % (238,359) -121.7 % Income tax expense (3,412) -0.2 % 43,225 2.5 % (46,637) -107.9 % Net income (39,111) -2.0 % 152,611 8.7 % (191,722) -125.6 % Net income attributable to non-controlling interests (3,810) (2,998) Net income attributable to non-controlling interests of One Water Marine Holdings, LLC 4,329 (18,669) Net income attributable to OneWater Marine Inc. $ (38,592) $ 130,944 55 Table of Contents Revenue Overall, revenue increased by $191.5 million, or 11.0%, to $1,936.3 million for the year ended September 30, 2023 from $1,744.8 million for the year ended September 30, 2022.
Our current portfolio as of September 30, 2023 consists of multiple brands which are recognized on a local, regional or national basis. Because of this, we believe we are one of the largest and fastest-growing marine retailers in the United States based on number of dealerships and total boats sold.
Our current portfolio 44 Table of Contents as of September 30, 2024 consists of multiple brands which are recognized on a local, regional or national basis. Because of this, we believe we are one of the largest and fastest-growing marine retailers in the United States based on number of dealerships and total boats sold.
Additionally, we cannot predict the timing or length of unfavorable economic or industry conditions, including a downturn as a result of pandemics, rising interest rates, inflation, or the extent to which they could adversely affect our operating results.
Additionally, we cannot predict the timing or length of unfavorable economic or industry conditions, including a downturn as a result of a global health crisis, rising interest rates, inflation, or the extent to which they could adversely affect our operating results.
We do not undertake any obligation to publicly update any forward-looking statements, except as otherwise required by applicable law. Overview We believe that we are one of the largest and fastest-growing marine retailers in the United States with 98 dealerships, 11 distribution centers/warehouses and multiple online marketplaces as of September 30, 2023.
We do not undertake any obligation to publicly update any forward-looking statements, except as otherwise required by applicable law. Overview We believe that we are one of the largest and fastest-growing marine retailers in the United States with 96 dealerships, 10 distribution centers/warehouses and multiple online marketplaces as of September 30, 2024.
Subject to certain conditions, the available amount under the Term Facility and the Revolving Facility may be increased by $125.0 million plus additional amounts subject to additional conditions (including satisfaction of a consolidated leverage ratio requirement) in the aggregate (with up to $50.0 million allocable to the Revolving Facility). The Revolving Facility matures on August 9, 2027.
Subject to certain conditions, the available amount under the Term Facility and the Revolving Facility may be increased by $125.0 million plus additional amounts subject to additional conditions (including satisfaction of a consolidated leverage ratio requirement) in the aggregate (with up to $50.0 million allocable to the Revolving Facility).
The decrease in Adjusted EBITDA resulted from the decrease in gross profit, the increase in selling, general and administrative expenses and the increase in interest expense - floor plan for the year ended September 30, 2023 as compared to the year ended September 30, 2022. 59 Table of Contents Year Ended September 30, 2022, Compared to Year Ended September 30, 2021.
The decrease in Adjusted EBITDA resulted from the decrease in gross profit and the increase in interest expense - floor plan, partially offset by the decrease in selling, general and administrative expenses for the year ended September 30, 2024 as compared to the year ended September 30, 2023. 59 Table of Contents Year Ended September 30, 2023, Compared to Year Ended September 30, 2022.
Fiscal Year 2022 Acquisitions • Effective October 1, 2021, we acquired Naples Boat Mart, a full-service marine retailer with one location in Florida. • Effective November 30, 2021, we acquired T-H Marine, a leading provider of branded marine parts and accessories for OEMs and the aftermarket, with locations in Alabama, Florida, Illinois, Indiana, Oklahoma and Texas. • Effective December 1, 2021, we acquired Norfolk Marine Company, a full-service marine retailer with one location in Virginia. • Effective December 31, 2021, we acquired a majority interest in Quality Boats, a full-service marine retailer with three locations in Florida. • Effective February 1, 2022 we acquired JIF Marine, a leading supplier of stainless steel ladders, dock products and other accessories which is based in Tennessee. 49 Table of Contents • Effective March 1, 2022, we acquired YakGear, a leading supplier of kayak equipment, paddle sport accessories and boat mounting accessories which is based in Texas. • Effective April 1, 2022, we acquired Denison Yachting, a leader in yacht and superyacht sales as well as ancillary yacht services, with 20 locations. • Effective August 9, 2022, we acquired Ocean Bio-Chem, including Star Brite Europe, Inc., a leading supplier and distributor of appearance, cleaning and maintenance products for the marine industry and the automotive, powersports, recreational vehicles, and outdoor power equipment markets with locations in Alabama and Florida.
