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What changed in OneWater Marine Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of OneWater Marine Inc.'s 2022 and 2023 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 2023 report.

+520 added−505 removedSource: 10-K (2023-12-14) vs 10-K (2022-12-15)

Top changes in OneWater Marine Inc.'s 2023 10-K

520 paragraphs added · 505 removed · 417 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

98 edited+10 added−17 removed126 unchanged
Biggest changeThe more significant of these environmental and occupational health and safety laws and regulations include the following federal legal standards that currently exist in the United States, as amended from time to time: • the Clean Air Act (“CAA”), which restricts the emission of air pollutants from many sources, including outboard marine engines and chemical manufacturing operations, and imposes various pre-construction, operational, monitoring, and reporting requirements, and that the EPA has relied upon as authority for adopting climate change regulatory initiatives relating to greenhouse gas (“GHG”) emissions; 11 Table of Contents • the Federal Water Pollution Control Act (the “Clean Water Act”), which regulates discharges of pollutants from facilities to state and federal waters and establishes the extent to which waterways are subject to federal jurisdiction and rulemaking as protected waters of the United States; • the Oil Pollution Act (“OPA”), which subjects owners and operators of vessels, onshore facilities, and pipelines, as well as lessees or permittees of areas in which offshore facilities are located, to liability for removal costs and damages arising from an oil spill in waters of the United States; • the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”), which imposes liability on generators, transporters, disposers and arrangers of hazardous substances at sites where hazardous substance releases have occurred or are threatening to occur; • the Resource Conservation and Recovery Act (“RCRA”), which governs the generation, treatment, storage, transport, and disposal of solid wastes, including hazardous wastes; • the Emergency Planning and Community Right-to-Know Act, which requires facilities to implement a safety hazard communication program and disseminate information to employees, local emergency planning committees, and fire departments on toxic chemical uses and inventories; and • the Occupational Safety and Health Act, which establishes workplace standards for the protection of the health and safety of employees, including the implementation of hazard communications programs designed to inform employees about hazardous substances in the workplace, potential harmful effects of these substances, and appropriate control measures.
Biggest changeThe more significant of these environmental and occupational health and safety laws and regulations include the following federal legal standards that currently exist in the United States, as amended from time to time: • the Clean Air Act (“CAA”), which restricts the emission of air pollutants from many sources, including outboard marine engines and chemical manufacturing operations, and imposes various pre-construction, operational, monitoring, and reporting requirements, and that the EPA has relied upon as authority for adopting climate change regulatory initiatives relating to greenhouse gas (“GHG”) emissions; • the Federal Water Pollution Control Act (the “Clean Water Act”), which regulates discharges of pollutants from facilities to state and federal waters and establishes the extent to which waterways are subject to federal jurisdiction and rulemaking as protected waters of the United States; • the Oil Pollution Act (“OPA”), which subjects owners and operators of vessels, onshore facilities, and pipelines, as well as lessees or permittees of areas in which offshore facilities are located, to liability for removal costs and damages arising from an oil spill in waters of the United States; • the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”), which imposes liability on generators, transporters, disposers and arrangers of hazardous substances at sites where hazardous substance releases have occurred or are threatening to occur; • the Resource Conservation and Recovery Act (“RCRA”), which governs the generation, treatment, storage, transport, and disposal of solid wastes, including hazardous wastes; • the Emergency Planning and Community Right-to-Know Act, which requires facilities to implement a safety hazard communication program and disseminate information to employees, local emergency planning committees, and fire departments on toxic chemical uses and inventories; and • the Occupational Safety and Health Act, which establishes workplace standards for the protection of the health and safety of employees, including the implementation of hazard communications programs designed to inform employees about hazardous substances in the workplace, potential harmful effects of these substances, and appropriate control measures. 10 Table of Contents Additionally, there exist state and local jurisdictions in the United States where we operate that also have, or are developing or considering developing, similar environmental and occupational health and safety laws and regulations governing many of these same types of activities, which requirements may impose additional, or more stringent, conditions or controls than required under federal law and that can significantly alter, delay or cancel the permitting, development, or expansion of operations or substantially increase the cost of doing business.
We believe that our diversification revenue streams, the strength of our industry relationships and our scale enables us to receive among the best pricing and terms available across all of the products that we carry.
We believe that our diversification of revenue streams, the strength of our industry relationships and our scale enables us to receive among the best pricing and terms available across all of the products that we carry.
In addition to boat sales, we also generate sales from related products including finance & insurance and service, parts and 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 recent acquisitions of T-H Marine and Ocean Bio-Chem have significantly expanded our sales of marine parts and accessories.
Members of our sales teams receive compensation on primarily a commission basis. Additionally, each manager within a dealership receives a salary along with incentive compensation based on the performance of the managed location or their respective departments.
Members of our sales teams receive compensation primarily on a commission basis. Additionally, each manager within a dealership receives a salary along with incentive compensation based on the performance of the managed location or their respective departments.
For the years ended September 30, 2021 and 2020, 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.
For 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.
Aisquith has 25 years of experience in the boating industry, and prior to joining OneWater LLC in 2008, he held several senior management positions at MarineMax (NYSE: HZO).
Aisquith has over 25 years of experience in the boating industry, and prior to joining OneWater LLC in 2008, he held several senior management positions at MarineMax (NYSE: HZO).
Typically, one of our delivery professionals or the sales representative delivers the customer’s boat to the customer’s boating location and thoroughly instructs the customer about the operation of the boat, including hands-on instructions for docking and trailering the boat. 9 Table of Contents With the addition of T-H Marine and Ocean Bio-Chem, we sell our manufactured and assembled products through national retailers, direct to OEM manufacturers and online.
Typically, one of our delivery professionals or the sales representative delivers the customer’s boat to the customer’s boating location and thoroughly instructs the customer about the operation of the boat, including hands-on instructions for docking and trailering the boat. 8 Table of Contents With the addition of T-H Marine and Ocean Bio-Chem, we sell our manufactured and assembled products through national retailers, direct to OEM manufacturers and online.
Under the Registration Rights Agreement (defined below) we entered into with certain of the Legacy Owners in connection with the IPO, such Legacy Owners have the right, under certain circumstances, to cause us to register the offer and resale of their shares of Class A common stock. 15 Table of Contents Executive Officers and Directors The following table sets forth certain information with respect to our executive officers and directors: Name Position Age P.
Under the Registration Rights Agreement (defined below) we entered into with certain of the Legacy Owners in connection with the IPO, such Legacy Owners have the right, under certain circumstances, to cause us to register the offer and resale of their shares of Class A common stock. 13 Table of Contents Executive Officers and Directors The following table sets forth certain information with respect to our executive officers and directors: Name Position Age P.
Ezzell has over 25 years of accounting and finance experience, with over 18 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 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.
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 2022.
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.
Additionally, we operate 16 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 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.
The yacht product lines typically include state-of-the-art designs with live-aboard luxuries, offering amenities such as flybridges with extensive guest seating; covered aft deck, which may be fully or partially enclosed, providing the boater with additional living space; an elegant salon; and multiple staterooms for accommodations. 6 Table of Contents Motors, Trailers, Personal Water Crafts (“PWC”), Wholesale and Other .
The yacht product lines typically include state-of-the-art designs with live-aboard luxuries, offering amenities such as flybridges with extensive guest seating; covered aft deck, which may be fully or partially enclosed, providing the boater with additional living space; an elegant salon; and multiple staterooms for accommodations. Motors, Trailers, Personal Water Crafts (“PWC”), Wholesale and Other .
Revenue from motors, trailers, PWC, wholesale and other sales comprised 5% of our new boat revenue for fiscal year 2022. 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 2023. The motors and trailers we offer range in size, horsepower, length and style dependent upon the type of boat our customers may own.
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 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.
Generally, we receive a fee for arranging these extended service contracts and most of the required services under the contracts are provided by us and paid for by the third-party contract holder. We also assist our customers with obtaining property and casualty insurance. Property and casualty insurance covers loss or damage to their boat.
Generally, we receive a fee for arranging these extended service contracts and most of the required services under the contracts are provided by us and paid for by the third-party contract holder. 6 Table of Contents We also assist our customers with obtaining property and casualty insurance. Property and casualty insurance covers loss or damage to their boat.
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 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 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.
Roy is qualified to serve on our Board of Directors because of his public company experience, as well as his financial and leadership background. 17 Table of Contents Jeffrey B.
Roy is qualified to serve on our Board of Directors because of his public company experience, as well as his financial and leadership background. 15 Table of Contents Jeffrey B.
The use of these facilities varies and primarily includes manufacturing facilities, distribution centers, warehouses, administrative and product testing centers. 8 Table of Contents Operations Operations and Management The operational management of our retail locations are decentralized, with certain administrative functions centralized at the corporate level and the primary responsibility of day-to-day operations localized at the dealership.
The use of these facilities varies and primarily includes manufacturing facilities, distribution centers, warehouses, administrative and product testing centers. Operations Operations and Management The operational management of our retail locations are decentralized, with certain administrative functions centralized at the corporate level and the primary responsibility of day-to-day operations localized at the dealership.
We believe our status as a consolidator of choice is based on the expertise we have developed through completing 30 acquisitions (75 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 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.
See “Risk Factors—Risks Related to Our Operations—We may be unable to enforce our intellectual property rights and we may be accused of infringing the intellectual property rights of third parties, which could have a material adverse effect on our business, financial conditions and results of operations,” in Item 1A of this report for additional information.
See “Risk Factors—Risks Related to Our Operations—We may be unable to adequately maintain, enforce, and protect our intellectual property rights and we may be accused of infringing the intellectual property rights of third parties, which could have a material adverse effect on our business, financial conditions, and operations,” in Item 1A of this report for additional information.
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 12 locations spanning 7 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 11 locations spanning 6 states in our Distribution segment.
Our dealerships are located within highly attractive markets throughout the Southeast, Gulf Coast, Mid-Atlantic and Northeast, many of which are in the top twenty states for marine retail expenditures. We believe that we are a market leader by volume in sales of premium boats in 13 of the markets in which we operate.
Our retail locations are located in highly attractive markets throughout the Southeast, Gulf Coast, Mid-Atlantic and Northeast, many of which are in the top twenty states for marine retail expenditures. We believe that we are a market leader by volume in sales of premium boats in many of the markets in which we operate.
Bodine is currently Chairman and Director of ContinuumRX Services, Inc. Mr. Bodine is also a Venture Partner at NewSpring Capital and a Director of Russell Medical Center Foundation. Prior to these positions, he was a director at Allergan Plc, Fred’s, Inc., and Nash-Finch Company. Mr.
Bodine is currently Chairman and Director of ContinuumRX Services, Inc. Mr. Bodine is also a Venture Partner at NewSpring Capital and a Director of Russell Medical Center Foundation. Prior to these positions, he was a director at Allergan plc (NYSE: AGN), Fred’s, Inc. (NASDAQ: FRED) and Nash-Finch Company . Mr.
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 33% of our new boat revenue for fiscal year 2022.
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.
Bodine retired as President, Health Care Services at CVS Caremark Corporation (NYSE: CVS) (“CVS Caremark”) after 24 years with CVS Caremark in 2009. During his tenure as President, Mr. Bodine was responsible for Strategy, Business Development, Trade Relations, Sales and Account Management, Pharmacy Merchandising, Marketing, Information Technology, and Minute Clinic. Mr.
Bodine retired as President, Health Care Services at CVS Health Corp (formerly CVS Caremark Corporation) (NYSE: CVS) (“CVS”) after 24 years with CVS in 2009. During his tenure as President, Mr. Bodine was responsible for Strategy, Business Development, Trade Relations, Sales and Account Management, Pharmacy Merchandising, Marketing, Information Technology, and Minute Clinic. Mr.
Since the combination in 2014, we have acquired a total of 75 additional dealerships, 12 distribution centers/warehouses and multiple online marketplaces through 30 acquisitions. Our current portfolio as of September 30, 2022 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 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.
The fishing boats we offer range from entry-level models to advanced models, from brands such as Everglades, Grady-White, Pursuit, Scout, Sea Hunt and World Cat, each designed for fishing and water sports in lakes, bays and off-shore waters, with cabins with limited live-aboard capability.
