OneWater Marine (ONEW) 1 Feb 242024 Q1 Earnings call transcript

Good morning, and welcome to the OneWater Marine Fiscal First Quarter 2024 Conference Call. [Operator Instructions] I would now like to turn the conference [Technical Difficulty].

Good morning, and welcome to OneWater Marine's Fiscal First Quarter 2024 Earnings Conference Call. I'm joined on the call today by Austin Singleton, Chief Executive Officer; and Anthony Aisquith, President [Technical Difficulty]. Mind you that certain statements made by management in this morning's conference call regarding OneWater Marine and its operations may be considered forward-looking statements under securities law and involve a number of risks and uncertainties [Technical Difficulty] earnings release, which can be found under the Investor Relations section of the company's website and in its SEC filings. are obligation circumstances to after or that forward-looking any statements the the disclaims required the reflect as to events statements company or update undertaking forward-looking date by The law. except made, that occur the I'd who Austin with few turn begin over opening to And with remarks. to call that, a like Singleton, will Austin?

moderated increasingly Jack, thank you, to We environment, quarter solid a industry-wide remained and deals everyone, return call. active an X%. Thanks, and sales despite selling seasonal pricing. our team and driving patterns delivered competitive growth for joining In the closing today's of same-store

We X% which for continue market industry, about quarter. down was to the the data outperform indicated

our in seasonal demand sales sales to the Unit expected first larger were return flat environment. during With in the towards our approach to reflecting and the softened our expected, we management.As boat mix, the of anticipated the continue first effectiveness operate the offerings. and and historical half quarter, the continue as competitive a strategic to quarter, industry expect team turn of we to customer continue preferences more this through across margins to inventory year. Boat reset

to to continue will seasonality margins mix, with similar quarterly Additionally, model traditional and year. pre-Covid fluctuate

with increased we and As mix unit mix selling shifting months volumes shift margins. margins to benefit with the typically a margins with during lower compared reminder, slower a with to ASPs to stronger from the months winter higher summer higher the ASPs the lower

we back coupled of approaching M&A. of growth believe had historical ] When are went with consisting we I we to growth, a solid to transition trends the and good [ to organic our new lot would to emphasize Toby bad. been has but today. like battle-tested The steady challenging, of disruptions, both created a this normal. strategy our we Anthony, where and to February path a XXXX, I in Before strategy get public we turn over are

start we grown offering. a has is more stronger fundamentally having were diversified forward, As to reset the us we been to product are at so off pre-COVID, baseline move XXXX. in far, Compared we boat seen encouraged a and in a we company shows what by with and to significantly the coming where One we've giving are that, confidence higher, Water year. robust great Adding our

on and Even industry, in environment we navigate in challenging still strategy. confident macro inventory very deliver as the we our the are our ability overhang growth to

about we through return that, market to to M&A the are enhance opportunities pursue We over to operations. business as profitability to and our higher-margin continue discuss amplify businesses Anthony it will future turn come. grow excited optimize shareholder I to With costs, share, years for

Austin. Thanks,

sales Our larger preferences shifted of offerings. X%, our team delivered as growth first to quarter higher prices their supported customers unit average same-store by boat

we boat our are for We demand models, in participated strong given have strategy. seeing year sign so which about the our newer a excited positive far are is this shows inventory and manufacturers'

shows by were weather. We orders are report growth the customer pleased that in not at impacted inclement boat to

us Boat event industry. International weeks, a Miami Show important We which the looking are in is and to an for forward few the

in on and That we Our can XX as continues opened down industry aggressive season. We a weeks newer the to models. year the us has with sequentially flooded work well model non-current healthy in inventory where preparation in build inventory in said, non-current selling an on-hand management models. approximately standard industry approach mix with continue positioned Inventory levels months outperform at for hand. XX inventory favor weeks our the will winter the are up to

was total we higher of and insurance rates. year-over-year, While down boat as revenue sales challenges moderately face finance up are the

of over portion stand go the of we that, Jack detail. XX% tracked where during strong, turn and financials the we financing penetration with good remain their And feel I'll Credit purchases us. consistent new and directly with to our call of in finance target to over today. more boat with about quarter the a However, availability customers uses the

first $XXX million the million quarter. Anthony. to in revenue in decreased Thanks, XXXX quarter X% $XXX Fiscal year from prior