Fiscal Year 2022 Acquisitions • Effective October 1, 2021, we acquired Naples Boat Mart, a full-service marine retailer with one location in Florida. • Effective November 30, 2021, we acquired T-H Marine, a leading provider of branded marine parts and accessories for OEMs and the aftermarket, with locations in Alabama, Florida, Illinois, Indiana, Oklahoma and Texas. • Effective December 1, 2021, we acquired Norfolk Marine Company, a full-service marine retailer with one location in Virginia. • Effective December 31, 2021, we acquired a majority interest in Quality Boats, a full-service marine retailer with three locations in Florida. • Effective February 1, 2022 we acquired JIF Marine, a leading supplier of stainless steel ladders, dock products and other accessories which is based in Tennessee. • Effective March 1, 2022, we acquired YakGear, a leading supplier of kayak equipment, paddle sport accessories and boat mounting accessories which is based in Texas. • Effective April 1, 2022, we acquired Denison Yachting, a leader in yacht and superyacht sales as well as ancillary yacht services, with 20 locations. • Effective August 9, 2022, we acquired Ocean Bio-Chem, including Star Brite Europe, Inc.
As of September 30, 2023 and September 30, 2022, our additional available borrowings under our Inventory Financing Facility were $61.0 million and $232.9 million, respectively, based upon the outstanding borrowings and the maximum facility amount. The aging of our inventory limits our borrowing capacity as defined curtailments reduce the allowable advance rate as our inventory ages.
As of September 30, 2024 and September 30, 2023, our additional available borrowings under our Inventory Financing Facility were $206.6 million and $61.0 million, respectively, based upon the outstanding borrowings and the maximum facility amount. The aging of our inventory limits our borrowing capacity as defined curtailments reduce the allowable advance rate as our inventory ages.
As of September 30, 2023 , we had $3.6 million outstanding under the commercial vehicles notes payable. Contractual Obligations The table below provides estimates of the timing of future payments that we are contractually obligated to make based on agreements in place at September 30, 2023 .
As of September 30, 2024 , we had $2.6 million outstanding under the commercial vehicles notes payable. 66 Table of Contents Contractual Obligations The table below provides estimates of the timing of future payments that we are contractually obligated to make based on agreements in place at September 30, 2024 .
Although non-boat sales contributed approximately 19.5%, 17.8% and 11.3% to revenue in fiscal years 2023, 2022 and 2021, respectively, due to the higher gross margin on these product and service lines, non-boat sales contributed 35.6%, 30.1% and 25.8% to gross profit in fiscal years 2023, 2022 and 2021, respectively.
Although non-boat sales contributed approximately 19.3%, 19.5% and 17.8% to revenue in fiscal years 2024, 2023 and 2022, respectively, due to the higher gross margin on these product and service lines, non-boat sales contributed 40.0%, 35.6% and 30.1% to gross profit in fiscal years 2024, 2023 and 2022, respectively.
Unfavorable local, regional, national, or global economic developments or uncertainties, including the adverse economic effects of a global pandemic, supply chain constraints, or a prolonged economic downturn, could reduce consumer spending and adversely affect our business.
Unfavorable local, regional, national, or global economic developments or uncertainties, including the adverse economic effects of higher interest rates or inflation, supply chain constraints, or a prolonged economic downturn, could reduce consumer spending and adversely affect our business.