The fishing boats we offer range from entry-level models to advanced models, from brands such as Everglades, Grady-White, Pursuit, Sportsman, Cobia and World Cat, each designed for fishing and water sports in lakes, bays and off-shore waters, with cabins with limited live-aboard capability.
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 6% of our new boat revenue for fiscal year 2022.
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.
Before joining BJ’s Wholesale Club, she served as Chief Marketing Officer at Swipely, now called Upserve, from August 2011 to July 2012 and prior to that, she served as SVP, Marketing at CVS Health (NYSE: CVS) from 2000 to August 2011.
Before joining BJ’s Wholesale Club, she served as Chief Marketing Officer at Swipely, now called Upserve, from August 2011 to July 2012 and prior to that, she served as SVP, Marketing at CVS Health Corp (formerly CVS Caremark Corporation) (NYSE: CVS) from 2000 to August 2011.
We believe that our dealer group branding strategy, which retains the name, logo and trademarks associated with each dealership or dealer group at the time of acquisition, significantly differentiates us from our largest competitors who employ singular, national branding strategies. In addition, we intend to continue to acquire businesses that focus on the sales of parts and accessories.
We believe that our dealer group branding strategy, which retains the name, logo and trademarks associated with each dealership or dealer group at the time of acquisition, significantly differentiates us from our largest competitors who employ singular, national branding strategies. In addition, we have and may again acquire businesses that focus on the sales of parts and accessories.
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 50 manufacturers covering 71 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 49 manufacturers covering 70 brands.
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 4.6x and 5.9x for fiscal years 2022 and 2021, 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 2.9x and 4.6x for fiscal years 2023 and 2022, respectively.
Harlam is qualified to serve on our Board of Directors because of her extensive business and marketing experience as well as her prior board experience. Christopher W. Bodine has served on our Board of Directors since the closing of our IPO. Mr.
Our Board of Directors believes Ms. Bauza is qualified to serve on our Board of Directors because of her extensive business and marketing experience as well as her prior board experience. Christopher W. Bodine has served on our Board of Directors since the closing of our IPO. Mr.
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 $71,000 in calendar year 2021 and $256,000 in fiscal year 2022, 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. 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.
Revenue from yachts comprised 17% of our new boat revenue for fiscal year 2022. The yachts we offer range from traditional models to advanced models, from brands such as Absolute, Riviera, Tiara and Sunseeker.
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.
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 15 states as of September 30, 2022.
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.
As of November 28, 2022, OneWater Inc. owned 90.9% 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 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.
We believe we are currently a top-three customer for 30 of our 71 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 9% 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 30 of our 71 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 9% 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.
As of September 30, 2022, 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 12 distribution centers/warehouses in Alabama, Florida, Texas, Oklahoma, Indiana, Tennessee and Illinois and represents approximately 8% of revenues.
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.
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 year ended September 30, 2022, interest on new boats and for rental unites is calculated using the Adjusted 30-Day Average SOFR (as defined in the Inventory Financing Facility section below).
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).
Fee income generated from finance & insurance products accounted for approximately $56.0 million or 3.2% of our revenue during fiscal year 2022.
Fee income generated from finance & insurance products accounted for approximately $56.3 million or 2.9% of our revenue during fiscal year 2023.
In fiscal year 2022, we sold over 10,500 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 50 manufacturers covering 71 brands.
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 2021, $56.7 billion was spent on retail boating sales, which has contributed to annual growth in excess of 7% percent since 2010. 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 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.
New boat sales and pre-owned boat sales constituted 37% and 25% of 2021 boating retail sales, respectively, based on industry data from the National Marine Manufacturers Association (“NMMA”). The NMMA estimates that approximately 1,145,000 pre-owned boats were sold in 2021.
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.
Additionally, the recent acquisitions of T-H Marine Supplies, LLC (“T-H Marine”) and Ocean Bio-Chem will significantly expand our sales of marine-related parts and accessories.
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, our top brand only accounts for approximately 13% of new boat sales. However, sales of new boats from the top ten brands represent approximately 41.8% of our total sales volume for fiscal year 2022. 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 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.
Human Capital Resources As of September 30, 2022, we had 2,205 employees, 1,949 of whom were in location-level operations and 256 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, 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.
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 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.
For additional information relating to environmental protection, including releases, discharges and emissions into the environment, as well as worker health and safety requirements, please see “Risk Factors— 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,” “—Environmental and other regulatory issues may impact our operations” and “Our operations are subject to risks arising out of the threat of climate change, which could result in increased operating costs and reduced demand for the products that we and the retail recreational boat industry provide.” Historically, our environmental compliance costs have not had a material adverse effect on our business, financial condition or results of operations; however, there can be no assurance that such costs will not be material in the future or that such future compliance will not have a material adverse effect on our business, financial condition or results of operations.
For additional information relating to environmental protection, including releases, discharges and emissions into the environment, as well as worker health and safety requirements, please see “Risk Factors— 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,” “—Environmental and other regulatory issues impact our operations from time to time” and “Our operations are subject to risks arising out of the threat of climate change, which could result in increased operating costs and reduced demand for the products that we and the retail recreational boat industry provide.” Historically, our environmental compliance costs have not had a material adverse effect on our business, financial condition or results of operations; however, there can be no assurance that such costs will not be material in the future or that such future compliance will not have a material adverse effect on our business, financial condition or results of operations. 11 Table of Contents Product Liability Our sale and servicing of boats and other watercraft as well as the sale of parts and accessories which we manufacture may expose us to potential liabilities for personal injury or property damage claims relating to the use of such products.
We face competition from businesses relating to recreational activities, which businesses compete for consumers’ leisure time and discretionary spending dollars. We face intense competition within the highly fragmented marine retail industry for customers, quality products, boat show space and suitable dealership locations. We rely to a certain extent on boat shows to generate sales.
Competition We operate in a highly competitive and fragmented environment. We face competition from businesses relating to recreational activities, which businesses compete for consumers’ leisure time and discretionary spending dollars. We face intense competition within the highly fragmented marine retail industry for customers, quality products, boat show space and suitable dealership locations.
We view our trademarks as significant assets because they provide product recognition. We believe that our trademarks provide protection in the geographic markets we serve, but we cannot assure that our intellectual property rights can be successfully asserted in the future or will not be invalidated, circumvented or challenged.
We believe that our trademarks provide protection in the geographic markets we serve, but we cannot assure that our intellectual property rights can be maintained or successfully asserted in the future or will not be invalidated, circumvented or challenged.
Overview We believe that we are one of the largest and fastest-growing marine retailers in the United States with 96 dealerships, 12 distribution centers/warehouses and multiple online marketplaces as of September 30, 2022.
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.
Non-boat sales were approximately 17.8% of revenue and 30.1% of gross profit in fiscal year 2022, 11.3% of revenue and 25.8% of gross profit in fiscal year 2021 and 9.8% of revenue and 28.3% of gross profit in fiscal year 2020.
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.
New powerboat sales have driven market growth and reached $15.4 billion in 2021, resulting in a 12% average annual growth rate since 2010. Of the approximately 1,171,000 powerboats sold in the United States in 2021, 81% of total units sold (approximately 952,000) were pre-owned.
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.
For additional information relating to the terms of our Inventory Financing Facility, please see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Debt Agreements—Inventory Financing Facility.” Customers We are not dependent on any one customer or group of customers, and no individual customer, or together with its affiliates, contributed on an aggregate basis 10% or more to our revenues.
For additional information relating to the terms of our Inventory Financing Facility, please see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Debt Agreements—Inventory Financing Facility.” Customers We are not dependent on any one customer or group of customers, and no individual customer, or together with its affiliates, contributed on an aggregate basis 10% or more to our revenues. 9 Table of Contents Seasonality Our business, along with the entire retail marine industry, is highly seasonal, and such seasonality varies by geographic market.
Over the three-year period ended September 30, 2022, the average revenue for the quarters ended December 31, March 31, June 30 and September 30 represented approximately 18%, 24%, 34%, and 24%, respectively, of our average annual revenues.
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.
As of September 30, 2022, the Dealerships segment includes operations of 96 dealerships in 15 states including Florida, Texas, Alabama and Georgia, among others, and represents approximately 92% of revenues.
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.
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 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.
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. Pre-owned traditional powerboat sales were approximately $13.1 billion in 2021, which represents an increase of 21.7% over 2020.
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.
Austin Singleton Founder, Chief Executive Officer and Director 49 Anthony Aisquith President, Chief Operating Officer and Director 55 Jack Ezzell Chief Financial Officer and Secretary 52 Mitchell W. Legler Director and Chairman of the Board of Directors 80 Bari A. Harlam Director 61 Christopher W. Bodine Director 67 J. Steven Roy Director 62 Jeffery B. Lamkin Director 53 John F.
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.
We design compensation packages for these employees by providing a competitive base salary and an incentive component where they can earn additional compensation based on the performance of their area of responsibility or individual sales. As a result of our performance-based compensation philosophy, pay levels may vary significantly from year to year and among our various team members.
We design compensation packages for these employees by providing a competitive base salary and an incentive component where they can earn additional compensation based on the performance of their area of responsibility or individual sales.
Existing or future regulations may restrict our operations, increase our costs of operations or require us to make additional capital expenditures. 12 Table of Contents We are also subject to laws and regulations governing the investigation and remediation of contamination at the facilities we currently or formerly own or operate, as well as at third-party sites to which we send hazardous substances or wastes for treatment, recycling or disposal.
We are also subject to laws and regulations governing the investigation and remediation of contamination at the facilities we currently or formerly own or operate, as well as at third-party sites to which we send hazardous substances or wastes for treatment, recycling or disposal.
While we continue to monitor the impact of the macro-economic environment, including challenges with inflation, civil unrest and the continued impacts of the COVID-19 pandemic on our operations, our financial position through September 30, 2022 suggests that spending in our regions and across product lines has proven resilient as families have increasingly focused on outdoor socially distanced recreation, driving increased sales.
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.
During fiscal year 2022, new boat sales accounted for approximately $1,139.3 million or 65.3% of our consolidated revenue, and pre-owned boat sales accounted for approximately $294.8 million or 16.9% of our consolidated revenue. We offer new and pre-owned recreational boats in a broad range of product categories.
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.
No single brand accounted for more than 9% of our total sales volume in fiscal year 2022. 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 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.
Acquisition Strategy : We believe there is a tremendous opportunity for us to expand in both existing and new markets, given that the industry is highly fragmented with most boat retailers owning three or fewer stores.
We believe this will further advance our long-term growth opportunity, while broadening our customer base and geographic reach. 4 Table of Contents Acquisition Strategy : We believe there is a tremendous opportunity for us to expand in both existing and new markets, given that the industry is highly fragmented with most boat retailers owning three or fewer stores.
Ezzell is a Certified Public Accountant and obtained his Bachelor of Science in Accounting from Western Carolina University. 16 Table of Contents Non-Employee Directors Mitchell W. Legler has served on our Board of Directors since the closing of our IPO in February 2020 and served as Chairman of the Board of Managers of OneWater LLC from 2015 until the Reorganization.
Ezzell is a Certified Public Accountant and obtained his Bachelor of Science in Accounting from Western Carolina University. 14 Table of Contents Non-Employee Directors John F. Schraudenbach has served on our Board of Directors since the closing of our IPO and has served as Chairman of the Board of Directors since 2023. Mr.
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.
All revenue for the Distribution segment is reported in service, parts & other in our consolidated statements of operations. 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.
Our manufacturers generally maintain product liability insurance, and we maintain third-party liability insurance with respect to the sale and servicing of boats and other watercrafts, which we believe to be adequate. However, we may experience legal claims in excess of our insurance coverage, and those claims may not be covered by insurance.
Historically, product liability claims have not materially affected our business. Our manufacturers generally maintain product liability insurance, and we maintain third-party liability insurance with respect to the sale and servicing of boats and other watercrafts, which we believe to be adequate.
The interest rate for pre-owned boats is calculated using the new boat rate set forth above plus 0.25%. 10 Table of Contents The collateral for the Inventory Financing Facility consists primarily of our inventory that is financed through the Inventory Financing Facility and related assets, including accounts receivable, bank accounts, and proceeds of the foregoing, and excludes the collateral that underlies our A&R Credit Facility (as defined below).