Revenue in New in towards million primarily and in grew while decreased The sales trade-ins. a average the million. in prior XX% quarter. price sales in X% boat for sales, boat the $XX as pre-owned to boat compared of by pre-owned year. service sales in the brokerage decrease quarter The drop preowned was increase to sales sales million was increase first sales parts in to an by other driven to customers the due larger offset an quarter gravitated from $XXX from consignment fiscal boats XXXX, partially $XX X% decreased boat selling to increase new the

Center As a of quarter decline. Roscioli fourth primarily fiscal XXXX, the reminder, in we our Lookout sold Yachting and Marine drove which

of our towards fell and service through other returns in year our the what on new by quarter, $XXX gross to high those offset million prior rate current the compared quarter we margins sold. to to of to the will pandemic, Overall, year, than increases on this we We production million equipment original result in higher interest as seasonality partially and cycle sequentially in given Additionally, Gross the sales. have by decline the the with primarily first to first driven Finance a these we the environment. due larger fell gross $X revenue industry off reduction levels. sales to million saw and and margins the in the reduced in though XX% anticipate accessory to structural of business boats, parts stabilize given profit OEMs normalization prior XX% changes manufacturers; parts to margins preference on a first $XX of in level normal half loans saw to income inventory anticipate boats earned insurance margin decreased elevated gross expected continue profit for a a and industry. as the the normal,

from and million SG&A which selling, was is percent general to increased a $XX of year period. XXXX reduce sales our leverage. points basis lower as up the cost slowest sales quarter fixed prior higher quarter $XX historically the expenses the quarter, administrative a typically in first SG&A from XX revenues million. as is First percentage XX.X%, as of

loss We was due compared from The continue in adjusted year to gross $X to floor and in earnings or and to million first $X.XX quarter the Operating diluted monitor the compared first the totaled prior share million the income share million fiscal fiscal optimize per profit prior environment prior to $XX $X lower In business. plan manage income the compared $X $X.XX per year in of was XXXX. diluted $X.XX period, primarily adjusted loss million EBITDA was diluted decline heightened costs. million costs EBITDA million in to net interest related $XX and for to per in and quarter, Net adjusted year. share the of the sales or period. proactively adjusted share decreased diluted $X.XX $XX borrowings to per

$XX patterns was cash facilities.Total at -- availability historically Turning expect year remainder inventory million December $XX $XXX now On to million, million. inventory to Total including reflective additional our $XXX have seasonal of of was stands excess September the on XX, liquidity balance credit inventory for levels build XX, currently we and long-term in XXXX, The XXth, the XXXX. Total and December is preparation throughout sheet. the compared mirror of we million million peak under debt at of season, the our $XXX to experienced. this selling XXXX.

is ratio EBITDA adjusted to X.Xx. debt net Our

down earnings in million $XXX Our our to top-performing liquidity to of footprint diluted to we boating our fiscal on and with unchanged, comfortable increasing the seasonal focused expect leverage and We to utilizing $XXX positions same-store highest share country. plan, range remain range to adjusted best our the up to floor carries in expect which stabilize through delivering norms. the per and are we XXXX anticipate allocation, and ahead, adjusted strategic interest are rate.Looking cash organic dealers we the and in a and capital in are remain our mid-single pay low be $X.XX. of guidance the digits, we to sales be $X.XX range, M&A million our in margins of maintaining EBITDA On markets growth be priorities and to

cash shareholders. we our in and always, prudent it our approach are believe we will for allocate where will As most value the provide

look we deals, the best M&A flow as source, which invested utilize our free funding our given historically to our capital. For cash return us has on