As of September 30, 2023 and September 30, 2022, the effective interest rate on the outstanding short-term borrowings under the Inventory Financing Facility was 5.7% and 2.2%, respectively.
As of September 30, 2024 and September 30, 2023, the effective interest rate on the outstanding short-term borrowings under the Inventory Financing Facility was 6.6% and 5.7%, respectively.
We define Adjusted EBITDA as net income (loss) before interest expense – other, income tax (benefit) 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, loss on impairment and transaction costs. 58 Table of Contents 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 (loss) on extinguishment of debt, loss on impairment and transaction costs) that impact the comparability of financial results from period to period.
Our Board, 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 (loss) on extinguishment of debt, income tax (benefit) expense, restructuring and impairment, stock-based compensation and transaction costs) that impact the comparability of financial results from period to period.
Since 2015, we have entered into multiple notes payable with various commercial lenders in connection with our acquisition of certain vehicles utilized in our retail operations. Such notes bear interest ranging from 0.0% to 10.8% per annum, require monthly payments of approximately $122,000, and mature on dates between November 2023 to September 2028.
Since 2015, we have entered into multiple notes payable with various commercial lenders in connection with our acquisition of certain vehicles utilized in our retail operations. Such notes bear interest ranging from 0.0% to 10.8% per annum, require monthly payments of approximately $108,000, and mature on dates between October 2024 to April 2029.
Years Ended September 30, Description 2023 2022 Change ($ in thousands) Net (loss) income $ (39,111) $ 152,611 $ (191,722) Interest expense – other 34,557 13,201 21,356 Income tax (benefit) expense (3,412) 43,225 (46,637) Depreciation and amortization 26,788 16,297 10,491 Change in fair value of contingent consideration (1,604) 10,380 (11,984) Transaction costs 1,839 7,724 (5,885) Loss on extinguishment of debt — 356 (356) Loss on impairment 147,402 — 147,402 Other expense (income), net 953 3,793 (2,840) Adjusted EBITDA $ 167,412 $ 247,587 $ (80,175) Adjusted EBITDA was $167.4 million for the year ended September 30, 2023 compared to $247.6 million for the year ended September 30, 2022.
Years Ended September 30, Description 2023 2022 Change ($ in thousands) Net (loss) income $ (39,111) $ 152,611 $ (191,722) Interest expense – other 34,557 13,201 21,356 Income tax (benefit) expense (3,412) 43,225 (46,637) Depreciation and amortization 26,788 16,297 10,491 Stock-based compensation 8,961 10,013 (1,052) Change in fair value of contingent consideration (1,604) 10,380 (11,984) Transaction costs 1,839 7,724 (5,885) Loss on extinguishment of debt — 356 (356) Restructuring and impairment 147,402 — 147,402 Other expense (income), net 953 3,793 (2,840) Adjusted EBITDA $ 176,373 $ 257,600 $ (81,227) Adjusted EBITDA was $176.4 million for the year ended September 30, 2023 compared to $257.6 million for the year ended September 30, 2022.
As of September 30, 2023, the Dealerships reporting segment includes operations of 98 dealerships in 15 states including Florida, Texas, Alabama and Georgia, among others, and represents approximately 91% of revenues.
As of September 30, 2024, the Dealerships reporting segment includes operations of 96 dealerships in 16 states including Florida, Texas, Alabama and Georgia, among others, and represents approximately 91% of revenues.
Our scale and business model allow us to leverage our extensive inventory to provide consumers with the ability to find a boat that matches their preferences (e.g., make, model, color, configuration and other options) and to deliver the boat within days while providing a personalized sales experience.
Despite our size, we comprise less than 4% of total industry sales. Our scale and business model allow us to leverage our extensive inventory to provide consumers with the ability to find a boat that matches their preferences (e.g., make, model, color, configuration and other options) and to deliver the boat within days while providing a personalized sales experience.
We have also diversified our business across geographies, dealership types (e.g., fresh water and salt water), and product offerings (e.g., focus on parts and accessories businesses through PartsVu, T-H Marine and Ocean Bio-Chem) in order to reduce the effects of seasonality and cyclicality of our business.