The collateral for the Inventory Financing Facility consists primarily of our inventory that is financed through the Inventory Financing Facility and related assets, including accounts receivable, bank accounts, and proceeds of the foregoing, and excludes the collateral that underlies our A&R Credit Facility (as defined below).
Furthermore, any significant claims against us, or an increase in insurance premiums resulting from excessive insurance claims, could adversely affect our business, financial performance and results of operations and result in negative publicity. Competition We operate in a highly competitive and fragmented environment.
However, we may experience legal claims in excess of our insurance coverage, and those claims may not be covered by insurance. Furthermore, any significant claims against us, or an increase in insurance premiums resulting from excessive insurance claims, could adversely affect our business, financial performance and results of operations and result in negative publicity.
We intend to expand our online presence and sales through digital platforms to engage in online new and pre-owned boat sales, parts and accessories as well as financing & insurance. We believe this will further advance our long-term growth opportunity, while broadening our customer base and geographic reach.
We intend to expand our online presence and sales through digital platforms to engage in online new and pre-owned boat sales, parts and accessories as well as financing & insurance.
Schraudenbach was the Managing Partner of Business Development for the Southeast U.S. Region and an Audit Partner. Mr. 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 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.
Additionally, we have obtained registered trademarks for Star brite ® , Star Tron ® , Performacide ® and other trade names used on our products. We also rely on a number of trade names with respect to the regional dealer groups that we have acquired, which we do not re-brand under our “OneWater” mark.
We also rely on a number of trade names with respect to the regional dealer groups that we have acquired, which we do not re-brand under our “OneWater” mark. We view our trademarks as significant assets because they provide product recognition.
Schraudenbach held various positions at Ernst & Young for 37 years until his retirement in June 2019. 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.
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.
We offer a wide array of branded parts and accessories including jack plates, rigging parts, plumbing components, LED lighting, storage systems, and appearance, cleaning, and maintenance products for the marine and ancillary industries. All revenue for the Distribution segment is reported in service, parts & other in our consolidated statements of operations.
The Distribution segment engages in the manufacturing, assembly and distribution of primarily marine-related products for sale to distributors, big box retailers, online retailers and direct to consumers. We offer a wide array of branded parts and accessories including jack plates, rigging parts, plumbing components, LED lighting, storage systems, and appearance, cleaning, and maintenance products for the marine and ancillary industries.
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, 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.
Products and Services We offer new and pre-owned recreational boats, yachts and related marine products, including parts and accessories, with a specific focus on premium brands. We also provide boat repair and maintenance services, arrange boat financing and insurance and offer other ancillary services, including indoor and outdoor storage, marina services, and rentals of boats and personal watercraft.
Products and Services We offer new and pre-owned recreational boats, yachts and related marine products, including parts and accessories, with a specific focus on premium brands.
With the exception of the significant growth in 2020 and 2021, pre-owned traditional powerboat sales have remained relatively consistent since 2006 and through economic cycles. 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 4,200 dealerships nationwide, and the majority of retailers are owner-operated with three stores or fewer.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThe A&R Credit Facility provides for, among other things, (i) a single tranche of Revolving Commitments in an amount equal to $65.0 million (including up to $5.0 million in swingline loans and up to $5.0 million in letters of credit from time to time) (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”).
Biggest changeFor 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”).
Our failure to successfully pursue our acquisition strategies or effectively operate the combined entity could have a material adverse effect on our rate of growth and operating performance. Further, if we acquire businesses or products that depend on a small number of customers, if we are unable to retain key customers following the acquisition, our revenues may be adversely affected.
Our failure to successfully pursue our acquisition strategies or effectively operate the combined entity could have a material adverse effect on our rate of growth and operating performance. Further, if we acquire businesses or products that depend on a small number of customers and we are unable to retain key customers following the acquisition, our revenues may be adversely affected.
These laws and regulations affect many aspects of our operations, such as requiring the acquisition and renewal of permits, licenses and other governmental approvals to conduct regulated activities, including the retail sale of recreational boats, restricting the manner in which we use, handle, store, recycle, transport and dispose of our discarded substances and wastes, responding to and performing investigatory, remedial and corrective actions with respect to any discharges and emissions or other release of regulated substances, requiring capital and operating expenditures to construct, maintain and upgrade pollution control and containment equipment and facilities, imposing specific human health and safety criteria addressing worker protection, and imposing liabilities for failure to comply with applicable environmental or other legal requirements, pollution incidents or inappropriate payment or treatment of our workers with respect to our operations.
These laws and regulations affect many aspects of our operations, such as requiring the acquisition and renewal of permits, licenses and other governmental approvals to conduct regulated activities, including the retail sale of recreational boats, restricting the manner in which we use, handle, store, recycle, transport and dispose of discarded substances and wastes, responding to and performing investigatory, remedial and corrective actions with respect to any discharges and emissions or other release of regulated substances, requiring capital and operating expenditures to construct, maintain and upgrade pollution control and containment equipment and facilities, imposing specific human health and safety criteria addressing worker protection, and imposing liabilities for failure to comply with applicable environmental or other legal requirements, pollution incidents or inappropriate payment or treatment of our workers with respect to our operations.
These provisions include: 40 Table of Contents • 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; • 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; 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.
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; • additions or departures of key management personnel; • actions by our stockholders; • general market conditions, including fluctuations in commodity prices; 39 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.
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.
These fluctuations could adversely affect the market price of our common stock. 23 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 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.
The Tax Receivable Agreement generally provides for the payment by OneWater Inc. to each OneWater Unit Holder of 85% of the net cash savings, if any, in U.S. federal, state and local income tax and franchise tax (computed using simplifying assumptions to address the impact of state and local taxes) that OneWater Inc. actually realizes (or is deemed to realize in certain circumstances) in periods after the IPO as a result of certain increases in tax basis available to OneWater Inc. as a result of the exercise of the Redemption Right or pursuant to our Call Right or that relate to prior transfers of such OneWater LLC Units that will be available to OneWater Inc. as a result of its acquisition of those units, and certain benefits attributable to imputed interest.
The Tax Receivable Agreement generally provides for the payment by OneWater Inc. to each TRA Holder of 85% of the net cash savings, if any, in U.S. federal, state and local income tax and franchise tax (computed using simplifying assumptions to address the impact of state and local taxes) that OneWater Inc. actually realizes (or is deemed to realize in certain circumstances) in periods after the IPO as a result of certain increases in tax basis available to OneWater Inc. as a result of the exercise of the Redemption Right or pursuant to our Call Right or that relate to prior transfers of such OneWater LLC Units that will be available to OneWater Inc. as a result of its acquisition of those units, and certain benefits attributable to imputed interest.
Our failure to successfully order and manage our inventory to reflect consumer demand and to anticipate changing consumer preferences and buying trends, or the lack of inventory generally in the industry, could have a material adverse effect on our business, financial condition and results of operations.
Our failure to successfully order and manage our inventory to reflect consumer demand and to anticipate changing consumer preferences and buying trends, or the lack or excess of inventory in the industry, generally, could have a material adverse effect on our business, financial condition and results of operations.
We are increasing our efforts to grow our repair and maintenance services, parts and accessories, and financing and insurance businesses to better serve our customers and thereby increase revenue and improve profitability as a result of these comparatively higher margin businesses.
We are increasing our efforts to grow our distribution, repair and maintenance services, parts and accessories, and financing and insurance businesses to better serve our customers and thereby increase revenue and improve profitability as a result of these comparatively higher margin businesses.
We do not believe that we are an “investment company,” as such term is defined in either of those sections of the 1940 Act. As the sole managing member of OneWater LLC, we will control and operate OneWater LLC.
We do not believe that we are an “investment company,” as such term is defined in either of those sections of the 1940 Act. As the sole managing member of OneWater LLC, we control and operate OneWater LLC.
Any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock will be deemed to have notice of, and consented to, the provisions of our certificate of incorporation described herein.
Any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock will be deemed to have notice of, and consented to, the provisions of our certificate of incorporation and bylaws described herein.
Moreover, we cannot guarantee that would be able to pass any such increased costs on to our customers, or that such increased costs could deter customer interest and otherwise adversely affect boating sales.
Moreover, we cannot guarantee that would be able to pass any such increased costs on to our customers, and such increased costs could deter customer interest and otherwise adversely affect boating sales.
The OneWater Unit Holders will not reimburse OneWater Inc. for any payments previously made under the Tax Receivable Agreement if any tax benefits that have given rise to payments under the Tax Receivable Agreement are subsequently disallowed, except that excess payments made to any OneWater Unit Holder will be netted against future payments that would otherwise be made to such OneWater Unit Holder, if any, after OneWater Inc.’s determination of such excess (which determination may be made a number of years following the initial payment and after future payments have been made).
The TRA Holders will not reimburse OneWater Inc. for any payments previously made under the Tax Receivable Agreement if any tax benefits that have given rise to payments under the Tax Receivable Agreement are subsequently disallowed, except that excess payments made to any TRA Holder will be netted against future payments that would otherwise be made to such TRA Holder, if any, after OneWater Inc.’s determination of such excess (which determination may be made a number of years following the initial payment and after future payments have been made).
In addition, certain of the OneWater Unit Holders’ rights (including the right to receive payments) under the Tax Receivable Agreement are transferable in connection with transfers permitted under the OneWater LLC Agreement of the corresponding OneWater LLC Units or, subject to OneWater Inc.’s consent (not to be unreasonably withheld, conditioned, or delayed), after the corresponding OneWater LLC Units have been acquired pursuant to the Redemption Right or Call Right.
In addition, certain of the TRA Holders’ rights (including the right to receive payments) under the Tax Receivable Agreement are transferable in connection with transfers permitted under the OneWater LLC Agreement of the corresponding OneWater LLC Units or, subject to OneWater Inc.’s consent (not to be unreasonably withheld, conditioned, or delayed), after the corresponding OneWater LLC Units have been acquired pursuant to the Redemption Right or Call Right.
A number of factors have historically affected, and will continue to affect, our Dealership same-store sales results, including: • changes or anticipated changes to regulations related to some of the products we sell; • consumer preferences, buying trends and overall economic trends; • our ability to identify and respond effectively to local and regional trends and customer preferences; • our ability to provide quality customer service that will increase our conversion of shoppers into paying customers; • competition in the regional market of a dealership; • atypical weather patterns; 32 Table of Contents • changes in our product availability and mix; • changes in sales of services; and • changes in pricing and average unit sales.
A number of factors have historically affected, and will continue to affect, our Dealership same-store sales results, including: • changes or anticipated changes to regulations related to some of the products we sell; • consumer preferences, buying trends and overall economic trends; • our ability to identify and respond effectively to local and regional trends and customer preferences; • our ability to provide quality customer service that will increase our conversion of shoppers into paying customers; • competition in the regional market of a dealership; • atypical weather patterns; • changes in our product availability and mix; • changes in sales of services; and • changes in pricing and average unit sales.
Any period of adverse economic conditions or low consumer confidence could have a negative effect on our business. Inflation could adversely affect our financial results. The market prices of certain materials and components used by us and our suppliers in manufacturing our products can be volatile.
Any period of adverse economic conditions or low consumer confidence could have a negative effect on our business. Inflation could adversely affect our financial results. The market prices of certain materials and components used by us and/or our suppliers in manufacturing the products we sell can be volatile.
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 104 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 106 of the real properties where we conduct operations.
Failure to meet performance goals and other conditions set forth in any existing or new dealer agreement could have various consequences, including the following: • the termination or nonrenewal of the dealer agreement; • the imposition of additional conditions in subsequent dealer agreements; • limitations on boat inventory allocations; • reductions in reimbursement rates for warranty work performed by the dealer; • loss of certain manufacturer-to-dealer incentives; • denial of approval of future acquisitions; or 20 Table of Contents • the loss of exclusive rights to sell in the geographic territory.
Failure to meet performance goals and other conditions set forth in any existing or new dealer agreement could have various consequences, including the following: • the termination or nonrenewal of the dealer agreement; • the imposition of additional conditions in subsequent dealer agreements; • limitations on boat inventory allocations; • reductions in reimbursement rates for warranty work performed by the dealer; • loss of certain manufacturer-to-dealer incentives; • denial of approval of future acquisitions; or • the loss of exclusive rights to sell in the geographic territory.