remains poised pipeline concludes remain our targets the As when are to deal remarks. the we when please along. for This open disciplined right the active, and always, you we will line Operator, our and evaluating approach prepared comes acquisition questions. in act

first The Drew the session. from begin Stifel. question-and-answer Instructions] now Crum will We question with comes [Operator

relative spend I will same-store achieve the plus how level address to sales, follow-up. year? order have to hit plan your same-store to in target aggressive And then and guess, promotional a need perform can sales I more deployed the And of figure? expectations for order your On you here be in X to versus the you you that

to... want you or to do you Jack, take that me want

say close in similar to really a a the we don't know say where changed say trends Yes, I saw I fairly it fourth promotional expected elevated, it to I would we're from that be that activity, during continues would I would plan quarter. to quarter. to the in come we have lot.

doors. in aggressive Initial Customers are show continue activity good, we we has coming to think the and boat on. I continue still through very been marketplace. pushing be

year-on-year think sales flagged. service the XX%. but see Okay. have you production the lapping other I business, by also easier, parts in the little the with declines get OEMs, you Perfect. contributing the cuts leaseback a on And mentioned which the then going retailer would moderating forward? Do destocking and you down comps you to the transaction

So next curious few over quarters? trending the how see you to this as business

the to would right? parts right decline in going December don't is going that September Because to it'll decline sure. if like I to it's at year challenge some, to transaction a I quarter. know the moderate we you for year. the and mean, Yes, expect closed I on X%, a -- small X% the for percentage because such just it's were down. I an be suggest. for do But expect be service probably but I would be I impact, expect to be other the quarter that XXth.

out. that you So, you have full a bake to have year

with Kennison Craig The from next Baird. comes question

-- to you environment. today? current just who be on how are the sell? a dealers it get aggressive are want I list your more I'm that if are some out to the think you target mentioned ready those I imagine environment. I'm Is sell environment curious, there to could active acquisition in ready And

we're Jack mean, stated I use going like flow. earlier, Craig, cash to Well, free

at looking it doing. some just but to wide the on if strategic that what put limitations want [Indiscernible] -- opened we will we're be So about open

a you when that of what so, environment is we're of There's still some trying the things a of but multiple is multiple now know the how a on. now, to set, much decline. see interest with at the margin pinpoint plan inflated And one we costs. is I We're -- what kind to dealer floor easy paying -- look expecting can what right have right true absorb more lot dealers. because don't

storm. that picking something more probably is going are interest thought -- perfect are they bit, gone Not little is winter. of and also think we I double-digit was because to tight kind to dealers happening curtailments continuing a so to but pretty margins a costs, down it's fall last paying now through have flow the because floor like start plan cash rate only the of happen drift

just and those that that the we a of I a looking it's to to tended mean to Even really pipeline bad say picked -- would up and consider. any we're just deal even I and add month e-mails was. was half of parts and incoming stuff a a than interest more a calls not dozen a stuff or wouldn't in. we good something -- we at couple that or week get dozen probably any it have lot COVID, a I So, the

So, much the I'd increased. it's wouldn't pretty I say same. say it's

back and incoming what to June. see real up be cash want till that they might going the start in could of and i.e., earnings that don't build if flow to some we weather towel reaching to this spring on or to [ push to think just pockets might throwing really leveraging deals to because months June have months say, pick and screen into could the that early I the flow cash some May then we get just ], put think even a they somebody to that's again into to bad their are people where see estate go April, strategic I July. There do to May, whatever we as do start they "Hey, increase. And up it don't have out I

like -- working So, be opportunistic we're it's to got we as of just very forward. we're but move kind we we're some going things on,

mind, thought frankly, things expense OEM do about like would floor And OEM's and to somewhat for feels that then had they time is production minds you think and I'm is in are just has it dynamic agreed, the weird a retail -- some -- on expectations, your different with inventory. in pain but line or you which trying with plan help that so be to it it. realization in changed of is like get what to every the OEMs my looks what But cut reconcile severe it the you to on own retail part actually it's other was right be? it's dealers a dealers do

Yes.