We have also diversified our business across geographies, dealership types (e.g., fresh water and salt water), and product offerings (e.g., focus on parts and accessories businesses through our Distribution segment) in order to reduce the effects of seasonality and cyclicality of our business.
Year Ended September 30, 2023, Compared to Year Ended September 30, 2022.
Year Ended September 30, 2024, Compared to Year Ended September 30, 2023.
In response to these conditions we reduced our inventory purchases, closed certain dealerships and reduced headcount. Additionally, in an effort to counteract the downturn, we increased our focus on pre-owned sales, parts and repair services, and finance & insurance services. As a result, we surpassed our pre-recession sales levels in less than 24 months.
Additionally, in an effort to counteract the downturn, we increased our focus on pre-owned sales, parts and repair services, and finance & insurance services. As a result, we surpassed our pre-recession sales levels in less than 24 months.
The increase in floor plan interest expense is primarily attributable to an increase in the average inventory for the year ended September 30, 2022 compared to the year ended September 30, 2021 as well as an increase in interest rates.
The increase in floor plan interest expense is primarily attributable to an increase in interest rates and the average inventory for the year ended September 30, 2024 compared to the year ended September 30, 2023.
OneWater Inc. will retain the benefit of the remaining net cash savings. 66 Table of Contents As of September 30, 2023 and September 30, 2022, our liability under the Tax Receivable Agreement was $43.1 million and $46.4 million, respectively.
OneWater Inc. will retain the benefit of the remaining net cash savings. As of September 30, 2024 and September 30, 2023, our liability under the Tax Receivable Agreement was $40.6 million and $43.1 million, respectively.
The increase in Adjusted Diluted Earnings Per Share resulted from the increase in Adjusted Net Income Attributable to OneWater Marine Inc., partially offset by the increase in the diluted weighted-average shares of Class A common stock outstanding. Seasonality Our business, along with the entire boating industry, is highly seasonal, and such seasonality varies by geographic market.
The decrease in Adjusted Diluted Earnings Per Share resulted from the decrease in Adjusted Net Income Attributable to OneWater Marine Inc. 62 Table of Contents Seasonality Our business, along with the entire boating industry, is highly seasonal, and such seasonality varies by geographic market.
The Term Facility is repayable in installments beginning on December 31, 2022, with the remainder due on the earlier of (i) August 9, 2027 or (ii) the date on which the principal amount of all outstanding term loans have been declared or automatically have become due and payable pursuant to the terms of the A&R Credit Facility. 64 Table of Contents Borrowings under the A&R Credit Facility bear interest, at our option, at either (a) a base rate (the “Base Rate”) equal to the highest of (i) the prime rate (as announced by Truist Bank from time to time), (ii) the Federal Funds Rate, as in effect from time to time, plus 0.50%, (iii) Term SOFR (as defined in the A&R Credit Facility) for a one-month Interest Period (calculated on a daily basis after taking into account a floor equal to 0.00%) plus 1.00%, and (iv) 1.00%, in each case, plus an applicable margin ranging from 0.75% to 1.75%, or (b) Term SOFR, plus an applicable margin ranging from 0.75% to 1.75%.
Borrowings under the A&R Credit Facility bear interest, at our option, at either (a) a base rate (the “Base Rate”) equal to the highest of (i) the prime rate (as announced by Truist Bank from time to time), (ii) the Federal Funds Rate, as in effect from time to time, plus 0.50%, (iii) Term SOFR (as defined in the A&R Credit Facility) for a one-month Interest Period (calculated on a daily basis after taking into account a floor equal to 0.00%) plus 1.00%, and (iv) 1.00%, in each case, plus an applicable margin ranging from 0.75% to 1.75%, or (b) Term SOFR, plus an applicable margin ranging from 0.75% to 1.75%.
In the case of such an acceleration, where applicable, we generally expect the accelerated payments due under the Tax Receivable Agreement to be funded out of the proceeds of the change of control transaction giving rise to such acceleration. OneWater Inc. intends to account for any amounts payable under the Tax Receivable Agreement in accordance with ASC Topic 450, Contingencies.