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; 30 Table of Contents • the burdens and costs of compliance with a variety of foreign laws; and • political or economic conflicts or instability.
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.
Further, OneWater Inc.’s payment obligations under the Tax Receivable Agreement are not conditioned upon the OneWater Unit Holders’ having a continued interest in OneWater Inc. or OneWater LLC. Accordingly, the OneWater Unit Holders’ interests may conflict with those of the holders of OneWater Inc.’s Class A common stock.
Further, OneWater Inc.’s payment obligations under the Tax Receivable Agreement are not conditioned upon the TRA Holders’ having a continued interest in OneWater Inc. or OneWater LLC. Accordingly, the TRA Holders’ interests may conflict with those of the holders of OneWater Inc.’s Class A common stock.
The various suballiances of GFANZ generally require participants to set short-term, sector-specific targets to transition their financing, investing, and/or underwriting activities to net zero by 2050. 36 Table of Contents There is also the possibility that financial institutions will be required to adopt policies that limit funding for companies producing, developing or bolstering the use of fossil fuels.
The various suballiances of GFANZ generally require participants to set short-term, sector-specific targets to transition their financing, investing, and/or underwriting activities to net zero by 2050. There is also the possibility that financial institutions will be required to adopt policies that limit funding for companies producing, developing or bolstering the use of fossil fuels.
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 has been exacerbated by wide ranging impacts from 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. 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.
We also may be subject to civil liability to third parties for remediation costs or other damages if leakage from our owned or operated tanks migrates onto the property of others. 34 Table of Contents We are subject to regulation by federal, state, and local authorities establishing investigatory, remedial, human health and environmental quality standards and imposing liability related thereto, which liabilities may include sanctions, including monetary penalties for violations of those standards.
We also may be subject to civil liability to third parties for remediation costs or other damages if our owned or operated tanks leak or leakage migrates onto the property of others. 29 Table of Contents We are subject to regulation by federal, state, and local authorities establishing investigatory, remedial, human health and environmental quality standards and imposing liability related thereto, which liabilities may include sanctions, including monetary penalties for violations of those standards.
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.
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.
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.” 44 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.
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.
Certain of our executive officers and directors, who are responsible for managing the direction of our operations, hold positions of responsibility with other entities (including affiliated entities) that are in the boat retail industry.
Certain of our executive officers and directors, who are responsible for managing the direction of our operations, hold positions of responsibility with other entities (including affiliated entities) that are in the retail boating industry.
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 $2.8 million in lease expense in the fiscal year ended September 30, 2022.
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.
In addition, new laws, amendments to or reinterpretations of existing laws, regulations, standards and other obligations may require us to incur additional costs and restrict our business operations, and may require us to change how we use, collect, store, transfer or otherwise process certain types of personal data and to implement new processes to comply with those laws and our customers’ exercise of their rights thereunder.
In addition, new laws, amendments to or reinterpretations of existing laws, regulations, standards and other obligations may require us to incur additional costs and restrict our business operations, and may require us to change how we use, collect, store, transfer or otherwise process certain types of personal data, including by implementing new processes to comply with those laws and our customers’ exercise of their rights thereunder.
As a result of these and other factors, a number of potential acquisitions that from time to time appear likely to occur do not result in binding legal agreements and are not consummated. We are required to obtain the consent of our manufacturers prior to the acquisition of other marine retailers.
As a result of these and other factors, a number of potential acquisitions that from time to time appear likely to occur do not result in binding legal agreements and are not consummated. We are required to obtain the consent of our manufacturers prior to the acquisition of other dealers.
Before making any investment decision, you should carefully consider the information in this Form 10-K, including the risks described below, the matters addressed under “Special Note Regarding Forward-Looking Statements,” our consolidated financial statements and the related notes, and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Some of these risks include: • General economic conditions and consumer spending patterns can have a material adverse effect on our business, financial condition and results of operations. • The ongoing COVID-19 pandemic may adversely affect our revenues, results of operations and financial condition. • 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. • Failure to implement strategies to enhance our performance could have a material adverse effect on our business and financial condition. • Our success depends, in part, on our ability to continue to make successful acquisitions at attractive or fair prices and to integrate the operations of acquired marine retailers and each marine retailer we acquire in the future. • We are required to obtain the consent of our manufacturers prior to the acquisition of other marine retailers. • Our failure to successfully order and manage our inventory to reflect consumer demand and to anticipate changing consumer preferences and buying trends could have a material adverse effect on our business, financial condition and results of operations. • OneWater Inc. is a holding company.
Before making any investment decision, you should carefully consider the information in this Form 10-K, including the risks described below, the matters addressed under “Special Note Regarding Forward-Looking Statements,” our consolidated financial statements and the related notes, and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Some of these risks include: • General economic conditions and consumer spending patterns can have a material adverse effect on our business, financial condition and results of 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. • Failure to implement strategies to enhance our performance could have a material adverse effect on our business and financial condition. • Our success depends, in part, on our ability to continue to make successful acquisitions at attractive or fair prices and to integrate the operations of acquired marine retailers and each marine retailer we acquire in the future. • We are required to obtain the consent of our manufacturers prior to the acquisition of other dealers. • Our failure to successfully order and manage our inventory to reflect consumer demand and to anticipate changing consumer preferences and buying trends, or the lack or excess of inventory in the industry, generally, could have a material adverse effect on our business, financial condition and results of operations. • OneWater Inc. is a holding company.
Additionally, disruptions in the capital markets, as a result of a global pandemic, may also adversely affect our ability to access capital and additional liquidity. The COVID-19 pandemic has led to disruptions in our supply chain, including our ability to obtain boats and parts from our suppliers.
Additionally, disruptions in the capital markets, as a result of a global pandemic, may also adversely affect our ability to access capital and additional liquidity. The COVID-19 pandemic's effects led to disruptions in our supply chain, including our ability to obtain boats and parts from our suppliers.
For additional information, please see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Internal Controls and Procedures.” 38 Table of Contents Our independent registered public accounting firm is required to express an opinion on the effectiveness of our internal controls.
For additional information, please see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Internal Controls and Procedures.” Our independent registered public accounting firm is required to express an opinion on the effectiveness of our internal controls.
Since the combination of Singleton Marine and Legendary Marine in 2014, we have acquired 75 additional dealerships and 12 warehouses/distribution centers through 30 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 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.
Additionally, any interruption or discontinuance of the operations of our manufacturers, including due to the COVID-19 pandemic, supply chain shortages or bankruptcy or insolvency, could also cause us to experience shortfalls, disruptions, or delays with respect to new boats and inventory.
Additionally, any interruption or discontinuance of the operations of our manufacturers, including due to, supply chain disruptions or shortages or bankruptcy or insolvency, could also cause us to experience shortfalls, disruptions, or delays with respect to new boats and inventory.
Economic conditions, weather and environmental conditions, competition, market conditions and any other adverse conditions impacting the Southeast and Gulf Coast regions of the United States, in which we generated approximately 79%, 80% and 75% of our revenue during fiscal years 2022, 2021 and 2020, respectively, could have a major impact on our operations.
Economic conditions, weather and environmental conditions, competition, market conditions and any other adverse conditions impacting the Southeast and Gulf Coast regions of the United States, 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.
Controls employed by our information technology department and our customers and third-party service providers could prove inadequate. 48 Table of Contents 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.
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.
Of this amount, Malibu Boats, Inc., including its brands Malibu, Axis, Cobalt, Pursuit, Maverick, Hewes, Cobia and Pathfinder accounted for 15.6%, 17.0% and 17.0% of our consolidated revenue for the fiscal years ended September 30, 2022, 2021 and 2020, respectively.
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.
Economic conditions in areas in which we operate dealerships, particularly the Southeast and Gulf Coast regions in which we generated approximately 79%, 80% and 75% of our revenue during fiscal years 2022, 2021 and 2020, 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 81%, 79% and 80% of our revenue during fiscal years 2023, 2022 and 2021, respectively, could have a major impact on our operations.
We may attempt to shift the focus or product mix in response to changing consumer sentiments, but there is no guarantee that we will be successful. 21 Table of Contents We face intense competition. We operate in a highly competitive and fragmented environment.
We may attempt to shift the focus or product mix in response to changing consumer sentiments, but there is no guarantee that we will be successful. We face intense competition. We operate in a highly competitive and fragmented environment.
This choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers, employees or agents, which may discourage such lawsuits against us and such persons.
These choice of forum provisions may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers, employees or agents, which may discourage such lawsuits against us and such persons.
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 299,505 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”). 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.
Our inability to use our common stock 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 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.
We may be unable to enforce our intellectual property rights and we may be accused of infringing the intellectual property rights of third parties, which could have a material adverse effect on our business, financial condition and results of operations.
We may be unable to adequately maintain, enforce, and protect our intellectual property rights and we may be accused of infringing the intellectual property rights of third parties, which could have a material adverse effect on our business, financial condition, and operations.
We may issue common or preferred stock and incur substantial indebtedness in making future acquisitions. The size, timing, and integration of any future acquisitions may cause substantial fluctuations in operating results from quarter to quarter.
We may issue common or preferred stock, or membership interests in OneWater LLC, and incur substantial indebtedness in making future acquisitions. The size, timing, and integration of any future acquisitions may cause substantial fluctuations in operating results from quarter to quarter.
For example, the impact of COVID-19 on our suppliers and the recent increase in demand for marine retail products has led to industry-wide supply chain constraints. We have experienced inventory shortages in marine retail products in fiscal year 2021, and it is possible that further shortages could occur.
For example, the impact of the novel coronavirus ("COVID-19") on our suppliers and subsequent increase in demand for marine retail products led to industry-wide supply chain constraints. We experienced inventory shortages in marine retail products in fiscal year 2021, and it is possible that further shortages could occur.
The extent to which we will be able and willing to use our common stock for acquisitions will depend on the market value of our common stock and the willingness of potential sellers to accept our common stock as full or partial consideration.
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.
OneWater Inc. will retain the benefit of the remaining 15% of these net cash savings.
OneWater Inc. will retain the benefit of the remaining net cash savings.
The ability of 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 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 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.
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.
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.
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 14,211,621 outstanding shares of Class A common stock and 1,429,940 outstanding shares of Class B common stock as of November 28, 2022.
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.
Our inability to participate in boat shows in our existing or targeted markets, including due to cancellations of boat shows in connection with pandemics or other external factors, 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.
Despite our efforts to protect sensitive, confidential or personal data or information, we may be vulnerable to security breaches, ransomware theft, cyber phishing attacks, misplaced or lost data, programming errors, employee errors and/or malfeasance that could potentially lead to the compromising of sensitive, confidential or personal data or information, improper use of our systems, inability to use our systems, and other unauthorized access, use, disclosure, modification or destruction of information, and operational disruptions.
Despite our efforts to protect sensitive, confidential or personal data or information, our or our third-party partners’ information technology systems may be vulnerable to security breaches, ransomware theft, cyber phishing attacks, cyber-attacks created through artificial intelligence, misplaced or lost data, programming errors, employee errors and/or malfeasance that could potentially lead to the compromising of sensitive, confidential or personal data or information, improper use of our systems, inability to use our systems, unauthorized access, use, disclosure, modification or destruction of information, and operational disruptions.
Despite ongoing efforts to improve our ability to protect data from compromise, we may not be able to protect all of our data across our systems. Our efforts to improve security and protect data from compromise may also identify previously undiscovered instances of security breaches or other cyber-related attack.
Despite ongoing efforts to improve our ability to protect our information technology systems and data stored thereon or transmitted thereby from compromise, we may not be able to protect all of our information technology systems or data. Our efforts to improve security and protect data from compromise may also identify previously undiscovered instances of security breaches or other cyber-related attack.
These laws also are not uniform, as certain laws may be more stringent or broader in scope, or offer greater individual rights, with respect to sensitive and personal information, and such laws may differ from each other, which may complicate compliance efforts. Compliance in the event of a widespread data breach may be costly.
These laws also are not uniform, as certain laws may be more stringent or broader in scope, or offer greater individual rights, with respect to sensitive and personal information, and such laws may differ from each other, which may complicate compliance efforts.