you but the a optimistic that's sit versus inventory now where a question. already we good on hand. because little bit and we're works, OEMs probably that at be not really that's right we So and the have opportunistic When retail to able -- more how look

too to much. inventory they're So, have having replenish we where

So, they we sell need through build to today. that inventory where boats

I kind the just I'm as of didn't mean chunk we'd sell we of a to here plenty summer. inventory. good have if that on from inventory another think, through out, boat so, if of Anthony, And of not probably order have plenty shifts, wrong, we I

Correct.

inventory you So at why as that, hand. all look we're little the optimistic we a that's on have when

put Now all I perform and inventory. well, to where my sell we is got OEM to like, have is do okay, an anywhere don't

can't that, they anywhere And it have if so, it. they to with build don't put

have it's happened OEMs this Oh lag think as the crap kind just maybe that I behind the and of us. is been a to timing much as that a So, caused that and just moment lapse, not it

good so, the in been in we've now I that individual And about we the have in decades you almost activity, promotional dealers talk X feel a When think right we're you enforced, and that majority digits the the spot. we're that where don't today in position of costs interest the outflow Not big a cash that so margins plan double 'XX, plan an really of have floor expense, dealers. weren't in for wasn't flow. floor curtailments is pre the contracted.The great only 'XX,

this to through cut every gone having are curtailments. we've for there month, as so, dealers And checks winter out

used that's the never the thing, navigate Now that. to sure they're inventory a to is really that. how marking market, and good they're seen needs industry which it's that. They've a not thing, that, But to not disciplined

going to time all I'm Maybe think, the to is what be saying doing, okay, my that's exit now navigated time. dealers so, They're I navigate tough 'XX, but is some sure, waiting this.And this. out dealers, a imagine and having that just point towel or they it to today? we've through say, for not been it's doing to the on, kind do for for it's that of to probably right where's when money. large sit are And kind and the hard throw -- coming 'XX, of that a bit and that going, they something they're go that scary they're for look the And a at they with right It's is industry. to at look shift the of deal where not navigate can okay, I a little to looking so got pretty to majority you going strategy. back being spot in to used they're what that's there, that

Joe Altobello comes from question Raymond with next James. The

a inventory made through How long competitors that about work you do comment to you your industry. the for Austin follow-up on Just it in take that non-current think will non-current? of kind

it early mean just season strong spring I the how Well, on really depends selling is.

really shows, are are things coming out through People doing I several got boat we're I at you've they're the good at boats. good well things boat performing other the are imagine very the that -- buying boat shows the shows. there at for going and dealers think we're door us. seeing

pushes early that. as And through, kind good accelerate selling of so, inventory season spring a that will

that have as weather aren't things. that pockets could you or good, If change

a ball And have. that's don't just I crystal so

there's any has Anthony feeling good take think just I pretty something say unless there June Anthony, that me, get you should than a point If we July, got lag you to we're a I out better wanted at into -- at that probably shape model macro it on from change in that and once year we in gut stride XXXX, going not that and a that? seeing standpoint. be

that plan is ensure their that way, No, in heading inventory place right. a think we're have and I we to

think some inventories had gotten thing XX I the are only there, throw in is we indication Joe, that would around dealer I weeks.

weeks to math the sounds XX%, a And then I industry if And does that like okay, get them right, you so, if cut I can that season is XX%, has year. guess that XX%. flat turns it down is flat, that hand, assuming XX%, would reduce sense, this that that seen, make back and -- manufacturers reduces closer on historically around retail some let's that, just XX X that say, say, well,

just on Okay. follow helpful. that. to very And maybe That's up

morning. seasonality changed because talked You Maybe by about COVID. your seasonality this since mean normal little bit help what has us business you a several times understand normal

year sales about X perspective? how the quarters, think for So, for EBITDA as do cadence example, we the a from next and think about we the maybe

you in backstop a Let bit. jump then and it little me can

applied boats good are look of we we where that on we and can't wanted that seasonality is and as also think control kind months some in seeing those the that the 'XX, an first way the to it we're what build to the in things. today look went at a as average of month you just exercises go where could longer things of the the bigger really sit patterns X not the And -- transition waiting just then winter for 'XX change of the lot to one smaller urgency years and used and out at order a macro how us when by the be are and of lot took Joe, was exercise we then feels a -- to buying us years and boat and kind like far November what 'XX quarter. was things of time, quarters is it as and because back in those customer It's in mean, for 'XX, October, boats, we had great the confidence times. I through 'XX. and front we just they're just a at those of gave it September, I shows. to it There's it today. the And individual there like But 'XX, that