In the case of such an acceleration, where applicable, we generally expect the accelerated payments due under the Tax Receivable Agreement to be funded out of the proceeds of the change of control transaction giving rise to such acceleration.
The $492.9 million increase in cash provided by financing activities was primarily attributable to a $176.4 million increase in net borrowings on our Inventory Financing Facility and a $382.5 million increase in proceeds on long-term debt, partially offset by $79.2 million increase in payments on long-term debt for the year ended September 30, 2022 as compared to the year ended September 30, 2021.
The $242.7 million decrease in cash provided by financing activities was primarily attributable to a $382.5 million decrease in proceeds of long term debt, partially offset by a $66.8 million increase in net borrowing from our Inventory Financing Facility and a $69.7 million decrease in payments on long-term debt for the year ended September 30, 2023 as compared to the year ended September 30, 2022.
Sales of new and pre-owned boats, which have comparable margins, generally result in a lower gross profit margin than our non-boat sales.
Sales of new and pre-owned boats, which have comparable margins, generally result in a lower gross profit margin than our non-boat sales. As a result, when revenue from non-boat sales increases as a percentage of total revenue, we expect our overall gross profit margin to increase.
As mentioned above, these factors do not change in isolation and, therefore, we do not believe it is practicable or meaningful to present the impact of changing a single factor.
As mentioned above, these factors do not change in isolation and, therefore, we do not believe it is practicable or meaningful to present the impact of changing a single factor. Furthermore, if management uses different assumptions in future periods or if different conditions exist in future periods, additional impairment charges could result.
Finance & Insurance Gross Profit Finance & insurance gross profit increased by $13.3 million, or 31.2%, to $56.0 million for the year ended September 30, 2022 from $42.7 million for the year ended September 30, 2021. Finance & insurance income is fee-based revenue for which we do not recognize incremental cost of sales.
Finance & Insurance Gross Profit Finance & insurance gross profit decreased by $4.8 million, or 8.6%, to $51.5 million for the year ended September 30, 2024 from $56.3 million for the year ended September 30, 2023. Finance & insurance income is fee-based revenue for which we do not recognize incremental cost of sales.
The A&R Credit Facility also includes events of default, borrowing conditions, representations and warranties and provisions regarding indemnification and expense reimbursement. The Company was in compliance with all covenants as of September 30, 2023.
The A&R Credit Facility also includes events of default, borrowing conditions, representations and warranties and provisions regarding indemnification and expense reimbursement.
We engaged a third-party independent valuation professional to perform a quantitative analysis of the fair values compared to the carrying value and, as a result, recorded a loss on impairment of $147.4 million.
During the year ended September 30, 2023, the Company determined that there were circumstances that indicated that impairment may have occurred. We engaged a third-party independent valuation professional to perform a quantitative analysis of the fair values compared to the carrying value and, as a result, recorded a loss on impairment of $147.4 million .
Fiscal Year 2023 Acquisitions • Effective October 1, 2022, we acquired Taylor Marine Centers, a full service marine retailer with locations in Maryland and Delaware • Effective December 1, 2022, we acquired Harbor View Marine, a full service marine retailer with locations in Florida and Alabama • Effective September 1, 2023, we acquired Harbor Pointe Marina, a full service marine retailer with one location in Alabama We refer to the fiscal year 2023 acquisitions described above collectively as the “2023 Acquisitions.” Taylor Marine Centers is fully reflected in our consolidated statements of operations for the year ended September 30, 2023.
Fiscal Year 2023 Acquisitions • Effective October 1, 2022, we acquired Taylor Marine Centers, a full service marine retailer with locations in Maryland and Delaware. • Effective December 1, 2022, we acquired Harbor View Marine, a full service marine retailer with locations in Florida and Alabama. • Effective September 1, 2023, we acquired Harbor Pointe Marina, a full service marine retailer with one location in Alabama.
Fiscal Year 2023 Dispositions • Effective September 30, 2023, we sold Roscioli Yachting Center, a full-service marine and yachting facility located in Florida, including the related real estate and in-water slips.