Unauthorized parties may also attempt to gain access to our systems or facilities, or those of third parties with whom we do business, through fraud, trickery or other forms of deceiving our team members, contractors, vendors and temporary staff.
From time to time, unauthorized parties have attempted to gain access to our systems or facilities, or those of third parties with whom we do business, through fraud, trickery or other forms of deceiving our team members, contractors, vendors and temporary staff.
Monitoring unauthorized use of our intellectual property is difficult and costly, and the steps we have taken or will take to protect our intellectual property may not be sufficient to effectively prevent third parties from infringing, misappropriating, diluting or otherwise violating our intellectual property rights.
However, monitoring unauthorized use of our intellectual property is difficult and costly, and the steps we have taken may not be sufficient to effectively prevent third parties from infringing, misappropriating, diluting or otherwise violating our intellectual property rights. From time to time, we may be compelled to protect our intellectual property, which may involve litigation.
If OneWater Inc. experiences a change of control (as defined under the Tax Receivable Agreement, which includes certain mergers, asset sales and other forms of business combinations) or the Tax Receivable Agreement terminates early (at OneWater Inc.’s election or as a result of OneWater Inc.’s breach), OneWater Inc. would be required to make an immediate payment equal to the present value of the anticipated future payments to be made by it under the Tax Receivable Agreement (determined by applying a discount rate equal to one-year LIBOR plus 100 basis points) and such early termination payment is expected to be substantial.
If OneWater Inc. experiences a change of control (as defined under the Tax Receivable Agreement, which includes certain mergers, asset sales and other forms of business combinations) or the Tax Receivable Agreement terminates early (at OneWater Inc.’s election or as a result of OneWater Inc.’s breach), OneWater Inc. would be required to make an immediate payment equal to the present value of the anticipated future payments to be made by it under the Tax Receivable Agreement (determined by applying a discount rate equal to the twelve-month SOFR published by CME Group Benchmark Administration Limited plus 171.513 basis points) and such early termination payment is expected to be substantial.
Risks to our information technology systems include potential breakdowns, invasions, viruses, cyber-attacks, cyber-fraud, security breaches, and destruction or interruption of our information technology systems by third parties or employees.
Risks to our information technology systems include potential breakdowns, invasions, viruses, cyber-attacks, cyber-fraud, security breaches, and destruction or interruption of our information technology systems or data.
OneWater Inc.’s only material asset is its equity interest in OneWater LLC, 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 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.
The availability and costs of borrowed funds can adversely affect our ability to obtain and maintain adequate boat inventory and the holding costs of that inventory, the ability and willingness of our customers to finance boat purchases and our ability to fund future acquisitions.
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.
Depressed economic conditions, as a result of COVID-19 or otherwise, weak consumer spending, turmoil in the credit markets and lender difficulties, among other potential reasons, could interfere with our ability to maintain compliance with our debt covenants and to utilize the Credit Facilities to fund our operations.
Depressed economic conditions, weak consumer spending, turmoil in the credit markets and lender difficulties, among other potential reasons, could interfere with our ability to maintain compliance with our debt covenants and to utilize the Credit Facilities to fund our operations.
The payments under the Tax Receivable Agreement are not conditioned upon a holder of rights under a Tax Receivable Agreement having a continued ownership interest in OneWater Inc. or OneWater LLC.
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.
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.
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.
OneWater Inc.’s only material asset is its equity interest in OneWater LLC, and OneWater Inc. will accordingly be 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. • 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. • The Legacy Owners own a significant amount of our voting stock, and their interests may conflict with those of our other stockholders. • 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. 19 Table of Contents • If we do not effectively utilize or successfully assert intellectual property rights, our competitiveness could be materially adversely affected.
OneWater Inc.’s only material asset is its equity interest in OneWater LLC, 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. • 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. • Our Legacy Owners own a significant amount of our voting stock, and their interests may conflict with those of our other stockholders. • 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. • We may be unable to adequately maintain, enforce, and protect our intellectual property rights and we may be accused of infringing the intellectual property rights of third parties, which could have a material adverse effect on our business, financial condition, and operations. 16 Table of Contents Our business, financial condition and results of operations could be materially adversely affected by any of these risks or uncertainties discussed herein.
Climatic events in the areas where we operate can cause disruptions and in some cases delays or suspensions in our operations that may adversely impact our business.
Climatic events in the areas where we operate have caused, and future climatic events may cause, disruptions and in some cases delays or suspensions in our operations that adversely impacted our business.
If the negative economic effects of COVID-19 or a new pandemic continue for a prolonged period of time, it could lead to a reduction in demand for our products, which would adversely affect our results of operations.
If the negative economic effects of a widespread contagious disease continue for a prolonged period of time, it could lead to a reduction in demand for our products, which would adversely affect our results of operations.
Many of these laws and regulations are subject to change and reinterpretation, and could result in claims, changes to our business practices, monetary penalties, increased cost of operations or other harm to our business.
Many of these laws and regulations are subject to change and reinterpretation, and any real or perceived failure to comply with such obligations could result in claims, changes to our business practices, monetary penalties, increased cost of operations or other harm to our business.
Accomplishing these goals for expansion will depend upon a number of factors, including the following: • our ability to identify new markets in which we can obtain distribution rights to sell our existing or additional product lines; • our ability to lease or construct suitable facilities at a reasonable cost in existing or new markets; • our ability to hire, train and retain qualified personnel; • the timely and effective integration of new dealerships into existing operations; 24 Table of Contents • our ability to achieve adequate market penetration at favorable operating margins without the acquisition of existing marine retailers; and • our financial resources.
Accomplishing these goals for expansion will depend upon a number of factors, including the following: • our ability to identify new markets in which we can obtain distribution rights to sell our existing or additional product lines; • our ability to lease or construct suitable facilities at a reasonable cost in existing or new markets; • our ability to hire, train and retain qualified personnel; • the timely and effective integration of new dealerships into existing operations; • our ability to achieve adequate market penetration at favorable operating margins without the acquisition of existing marine retailers; and • our financi al re sources. 21 Table of Contents Our dealer agreements require manufacturer consent to open or change dealership locations that sell certain products.
If OneWater LLC were to become a publicly traded partnership taxable as a corporation for U.S. federal income tax purposes, significant tax inefficiencies might result for OneWater Inc. and for OneWater LLC, including as a result of OneWater Inc.’s inability to file a consolidated U.S. federal income tax return with OneWater LLC.
If OneWater LLC were to become a publicly traded partnership taxable as a corporation for U.S. federal income tax purposes, significant tax inefficiencies might result for OneWater Inc. and for OneWater LLC.
With our growth and diversification strategy into marine related parts, products and accessories with the acquisitions of Ocean Bio-Chem, T-H Marine and PartsVu, we now import, assemble and/or manufacturer marine parts, products and accessories, which could expose us to potential increased costs and certain additional risks.
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.
Sales of new boats from our top ten brands represents approximately 41.8%, 42.9% and 41.1% of total sales for the fiscal years ended September 30, 2022, 2021 and 2020, 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 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.
Our dealer agreements require manufacturer consent to open or change dealership locations that sell certain products. We may not be able to open and operate new dealership locations or introduce new product lines on a timely or profitable basis. Moreover, the costs associated with opening new dealership locations or introducing new product lines may adversely affect our profitability.
We may not be able to open and operate new dealership locations or introduce new product lines on a timely or profitable basis. Moreover, the costs associated with opening new dealership locations or introducing new product lines may adversely affect our profitability.
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. 25 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.
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.
SOFR will fluctuate with changing market conditions and, as SOFR increases, our interest expense will mechanically increase. The market transition away from LIBOR to an alternative reference rate, including the conversion of our LIBOR-based loans to SOFR, is complex and could have a range of material adverse effects on our business, financial condition, and results of operations.
The market transition away from LIBOR to an alternative reference rate, including the conversion of our LIBOR-based loans to SOFR, is complex and could have a range of material adverse effects on our business, financial condition, and results of operations.
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. 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 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.
National, state and local governments in affected regions have implemented and may continue to implement safety precautions, including shelter in place orders, travel restrictions, business closures, cancellations of public gatherings, including boat shows, and other measures.
In response to the widespread outbreak of a contagious disease, national, state and local governments in affected regions have, and may again, implement safety precautions, including shelter in place orders, travel restrictions, business closures, cancellations of public gatherings, including boat shows, and other measures.
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.
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.
There is no guarantee that the steps we take to protect our intellectual property, including litigation when necessary, will be successful. We cannot assure that our intellectual property rights will be effectively utilized or, if necessary, successfully asserted.
There is no guarantee that the steps we take to protect our intellectual property, including litigation, when necessary, will be successful. 26 Table of Contents We cannot assure that our intellectual property rights will be effectively utilized, maintained, or, if necessary, successfully enforced against third parties.
To the extent the final rule imposes additional reporting obligations, we could incur increased costs, particularly as it relates to the requirement to collect and disclose data on physical climate-related risks. Risks Related to Our Class A Common Stock OneWater Inc. is a holding company.
To the extent the final rule imposes additional reporting obligations, we could incur increased costs, particularly as it relates to the requirement to collect and disclose data on physical climate-related risks.
Manufacturer recall campaigns could adversely affect our new and pre-owned boat sales or customer residual trade-in valuations, could cause us to temporarily remove vehicles from our inventory, could force us to incur increased costs and could expose us to litigation and adverse publicity related to the sale of recalled boats, which could have a material adverse effect on our business, results of operations, financial condition and cash flows.
Manufacturer recall campaigns could adversely affect our new and pre-owned boat sales or customer residual trade-in valuations, could cause us to temporarily remove boats from our inventory, could force us to incur increased costs and could expose us to litigation and adverse publicity related to the sale of recalled boats, which could have a material adverse effect on our business, results of operations, financial condition and cash flows. 18 Table of Contents Our business, as well as the entire retail marine industry, is highly seasonal, with seasonality varying in different geographic markets.

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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, 2022: Location & Dealer Group Dealerships Leased Dealerships Owned Alabama Legendary Marine 1 — Rambo Marine 3 — Singleton Marine 3 1 Sunrise Marine 1 — California Denison Yachting 5 — Florida Caribee Boat 1 — Central Marine 3 — Denison Yachting 9 — Legendary Marine 3 — Marina Mike’s 1 — Naples Boat Mart 1 — Ocean Blue Yacht Sales 3 — OneWater Yacht Group 4 — Quality Boats 3 — Roscioli Yachting Center — 1 Sundance Marine 4 — Sunrise Marine 2 — Tom George Yacht Group 2 — Walker’s Marine 6 — Georgia American Boat Brokers 1 — Singleton Marine 7 — Kentucky Lookout Marine 2 — Massachusetts Bosuns Marine 2 — Maryland Bosuns Marine 1 — Denison Yachting 1 — OneWater Yacht Group 1 — Monaco Denison Yachting 2 — North Carolina OneWater Yacht Group 1 — New Jersey Denison Yachting 1 — 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 — 50 Table of Contents As part of our Distribution segment, we own or lease the following material warehouses and distribution facilities as of September 30, 2022.
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.
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Location & Group Locations Leased Locations Owned Alabama T-H Marine 2 — 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 — Texas T-H Marine 2 — We believe that our facilities are adequate for our current operations. 51 Table of Contents

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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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 changeThis graph shall not be deemed “soliciting material” or be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities under that section, and shall not be deemed to be incorporated by reference into any of our filings under the Securities Act of 1933 (Securities Act), as amended, or the Securities Act, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing. 53 Table of Contents 2/7/20 9/30/20 9/30/21 9/30/22 OneWater Marine Inc. 100.00 135.34 277.33 207.67 Russell 2000 100.00 94.34 139.32 106.58 NASDAQ Retail Trade 100.00 149.73 159.19 118.02 Dividends On June 17, 2021, our board of directors declared a one-time special cash dividend of $1.80 per share.
Biggest changeThis graph shall not be deemed “soliciting material” or be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities under that section, and shall not be deemed to be incorporated by reference into any of our filings under the Securities Act of 1933 (Securities Act), as amended, or the Securities Act, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing.
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.
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.
Consequently, your only opportunity to achieve a return on your investment is if the price of our Class A common stock appreciates.” 54 Table of Contents Recent Sales of Unregistered Securities None.