Now do some contribution higher-margin these businesses. shifted of to agree I EBITDA that the we've

watch helped we out inventory little there then and pretty be bit. all it's if of that So out stomp look to really of something bit. EBITDA at at we careful new because things that, move all take tight you we stuff boat that the the you sit sales, really some that good, us boat optimistic, compelling you have the driver got today. little and we Covid think us changes go the shows a story where pretty noise are pre-Covid, kind predominant But our there as of control. got can't forward seasonality a just could and a And feeling it it is But I that's and back look which of that's still really

probably things to can time, you kind the watching if all that -- that feels normal, control, tough. of So going what all to but it noise we to -- new out going make this Covid take I very right But say much, look of pre-Covid to we're it, kind back the what we this and Jack, and shifts, we're too pre-Covid if at similar we're adjustments. now, of really big what rambled like was it something back we can saw the you controlling we're seasonality And

pretty my You much stole thunder. all

right, consensus work math got as to, only the I would of guidance, look add think think the we I and And of the of you it, COVID, part the I even summer first at out the -- when through last I right? of boats wasn't front when we were boat. that a year. boat was think thing really customer I too we little half the much sales And a and pontoon you in that, of right, we think spring year, so several the the kind with so heavy shifted into of ski boats of when the quarter the that and accelerated selling year and many back Normally, beginning the inventory, you years over the year scarcity in half December just buyer. a using that early light. about go little half

optimistic now transition season, we're said, cautiously that come the right back going don't sales we're half, through we'll optimistic. cautiously as in as seeing But I those like boat of adjust. think those the so sales But now, orders, we're show expectation. back, if lining that's And we're and up Austin our

Go Mr. question Swartz. with comes next ahead, Michael Truist Swartz The from Securities.

regard to understand, passive a assume there's I that. rates, your about to the on some just the trying there's expense, both revenue. with -- would F&I mute interest I flooring consumer to demand, forgot Sorry guidance, sensitivity

pertains So months? passive the maybe to next rates your just it help the XX us as in understand to embedding are over guidance what you interest exactly X

whole don't a rates lot Jack, I think -- of we -- embedded

and we I right, a drop wouldn't say, I banks, our together including in the we those model. of in embedded we would we kind sympathize and material of curves changes, models, yield say them get some different couple tourists, from any

a what reduction, not curve at. or you're that's baking significant if shift we're getting So, additional in or some

F&I banking line the the made think we retail are seen past. where in able as spreads I in we're make not on as goes; that the we've far the to pressure just we've

I'll business, a a a impact negative piece. it's certainly a ease that's Should it's rates just more that model, but profitable gets and it's So it better. know, say -- positive. you highly as versus the little maybe again, -- a impact -- small the can But a biggest it's of bit, it's probably

helpful. expanding. just Got maybe you. That's And

demand-wise kind some I look back there, boat you're but think, Anthony, seeing commentary just and you the the you level like of a there year around year we pre-Covid promotional them intensity this is at And model maybe maybe shows level, of year compare answer can we to boat But versus had maybe not 'XX the XXXX to looks or much about normal back way then, to any what maybe little concerned shows. just model so and the a think I'm versus ago. 'XX. year I sure if the go discounting And to back a pertaining frame is can year? what different