While we do not expect significant dispositions in the future, any such dispositions may impact the comparability of our future results of operations to our historical results. Fiscal Year 2023 Dispositions • Effective September 30, 2023, we sold Roscioli Yachting Center, a full-service marine and yachting facility located in Florida, including the related real estate and in-water slips.
As of September 30, 2023, we were in compliance with all covenants under the Inventory Financing Facility. Notes Payable Acquisition Notes Payable . In connection with certain of our acquisitions of dealer groups, we have entered into notes payable agreements with the acquired entities to finance these acquisitions.
Notes Payable Acquisition Notes Payable . In connection with certain of our acquisitions of dealer groups, we have from time to time entered into notes payable agreements with the acquired entities to finance these acquisitions.
Debt Agreements A&R Credit Facility On August 9, 2022 we entered into the Amended and Restated Credit Agreement (the “A&R Credit Facility”), with certain of our subsidiaries, Truist Bank and the other lenders party thereto. The A&R Credit Facility amends and restates and replaces in its entirety the Credit Facility.
The Company has $48.1 million remaining under the share repurchase program. 64 Table of Contents Debt Agreements A&R Credit Facility On August 9, 2022, we entered into the Amended and Restated Credit Agreement (the “A&R Credit Facility”), with certain of our subsidiaries, Truist Bank and the other lenders party thereto.
Net cash provided by financing activities was $456.4 million for the year ended September 30, 2022 compared to net cash used in financing activities of $36.5 million for the year ended September 30, 2021.
Net cash used in financing activities was $114.1 million for the year ended September 30, 2024 compared to net cash provided by financing activities of $213.7 million for the year ended September 30, 2023.
The decrease in gross profit margin was due to a shift in the mix of revenue towards parts & accessories which has a lower gross profit percentage than service and other sales.
The increase in gross profit margin was due to a slight shift in the mix of revenue towards service labor which has a higher gross profit percentage.
Our ability to fund inventory purchases and operations depends on the collateral levels and our compliance with the covenants of the Inventory Financing Facility. As of September 30, 2023, we were in compliance with all covenants under the A&R Credit Facility and the Seventh Inventory Financing Facility.
Our ability to fund inventory purchases and operations depends on the collateral levels and our compliance with the covenants of the Inventory Financing Facility.
We refer to the fiscal year 2021 acquisitions described above collectively as the “2021 Acquisitions.” The 2021 Acquisitions are fully reflected in our consolidated financial statements for the year ended September 30, 2023 and 2022 but are only partially reflected in our consolidated financial statements for the year ended September 30, 2021, beginning on the date of acquisition.
We refer to the fiscal year 2023 acquisitions described above collectively as the “2023 Acquisitions.” The 2023 Acquisitions are fully reflected in our consolidated financial statements for the year ended September 30, 2024. Taylor Marine Centers is fully reflected in our consolidated statements of operations for the year ended September 30, 2023.
Revenue generated from Dealership same-store sales increased 11.9% for the year ended September 30, 2022 as compared to the year ended September 30, 2021, primarily due to an increase in the average selling price of new boats, the number of pre-owned boats sold, the model mix of boats sold, an increase in finance & insurance sales and an increase in service, parts & other sales.
Revenue generated from Dealership same-store sales decreased 7.4% for the year ended September 30, 2024, as compared to the year ended September 30, 2023, primarily due to a decrease in the number of new and pre-owned boats sold and a decrease in service, parts & other sales.
Net cash provided by operating activities was $7.4 million for the year ended September 30, 2022 compared to net cash provided by operating activities of $159.4 million for the year ended September 30, 2021.
Net cash provided by operating activities was $34.8 million for the year ended September 30, 2024 compared to net cash used in operating activities of $129.8 million for the year ended September 30, 2023.
Any extended period of adverse economic conditions or low consumer confidence is likely to have a negative effect on our business. 46 Table of Contents Our business was significantly impacted during the recessionary period that began in 2007. This period of weakness in consumer spending and depressed economic conditions had a substantial negative effect on our operating results.