Consequently, 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.
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, 2022, there were 14,295,044 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 28, 2023 , there were 14,539,056 shares of Class A common stock and 1,429,940 shares of Class B common stock outstanding.
The graph assumes an initial investment of $100 on February 7, 2020, in our Class A common stock, the stocks comprising the Russell 2000 Index, and the stocks comprising the Nasdaq Retail Trade Index. The calculations of cumulative shareholder return on our Class A common stock, the Russell 2000 Index and the Nasdaq Retail Trade Index include reinvestment of dividends.
The graph assumes an initial investment of $100 on February 7, 2020, in our Class A common stock, the stocks comprising the Russell 2000 Index, and the stocks comprising the S&P 500 Retail Index. The calculations of cumulative shareholder return on our Class A common stock, the Russell 2000 Index and the S&P 500 Retail Index include reinvestment of dividends.
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, 2022 through July 31, 2022 - $ - - $ 50.0 August 1, 2022 through August 31, 2022 - - - 50.0 September 1, 2022 through September 30, 2022 10,134 34.89 10,134 49.6 Total 10,134 $ 34.89 10,134 $ 49.6 (1) On March 30, 2022, the Board authorized a share repurchase program of up to $50 million of outstanding shares of Class A common stock.
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.
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, 2022, to two indices: the Russell 2000 Index and the Nasdaq Retail Trade 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, 2023, to two indices: the Russell 2000 Index and the S&P 500 Retail Index.
During the year ended September 30, 2022, $0.2 million of the previously accrued balance was paid to restricted stock unit holders. The remaining $0.8 million is recorded in other payables and accrued expenses in the consolidated balance sheet as of September 30, 2022.
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.
Holders of Record As of November 28, 2022 there were 12 and 4 stockholders of record of our Class A common stock and Class B common stock, respectively.
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.
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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.
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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.
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Copyright© 2023 Standard & Poor's, a division of S&P Global.
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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.
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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

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Biggest changeCash Flows 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 $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 .
In addition to boat sales, we also generate sales from related products including finance & insurance and service, parts and 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 recent acquisitions of T-H Marine and Ocean Bio-Chem have significantly expanded our sales of marine parts and accessories.
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 and other sales.
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.
Although the service, parts and other mix shifted and led to a year over year decrease in margin percentage, our parts and accessories gross profit percentage was still accretive to the overall company gross profit percentage of 31.7% for the year ended September 30, 2022.
Although the service, parts & other mix shifted and led to a year over year decrease in margin percentage, our parts and accessories gross profit percentage was still accretive to the overall company gross profit percentage of 31.7% for the year ended September 30, 2022.
Selling, General & Administrative Expenses Selling, general & administrative expenses increased by $103.1 million, or 51.8%, to $302.1 million for the year ended September 30, 2022 from $199.0 million for the year ended September 30, 2021. This increase was primarily due to expenses incurred to support the overall increase in revenues and gross profit.
Selling, General and Administrative Expenses Selling, general and administrative expenses increased by $103.1 million, or 51.8%, to $302.1 million for the year ended September 30, 2022 from $199.0 million for the year ended September 30, 2021. This increase was primarily due to expenses incurred to support the overall increase in revenues and gross profit.
Selling, general & administrative expenses as a percentage of revenue increased to 17.3% from 16.2% for the years ended September 30, 2022 and 2021, respectively.
Selling, general and administrative expenses as a percentage of revenue increased to 17.3% from 16.2% for the years ended September 30, 2022 and 2021, respectively.
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.
Comparison of Non-GAAP Financial Measure We view Adjusted EBITDA as an important indicator of performance.
Comparison of Non-GAAP Financial Measure Adjusted EBITDA We view Adjusted EBITDA as an important indicator of performance.
Our dealer groups are located within highly attractive markets throughout the Southeast, Gulf Coast, Mid-Atlantic and Northeast, many of which are in the top twenty states for marine retail expenditures. We believe that we are a market leader by volume in sales of premium boats in 13 of the markets in which we operate.
Our dealer groups are located within highly attractive markets throughout the Southeast, Gulf Coast, Mid-Atlantic and Northeast, many of which are in the top twenty states for marine retail expenditures. We believe that we are a market leader by volume in sales of premium boats in many of the markets in which we operate.
Set forth below are the policies and estimates that we have identified as critical to our business operations and understanding our results of operations, based on the high degree of judgment or complexity in their application. Inventories Inventories are stated at the lower of cost or net realizable value.
Set forth below are the estimates that we have identified as critical to our business operations and understanding our results of operations, based on the high degree of judgment or complexity in their application. Inventories Inventories are stated at the lower of cost or net realizable value.
Loans are extended from time to time to enable us to purchase inventory from certain manufacturers and to lease certain boats and related parts to customers. The applicable financial terms, curtailment schedule and maturity for each loan are set forth in separate program terms letters that were entered into from time to time.
Loans are extended from time to time to enable us to purchase inventory from certain manufacturers and to lease certain boats and related parts to customers. The applicable financial terms, curtailment schedule and maturity for each loan are set forth in separate program terms letters that are entered into from time to time.
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, 2022, 2021 and 2020.
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.
The increase in selling, general & administrative expenses as a percentage of revenue was primarily due to higher variable personnel costs driven by the increased level of profitability for the year ended September 30, 2022 as well as increased costs given the current personnel environment.
The increase in selling, general and administrative expenses as a percentage of revenue was primarily due to higher variable personnel costs driven by the increased level of profitability for the year ended September 30, 2022 as well as increased costs given the current personnel environment.
The increase in depreciation and amortization expense is primarily due to a $7.6 million increase in amortization of identifiable intangible assets, primarily attributable to the 2022 Acquisitions, as well as an increase in our property, plant and equipment.
The increase in depreciation and amortization expense is primarily due to a $7.6 million increase in amortization of identifiable intangible assets, primarily attributable to the 2022 Acquisitions, as well as an increase in our property and equipment.
Years Ended September 30, Description 2022 2021 Change ($ in thousands) Net income $ 152,611 $ 116,413 $ 36,198 Interest expense – other 13,201 4,344 8,857 Income tax expense 43,225 25,802 17,423 Depreciation and amortization 16,297 5,411 10,886 Change in fair value of contingent consideration 10,380 3,249 7,131 Transaction costs 7,724 869 6,855 Loss on extinguishment of debt 356 — 356 Other expense (income), net 3,793 (248 ) 4,041 Adjusted EBITDA $ 247,587 $ 155,840 $ 91,747 71 Table of Contents Adjusted EBITDA was $247.6 million for the year ended September 30, 2022 compared to $155.8 million for the year ended September 30, 2021.
Years Ended September 30, Description 2022 2021 Change ($ in thousands) Net income $ 152,611 $ 116,413 $ 36,198 Interest expense – other 13,201 4,344 8,857 Income tax expense 43,225 25,802 17,423 Depreciation and amortization 16,297 5,411 10,886 Change in fair value of contingent consideration 10,380 3,249 7,131 Transaction costs 7,724 869 6,855 Loss on extinguishment of debt 356 — 356 Other expense (income), net 3,793 (248) 4,041 Adjusted EBITDA $ 247,587 $ 155,840 $ 91,747 Adjusted EBITDA was $247.6 million for the year ended September 30, 2022 compared to $155.8 million for the year ended September 30, 2021.
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 retail 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. 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.
As of September 30, 2022, the principal amount outstanding under these acquisition notes payable ranged from $1.1 million to $2.1 million, and the maturity dates ranged from December 1, 2023 to December 1, 2024. Commercial Vehicles Notes Payable .
As of September 30, 2023 , the principal amount outstanding under these acquisition notes payable ranged from $1.1 million to $2.1 million, and the maturity dates ranged from December 1, 2023 to December 1, 2024. Commercial Vehicles Notes Payable .
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.” 72 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.” 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.
Net Income (Loss) Net income increased by $36.2 million to $152.6 million for the year ended September 30, 2022 compared to $116.4 million for the year ended September 30, 2021.
Net Income Net income increased by $36.2 million to $152.6 million for the year ended September 30, 2022 compared to $116.4 million for the year ended September 30, 2021.
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.
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.
Our current portfolio as of September 30, 2022 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 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.
To the extent OneWater LLC has available cash and subject to the terms of any current or future debt or other agreements, the OneWater LLC Agreement will require OneWater LLC to make pro rata cash distributions to OneWater Unit Holders, including OneWater Inc., in an amount sufficient to allow OneWater Inc. to pay its taxes and to make payments under the Tax Receivable Agreement.
To the extent OneWater LLC has available cash and subject to the terms of any current or future debt or other agreements, the OneWater LLC Agreement will require OneWater LLC to make pro rata cash distributions to TRA Holders, including OneWater Inc., in an amount sufficient to allow OneWater Inc. to pay its taxes and to make payments under the Tax Receivable Agreement.
During different phases of the economic cycle, consumer behavior may shift away from new boats; however, we are well-positioned to benefit from revenue from pre-owned boats, repair and maintenance services, and parts and accessories, which have all historically increased during periods of economic uncertainty.
During different phases of the economic cycle, consumer behavior may shift away from new boats; however, we are well-positioned to generate revenue from pre-owned boats, repair and maintenance services, and parts and accessories, which have all historically increased during periods of economic uncertainty.
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.
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.
As of September 30, 2022, 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.
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.
Cash needs for acquisitions have historically been financed with our Credit Facilities and cash generated from operations. Our ability to utilize the A&R Credit Facility to fund acquisitions depend upon Adjusted EBITDA and compliance with covenants of the A&R Credit Facility. Cash needs for inventory have historically been financed with our Inventory Financing Facility.
Cash needs for acquisitions have historically been financed with our Credit Facilities and cash generated from operations. Our ability to utilize the A&R Credit Facility to fund acquisitions depends upon Adjusted EBITDA and compliance with covenants of the A&R Credit Facility. Cash needs for inventory have historically been financed with our Inventory Financing Facility.
Unfavorable local, regional, national, or global economic developments or uncertainties, including the adverse economic effects of the COVID-19 pandemic, including 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 a global pandemic, supply chain constraints, or a prolonged economic downturn, could reduce consumer spending and adversely affect our business.
Fiscal Year 2021 Acquisitions • Effective December 1, 2020, we acquired Tom George Yacht Group, a full-service marine retailer based in Florida with two locations. 61 Table of Contents • Effective December 31, 2020, we acquired Walker Marine Group, a full-service marine retailer based in Florida with five locations. • Effective December 31, 2020, we acquired Roscioli Yachting Center, a full-service marine and yachting facility located in Florida, including the related real estate and in-water slips. • Effective August 1, 2021, we acquired Stone Harbor Marina, a full-service marine retailer based in New Jersey with one location. • Effective September 1, 2021 we acquired PartsVu, an online marketplace for OEM marine parts, electronics and accessories with a warehouse in Florida.
Fiscal Year 2021 Acquisitions • Effective December 1, 2020, we acquired Tom George Yacht Group, a full-service marine retailer based in Florida with two locations. • Effective December 31, 2020, we acquired Walker Marine Group, a full-service marine retailer based in Florida with five locations. • Effective December 31, 2020, we acquired Roscioli Yachting Center, a full-service marine and yachting facility located in Florida, including the related real estate and in-water slips. • Effective August 1, 2021, we acquired Stone Harbor Marina, a full-service marine retailer based in New Jersey with one location. • Effective September 1, 2021 we acquired PartsVu, an online marketplace for OEM marine parts, electronics and accessories with a warehouse in Florida.
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, 2022, Compared to Year Ended September 30, 2021.
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.
Results of Operations Year Ended September 30, 2022, Compared to Year Ended September 30, 2021 For the Year Ended September 30, 2022 2021 Description Amount % of Revenue Amount % of Revenue $ Change % Change ($ in thousands) Revenues New boat $ 1,139,331 65.3 % $ 872,680 71.1 % $ 266,651 30.6 % Pre-owned boat 294,832 16.9 % 216,416 17.6 % 78,416 36.2 % Finance and insurance income 55,977 3.2 % 42,668 3.5 % 13,309 31.2 % Service, parts and other 254,682 14.6 % 96,442 7.9 % 158,240 164.1 % Total revenues 1,744,822 100.0 % 1,228,206 100.0 % 516,616 42.1 % Gross Profit New boat 305,305 17.5 % 210,916 17.2 % 94,389 44.8 % Pre-owned boat 81,665 4.7 % 54,138 4.4 % 27,527 50.8 % Finance & insurance 55,977 3.2 % 42,668 3.5 % 13,309 31.2 % Service, parts & other 110,708 6.3 % 49,733 4.0 % 60,975 122.6 % Total gross profit 553,655 31.7 % 357,455 29.1 % 196,200 54.9 % Selling, general and administrative expenses 302,113 17.3 % 199,049 16.2 % 103,064 51.8 % Depreciation and amortization 15,605 0.9 % 5,411 0.4 % 10,194 188.4 % Transaction costs 7,724 0.4 % 869 0.1 % 6,855 788.8 % Change in fair value of contingent consideration 10,380 0.6 % 3,249 0.3 % 7,131 219.5 % Income from operations 217,833 12.5 % 148,877 12.1 % 68,956 46.3 % Interest expense - floor plan 4,647 0.3 % 2,566 0.2 % 2,081 81.1 % Interest expense – other 13,201 0.8 % 4,344 0.4 % 8,857 203.9 % Loss on extinguishment of debt 356 0.0 % - 0.0 % 356 100.0 % Other expense (income), net 3,793 0.2 % (248 ) 0.0 % 4,041 * Income before income tax expense 195,836 11.2 % 142,215 11.6 % 53,621 37.7 % Income tax expense 43,225 22.1 % 25,802 2.1 % 17,423 67.5 % Net income 152,611 8.7 % 116,413 9.5 % 36,198 31.1 % Less: Net income attributable to non-controlling interests 2,998 - Less: Net income attributable to non-controlling interests of One Water Marine Holdings, LLC 18,669 37,354 Net income attributable to OneWater Marine Inc. $ 130,944 $ 79,059 62 Table of Contents Revenue Overall, revenue increased by $516.6 million, or 42.1%, to $1,744.8 million for the year ended September 30, 2022 from $1,228.2 million for the year ended September 30, 2021.
The change was primarily attributable to the $147.4 million loss on impairment, the increases in selling, general and administrative expenses, interest expense – floor plan and interest expense – other, all partially offset by the decrease in the change in fair value of contingent consideration during the same periods. 54 Table of Contents Results of Operations Year Ended September 30, 2022, Compared to Year Ended September 30, 2021 For the Year Ended September 30, 2022 2021 Description Amount % of Revenue Amount % of Revenue $ Change % Change ($ in thousands) Revenues: New boat $ 1,139,331 65.3 % $ 872,680 71.1 % $ 266,651 30.6 % Pre-owned boat 294,832 16.9 % 216,416 17.6 % 78,416 36.2 % Finance & insurance income 55,977 3.2 % 42,668 3.5 % 13,309 31.2 % Service, parts & other 254,682 14.6 % 96,442 7.9 % 158,240 164.1 % Total revenues 1,744,822 100.0 % 1,228,206 100.0 % 516,616 42.1 % Gross Profit New boat 305,305 17.5 % 210,916 17.2 % 94,389 44.8 % Pre-owned boat 81,665 4.7 % 54,138 4.4 % 27,527 50.8 % Finance & insurance 55,977 3.2 % 42,668 3.5 % 13,309 31.2 % Service, parts & other 110,708 6.3 % 49,733 4.0 % 60,975 122.6 % Total gross profit 553,655 31.7 % 357,455 29.1 % 196,200 54.9 % Selling, general and administrative expenses 302,113 17.3 % 199,049 16.2 % 103,064 51.8 % Depreciation and amortization 15,605 0.9 % 5,411 0.4 % 10,194 188.4 % Transaction costs 7,724 0.4 % 869 0.1 % 6,855 788.8 % Change in fair value of contingent consideration 10,380 0.6 % 3,249 0.3 % 7,131 219.5 % Income from operations 217,833 12.5 % 148,877 12.1 % 68,956 46.3 % Interest expense – floor plan 4,647 0.3 % 2,566 0.2 % 2,081 81.1 % Interest expense – other 13,201 0.8 % 4,344 0.4 % 8,857 203.9 % Loss on extinguishment of debt 356 0.0 % — 0.0 % 356 100.0 % Other expense (income), net 3,793 0.2 % (248) 0.0 % 4,041 * Income before income tax expense 195,836 11.2 % 142,215 11.6 % 53,621 37.7 % Income tax expense 43,225 2.5 % 25,802 2.1 % 17,423 67.5 % Net income 152,611 8.7 % 116,413 9.5 % 36,198 31.1 % Net income attributable to non-controlling interests (2,998) — Net income attributable to non-controlling interests of One Water Marine Holdings, LLC (18,669) (37,354) Net income attributable to OneWater Marine Inc. $ 130,944 $ 79,059 55 Table of Contents Revenue Overall, revenue increased by $516.6 million, or 42.1%, to $1,744.8 million for the year ended September 30, 2022 from $1,228.2 million for the year ended September 30, 2021.
With the expansion of our Distribution segment, we look to acquire parts and accessories manufacturing and distribution companies within a range of 5.0x – 10.0x EBITDA on a trailing twelve month basis, depending on the size of the business. 57 Table of Contents General Economic Conditions General economic conditions and consumer spending patterns can negatively impact our operating results.
With the expansion of our Distribution segment, we look to acquire parts and accessories manufacturing and distribution companies within a range of 5.0x – 10.0x EBITDA on a trailing twelve month basis, depending on the size of the business. General Economic Conditions General economic conditions and consumer spending patterns can negatively impact our operating results.
The collateral for the Inventory Financing Facility consisted primarily of our inventory that was financed through the Inventory Financing Facility and related assets, including accounts receivable, bank accounts, and proceeds of the foregoing, and excludes the collateral that secures the A&R Credit Facility.
The collateral for the Inventory Financing Facility consists primarily of our inventory that was financed through the Inventory Financing Facility and related assets, including accounts receivable, bank accounts, and proceeds of the foregoing, and excludes the collateral that secures the A&R Credit Facility.
As of September 30, 2022, our indebtedness associated with our 2 acquisition notes payable totaled an aggregate of $3.2 million with a weighted average interest rate of 5.0% per annum.
As of September 30, 2023 , our indebtedness associated with our 2 acquisition notes payable totaled an aggregate of $3.2 million with a weighted average interest rate of 5.0% per annum.
Interest on new boats and for rental units is calculated using the Adjusted 30-Day Average SOFR plus an applicable margin of 2.75% to 5.00% depending on the age of the inventory. Interest on pre-owned boats is calculated at the new boat rate plus 0.25%.
Under the Inventory Financing Facility, interest on new boats and for rental units is calculated using the Adjusted 30-Day Average SOFR plus an applicable margin of 2.75% to 5.00% depending on the age of the inventory. Interest on pre-owned boats is calculated at the new boat rate plus 0.25%.
In addition to boat sales, we also generate sales from related products including finance & insurance and service, parts and other sales. The recent acquisitions of T-H Marine and Ocean Bio-Chem will significantly expand 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.
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 75 additional dealerships, 12 distribution centers/warehouses and multiple online marketplaces through 30 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 80 additional dealerships, 12 distribution centers/warehouses and multiple online marketplaces through 33 acquisitions.
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, 2022, we were in compliance with all covenants under the A&R Credit Facility and the 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. As of September 30, 2023, we were in compliance with all covenants under the A&R Credit Facility and the Seventh Inventory Financing Facility.
The Distribution segment engages in the manufacturing, assembly and distribution of marine related products (and adjacent industries). The boat dealership market is highly fragmented and is comprised of approximately 4,200 dealerships nationwide.
The Distribution segment engages in the manufacturing, assembly and distribution of marine-related products (and adjacent industries). 45 Table of Contents The boat dealership market is highly fragmented and is comprised of approximately 4,200 dealerships nationwide.
Under the Inventory Financing Facility, among other exceptions, OneWater LLC may make distributions to its members for certain permitted tax payments subject to certain financial ratios, may make scheduled payments on certain subordinated debt and is permitted to make pro rata distributions to the OneWater Unit Holders, including OneWater Inc., in an amount sufficient to allow OneWater Inc. to pay its taxes and to make payments under the Tax Receivable Agreement.
Under the Inventory Financing Facility, among other exceptions, OneWater LLC may make distributions to its members for certain permitted tax payments subject to certain financial ratios, may make scheduled payments on certain subordinated debt, may make distributions to the Company for repurchases of the Company's common stock subject to certain financial ratios, and is permitted to make pro rata distributions to the OneWater Unit Holders, including OneWater Inc., in an amount sufficient to allow OneWater Inc. to pay its taxes and to make payments under the Tax Receivable Agreement.
We define Adjusted EBITDA as net income (loss) before interest expense – other, income tax expense, depreciation and amortization and other (income) expense, further adjusted to eliminate the effects of items such as the change in the fair value of warrant liability, change in fair value of contingent consideration, gain (loss) on extinguishment of debt 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, loss on impairment and transaction costs.
The $359.7 million increase in cash used in investing activities was primarily attributable to a $352.1 million increase in cash used in acquisitions for the year ended September 30, 2022 as compared to the year ended September 30, 2021. 73 Table of Contents Financing Activities .
The $359.7 million increase in cash used in investing activities was primarily attributable to a $352.1 million increase in cash used in acquisitions for the year ended September 30, 2022 as compared to the year ended September 30, 2021. Financing Activities .
As of September 30, 2022 and September 30, 2021, our additional available borrowings under our Inventory Financing Facility were $232.9 million and $278.3 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 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, 2022, we had $4.2 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, 2022.
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 .
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 8.9% per annum, require monthly payments of approximately $145,000, and mature on dates between November 2022 to October 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 $122,000, and mature on dates between November 2023 to September 2028.
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, 2022 but are only partially reflected in our consolidated financial statements for the year ended September 30, 2021, beginning on the date of acquisition, and will not impact our results of operations for the year ended September 30, 2020.
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 do not undertake any obligation to publicly update any forward-looking statements, except as otherwise required by applicable law. 55 Table of Contents Overview We believe that we are one of the largest and fastest-growing marine retailers in the United States with 96 dealerships, 12 distribution centers/warehouses and multiple online marketplaces as of September 30, 2022.
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.
As of September 30, 2022, the Distribution reporting segment includes the activity of PartsVu, Ocean Bio Chem and T-H Marine and its subsidiaries which together operate 12 distribution centers/warehouses in Alabama, Florida, Texas, Oklahoma, Indiana, Tennessee and Illinois and represents approximately 8% of revenues.
As of September 30, 2023, the Distribution reporting segment includes the activity of 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.
Loans under the Inventory Financing Facility may be extended from time to time to enable the Company to purchase inventory from certain manufacturers. The Inventory Financing Facility Expires on December 1, 2023.
Loans under the Inventory Financing Facility may be extended from time to time to enable the Company to purchase inventory from certain manufacturers. The Inventory Financing Facility expires on March 1, 2026.
The increase was primarily attributable to the $196.2 million increase in gross profit for the year ended September 30, 2022 as compared to the year ended September 30, 2021, partially offset by a $103.1 million increase in selling, general & administrative expenses, a $10.2 million increase in depreciation and amortization, a $6.9 million increase in transaction costs and a $7.1 million increase in the change in fair value of contingent consideration during the same periods. 65 Table of Contents Interest Expense – Floor Plan Interest expense – floor plan increased $2.1 million, or 81.1%, to $4.6 million for the year ended September 30, 2022 compared to $2.6 million for the year ended September 30, 2021.
The increase was primarily attributable to the $196.2 million increase in gross profit for the year ended September 30, 2022 as compared to the year ended September 30, 2021, partially offset by a $103.1 million increase in selling, general and administrative expenses, a $10.2 million increase in depreciation and amortization, a $6.9 million increase in transaction costs and a $7.1 million increase in the change in fair value of contingent consideration during the same periods.
As of September 30, 2022 and September 30, 2021, the effective interest rate on the outstanding short-term borrowings under the Inventory Financing Facility was 2.2% and 2.0%, respectively.
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.