Our business was significantly impacted during the recessionary period that began in 2007. This period of weakness in consumer spending and depressed economic conditions had a substantial negative effect on our operating results. In response to these conditions we reduced our inventory purchases, closed certain dealerships and reduced headcount.
Local influences, such as corporate downsizing, inclement weather such as hurricanes and other storms, environmental conditions, and global public health concerns and events could adversely affect our operations in certain markets and in certain periods.
Local influences, such as corporate downsizing, inclement weather such as hurricanes, tornadoes, and other storms, environmental conditions, and global public health concerns and events have and could adversely affect our operations in certain markets and in certain periods. Any extended period of adverse economic conditions or low consumer confidence is likely to have a negative effect on our business.
Most competing boat retailers are operated by local business owners who own three or fewer stores; however we do have other large competitors including MarineMax and Bass Pro Shops. We believe we are one of the largest and fastest-growing marine retailers in the United States. Despite our size, we comprise less than 3% of total industry sales.
The boat dealership market is highly fragmented and is comprised of approximately 4,000 dealerships nationwide. Most competing boat retailers are operated by local business owners who own three or fewer stores; however we do have other large competitors. We believe we are one of the largest and fastest-growing marine retailers in the United States.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

4 edited+3 added−0 removed3 unchanged
Biggest changeThe interest rate on our A&R Credit Facility is calculated using Term SOFR (with a 0.00% floor) plus an applicable margin. Based on an outstanding balance of $428.3 million and Term SOFR as of September 30, 2023 , a change of 100 basis points in the underlying interest rate would cause a change in interest expense of approximately $4.3 million.
Biggest changeThe interest rate on our A&R Credit Facility is calculated using Term SOFR (with a 0.00% floor) plus an applicable margin.
To the extent that we cannot recapture this volatility in prices charged to customers or if this volatility negatively impacts consumer demand for our products, this volatility could adversely affect our future operating results. 67 Table of Contents
To the extent that we cannot recapture this volatility in prices charged to customers or if this volatility negatively impacts consumer demand for our products, this volatility could adversely affect our future operating results. 68 Table of Contents
Based on an outstanding balance under the Seventh Inventory Financing Facility of $489.0 million as of September 30, 2023 , a change of 100 basis points in the underlying interest rate would cause a change in interest expense of approximately $4.9 million. We do not currently hedge our interest rate exposure.
Based on the portion of the outstanding balance under the Inventory Financing Facility that is not covered by interest rate swaps of $243.4 million as of September 30, 2024 , a change of 100 basis points in the underlying interest rate would cause a change in interest expense of approximately $2.4 million.
We do not currently hedge our interest rate exposure. Foreign Currency Risk We purchase certain of our new boat and parts inventories from foreign manufacturers and some of these transactions are denominated in a currency other than the U.S. dollar.
The following table provides information regarding our interest rate swaps as of September 30, 2024: Inception Date Hedged Rate Notional Value at Inception (in thousands) Maturity Date September 2024 SOFR $ 200,000 September 2027 September 2024 Term SOFR 200,000 September 2027 Foreign Currency Risk We purchase certain of our new boat and parts inventories from foreign manufacturers and some of these transactions are denominated in a currency other than the U.S. dollar.
Added
Based on the portion of the outstanding balance that is not covered by interest rate swaps of $226.6 million as of September 30, 2024 , a change of 100 basis points in the underlying interest rate would cause a change in interest expense of approximately $2.3 million.
Added
As part of our strategy to mitigate the exposure risk to fluctuations in interest rates for our Inventory Financing Facility and A&R Credit Facility, we may enter into various interest rate swap agreements. As of September 30, 2024 we had two interest rate swap agreements with a combined notional principal amount of $400.0 million .
Added
The swaps are designed to provide a hedge against the changes in variable cash flows regarding fluctuations in the SOFR and Term SOFR rates which are used in calculating interest payments. All of our interest rate swaps qualify for cash flow hedge accounting.

Other ONEW 10-K year-over-year comparisons