New and acquired dealerships become eligible for inclusion in the comparable dealership base at the end of the dealership’s thirteenth month of operations under our ownership, and revenues are only included for identical months in the same-store base periods. For the year ended September 30, 2021, we completed 5 acquisitions.
New and acquired dealerships become eligible for inclusion in the comparable dealership base at the end of the dealership’s thirteenth month of operations under our ownership, and revenues are only included for identical months in the same-store base periods. For the years ended September 30, 2023 and 2022, we completed 3 and 8 acquisitions, respectively.
Our board of directors, management team and lenders use Adjusted EBITDA to assess our financial performance because it allows them to compare our operating performance on a consistent basis across periods by removing the effects of our capital structure (such as varying levels of interest expense), asset base (such as depreciation and amortization) and other items (such as the fair value adjustment of the warrants, change in fair value of contingent consideration, gain (loss) on extinguishment of debt and transaction costs) that impact the comparability of financial results from period to period.
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.
Although non-boat sales contributed approximately 17.8%, 11.3% and 9.8% to revenue in fiscal years 2022, 2021 and 2020, respectively, due to the higher gross margin on these product and service lines, non-boat sales contributed 30.1%, 25.8% and 28.3% to gross profit in fiscal years 2022, 2021 and 2020, respectively.
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.
We refer to the fiscal year 2022 acquisitions described above collectively as the “2022 Acquisitions.” Naples Boat Mart is fully reflected in our consolidated statements of operations for the year ended September 30, 2022. The remaining 2022 Acquisitions are partially reflected in our consolidated statements of operations for the year ended September 30, 2022, beginning on the date of acquisition.
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.
New boat gross profit as a percentage of new boat revenue was 26.8% for the year ended September 30, 2022 as compared to 24.2% in the year ended September 30, 2021.
New boat gross profit as a percentage of new boat revenue was 21.9% for the year ended September 30, 2023 as compared to 26.8% in the year ended September 30, 2022.
We believe that COVID-19 has had a positive overall impact on the retail marine industry as people continue to seek recreational activities that could be done in a safe, socially distanced way.
We believe that COVID-19 had a positive overall impact on the retail marine industry during these periods as people sought recreational activities that could be done in a safe, socially distanced way.
Revenue generated from Dealership same-store sales increased 9.7% for the year ended September 30, 2021 as compared to the year ended September 30, 2020, primarily due to an increase in the average selling price of new and pre-owned boats, the model mix of boats sold, an increase in finance & insurance sales and an increase in service, parts and other sales.
Revenue generated from Dealership same-store sales increased 3.0% for the year ended September 30, 2023 as compared to the year ended September 30, 2022, primarily due to an increase in the average selling price of new and pre-owned boats, the number of pre-owned boats sold, the model mix of boats sold, and an increase in service, parts & other sales.
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.
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.
The Inflation Reduction Act, which was signed into law in August 2022, imposes a 1%, non-deductible excise tax on certain repurchases of common stock that occur after December 31, 2022.
The Inflation Reduction Act, which was signed into law in August 2022, imposes a 1%, non-deductible excise tax on certain repurchases of common stock that occur after December 31, 2022. We do not expect the tax to have a material effect on our business.
Change in Fair Value of Contingent Consideration During the year ended September 30, 2022, we incurred expenses of $10.4 million related to updated forecasts and accretion of contingent consideration liabilities related to fiscal 2021 and 2022 acquisitions.
Change in Fair Value of Contingent Consideration During the year ended September 30, 2023, we recognized income of $1.6 million related to updated forecasts and accretion of contingent consideration liabilities related to fiscal 2021, 2022 and 2023 acquisitions.
(5) Includes certain physical facilities and equipment that we lease under noncancelable operating leases. 77 Table of Contents Tax Receivable Agreement The Tax Receivable Agreement generally provides for the payment by OneWater Inc. to certain of the OneWater Unit Holders of 85% of the net cash savings, if any, in U.S. federal, state and local income tax and franchise tax (computed using the estimated impact of state and local taxes) that OneWater Inc. actually realizes (or is deemed to realize in certain circumstances) in periods after the IPO as a result of certain tax basis increases and certain tax benefits attributable to imputed interest.
Tax Receivable Agreement The Tax Receivable Agreement generally provides for the payment by OneWater Inc. to each TRA Holder of 85% of the net cash savings, if any, in U.S. federal, state and local income tax and franchise tax (computed using the estimated impact of state and local taxes) that OneWater Inc. actually realizes (or is deemed to realize in certain circumstances) in periods after the IPO as a result of certain tax basis increases and certain tax benefits attributable to imputed interest.
Payments are generally made as required pursuant to the terms of the relevant notes payable and as discussed above under “—Debt Agreements—Notes Payable.” (4) Estimated interest payments based on the outstanding principal and stated interest rates on the A&R Credit Facility and Notes Payable.
Payments are generally made as required pursuant to the terms of the relevant notes payable and as discussed above under “—Debt Agreements—Notes Payable.” (4) Estimated interest payments based on the outstanding principal and stated interest rates on the A&R Credit Facility and Notes Payable. (5) Includes certain physical facilities and equipment that we lease under noncancelable operating leases.
Finance & insurance income is fee-based revenue for which we do not recognize incremental cost of sales. Service, Parts & Other Gross Profit Service, parts & other gross profit increased by $61.0 million, or 122.6%, to $110.7 million for the year ended September 30, 2022 from $49.7 million for the year ended September 30, 2021.
Finance & Insurance Gross Profit Finance & insurance gross profit increased by $0.3 million, or 0.6%, to $56.3 million for the year ended September 30, 2023 from $56.0 million for the year ended September 30, 2022. Finance & insurance income is fee-based revenue for which we do not recognize incremental cost of sales.
This increase was primarily due to an overall increase in our Dealership same-store sales and acquired dealerships during fiscal year 2021. Pre-owned boat gross profit as a percentage of pre-owned boat revenue was 25.0% for the year ended September 30, 2021 as compared to 18.2% in the year ended September 30, 2020.
This increase was due to our overall increase in Dealership same-store sales and acquired dealerships during fiscal year 2022. New boat gross profit as a percentage of new boat revenue was 26.8% for the year ended September 30, 2022 as compared to 24.2% in the year ended September 30, 2021.
Finance & Insurance Income We generate revenue from arranging finance & insurance products, including financing, insurance and extended warranty contracts, to customers through various third-party financial institutions and insurance companies. Finance & insurance income increased by $5.9 million, or 16.0%, to $42.7 million for the year ended September 30, 2021 from $36.8 million for the year ended September 30, 2020.
Finance & Insurance Income We generate revenue from arranging finance & insurance products, including financing, insurance and extended warranty contracts, to customers through various third-party financial institutions and insurance companies. Finance & insurance income increased by $0.3 million, or 0.6%, to $56.3 million for the year ended September 30, 2023 from $56.0 million for the year ended September 30, 2022.
Pre-owned Boat Sales Pre-owned boat sales increased by $10.8 million, or 5.2%, to $216.4 million for the year ended September 30, 2021 from $205.7 million for the year ended September 30, 2020.
Pre-owned Boat Sales Pre-owned boat sales increased by $78.4 million, or 36.2%, to $294.8 million for the year ended September 30, 2022 from $216.4 million for the year ended September 30, 2021.
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%.
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%.
Service, Parts & Other Gross Profit Service, parts & other gross profit increased by $19.8 million, or 65.9%, to $49.7 million for the year ended September 30, 2021 from $30.0 million for the year ended September 30, 2020.
Service, Parts & Other Gross Profit Service, parts & other gross profit increased by $61.0 million, or 122.6%, to $110.7 million for the year ended September 30, 2022 from $49.7 million for the year ended September 30, 2021.
For the year ended September 30, 2022 compared to the year ended September 30, 2021, we experienced a strong increase in our gross profit on pre-owned sales for trade-ins, brokerage and consignment which all have a higher margin percentage than wholesale which saw a slight decrease in gross profit. 64 Table of Contents 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.
For the year ended September 30, 2022 compared to the year ended September 30, 2021, we experienced a strong increase in our gross profit on pre-owned sales for trade-ins, brokerage and consignment which all have a higher margin percentage than wholesale which saw a slight decrease in gross profit.
These assessments require management to make judgements, assumptions and estimates regarding the macroeconomic and industry conditions, our financial performance, and other factors.
These assessments require management to make judgements, assumptions and estimates regarding the macroeconomic and industry conditions, our financial performance, and other factors and are often interdependent; therefore, they do not change in isolation.
Overall gross margins increased 260 basis points to 31.7% for the year ended September 30, 2022 from 29.1% for the year ended September 30, 2021 due to the factors noted below.
Overall gross margins decreased 410 basis points to 27.6% for the year ended September 30, 2023 from 31.7% for the year ended September 30, 2022 due to the factors noted below.
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. Pre-owned boat sales for the year ended September 30, 2021 experienced a decrease in the number of units sold due to industry-wide supply constraints.
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 Gross Profit Finance & insurance gross profit increased by $5.9 million, or 16.0%, to $42.7 million for the year ended September 30, 2021 from $36.8 million for the year ended September 30, 2020. Finance & insurance income is fee-based revenue for which we do not recognize incremental expense.
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.
We are also continuously evaluating and pursuing acquisitions on an ongoing basis, and such acquisitions, if completed, will continue to impact the comparability of our financial results.
Summary of Acquisitions and Dispositions Acquisitions The comparability of our results of operations between the periods discussed below is naturally affected by the acquisitions we have completed during such periods. We are also continuously evaluating and pursuing acquisitions on an ongoing basis, and such acquisitions, if completed, will continue to impact the comparability of our financial results.
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.
Sales of new and pre-owned boats, which have comparable margins, generally result in a lower gross profit margin than our non-boat sales.
Our strategy is to acquire dealerships at attractive EBITDA multiples and then grow same-store sales while benefitting from cost-reducing synergies. Historically, we have typically acquired dealerships for less than 4.0x EBITDA on a trailing twelve month basis and believe that we will be able to continue to make attractive acquisitions within this range.
Historically, we have typically acquired dealerships for less than 4.0x EBITDA on a trailing twelve month basis and believe that we will be able to continue to make attractive acquisitions within this range.
We do not believe that there is a reasonable likelihood that there will be a change in the judgements and assumptions used in our qualitative assessment that would result in a material effect on our operating results.
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 operating results.
Overall revenue increased by $99.3 million as a result of our increase in Dealership same-store sales and $105.9 million from dealerships not eligible for inclusion in the same-store sales base.
Overall revenue increased by $48.1 million as a result of our increase in Dealership same-store sales and $143.4 million from revenue increases in our Distribution segment as well as revenue not eligible for inclusion in the Dealership same-store sales base.
The A&R Credit Facility also includes events of default, borrowing conditions, representations and warranties and provisions regarding indemnification and expense reimbursement.
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.
This increase in service, parts & other sales is primarily due to increases across the board in labor, parts, fuel and storage sales, driven by ancillary sales generated from our increase in new and pre-owned boat sales and the impact of our 2021 Acquisitions.
This increase in service, parts & other sales is primarily due to the contributions from our recently acquired parts and accessories businesses, including Ocean Bio-Chem, as well as increases across the board in labor, parts, fuel and storage sales, driven by ancillary sales generated from our increase in new and pre-owned boat sales at our dealerships.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeBased on an outstanding balance of $267.1 million as of September 30, 2022, a change of 100 basis points in the underlying interest rate would have caused a change in interest expense of approximately $2.7 million. We do not currently hedge our interest rate exposure.
Biggest changeBased 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.
We do not currently hedge our interest rate exposure. 78 Table of Contents 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.
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.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk. Interest Rate Risk Our Inventory Financing Facility exposes us to risks caused by fluctuations in interest rates. As of September 30, 2022, the interest rate on our Inventory Financing Facility for major unit inventory is calculated using SOFR plus an applicable margin.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk. Interest Rate Risk Our Inventory Financing Facility exposes us to risks caused by fluctuations in interest rates. The interest rate on our Inventory Financing Facility for major unit inventory is calculated using SOFR 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.
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
The 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 $445.0 million and Term SOFR as of September 30, 2022, a change of 100 basis points in the underlying interest rate would have caused a change in interest expense of approximately $4.5 million.
The 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.

Other ONEW 10-K year-over-year comparisons