partners are I manufacturers boats the manufacturing markets move weather the great markets the were in the in great partners XXXX of prior continue help in well. competitive we though, had the business with helping which shows that pretty was northern over pretty the And back we is the shows had XXXX. and had year we've it But and to boat think it's up bad most were help some, being do very as southern that had XXXX. volumes to affected. and and are us way that some the we've the concerned far and pretty is in being -- unfortunately, amidst XXXX as Everybody impressive that

competitive didn't shows, have are need you any rises, have we help. We great But During they us any us, inventory make, helping have get they didn't as help. that the staying will, been. ensuring with if and as and we Covid, more things

question next Fred from with Research. comes The Wolfe Whiteman

down a on it just proactive margin retail the today for industry and that that can the you're on talked you to more going You've think position a dealers do non-current where were working little seeing mix maybe some what to just compared to up? it's getting side? OneWater side? Like to approach what to versus that terms you your ability in seeing Do Is your feel inventory you in of for you comp about And visible? positions is bit maybe current slowing talk your of really now be horizon you like on would the heavy. quarters few it most Is -- that? show capture where taken you've do about the more

competitive out will we we it that's a perspective. makeup of I advantage weeks what's get out XX, everywhere. happened That's of the can't of from at don't have. weeks think Well, that us detail on show where that but at don't we We get I when But XX, are, up know out when the that on mean, mean, things diced now I pretty kind good look up weeks we industry XX. hand the of hand between that, an to we're one the Wells that I we XX Fargo, hand it's of think get them. of not -- -- comparing look you you compared XX% on really information

‘XX a to the the left inventory thing inventory little harder the that further that probably bit year, one the think I that sell. the more have give us is we into we get of would concern

are to ‘XXs and keep many kind on The you we're have many certain if boats ones that popcorn, -- like we've So, sell this sell like take to bit ‘XXs more that to whatever in get can the into of moving going harder really that little it's get, have ‘XX. a of going offset to think then to as there's I had concern the margin that some we get is just selling means -- last you going and of that several forward, is hope you that can harder that's we're margin weeks right as XX. but any decline them you to aren't that other as be

in I to but sales. think -- same-store show So it's up going

on I shows have you be able we new the ‘XXs think into It ‘XXs, then to up especially it and can as sell being depends margin. on against all down to get gross that competitive, in how then don't models. quick work

can non-current That any the makes to way of versus for context those opportunity pricing give sort ‘XXs some margin could benefit you is blended about to the what And that margin or think there just that us help sense. just look like? stuff

I you Well, Anthony, putting take it competitors' ‘XX, margin ‘XXs, getting. If isn't I a close. I we our XX. it's getting we're you were to mean – they're can to a XX, the X would Go if it? the a they're they're getting would we're probably XX, double, against a probably they're get think, twice ahead. it's XX, getting getting getting if XX, getting If

mixed very mean a scale. model whether more or recent model. it's a models little bit it's specific by I that's a renewal whether it's brand or the And

So break there's that number hard to really down -- it's Fred.

The Markets. Noah with from Capital next comes question KeyBanc Zatzkin

touched be then units retail up You but incentives you levers a this like bit, kind come OEM little on to you like thinking of kind the moving levers? available internally, how second, terms not there first, spring of you, are could that I summer? potentially should and to have in expectation And more of that step about those soften? guess, is an

quarters. levers, the lot this in covered we've a to Jack, several other

as as to we you look to a had on performance back go -- lot the of most or expense have as pre you and department. 'XX pull far P&L at our levers tied everything when kind that 'XX, biggest the of themselves what line of We is bottom employees,

kept deploy us lot it it's There's stuff of do, other cost-cutting have just have right of revenues up have of a because kind different can been we a if ship. from methods that now that up. that levers slow things playbook hard kind to the those that bit, in our that some really just little So, we of for we writes

And does it nothing cuts like bad from out a or then perspective just make you and up service go you so, to then that have slows it's and bunch you worked. and up of start slow customer, dramatically, a the performing

off lot we of performance watching levers. automatically But business. we're just really are feel of the we levers pull that So, good, have based that and there the several a themselves

good our game that shift in plan have something we we're dramatically things in to from completely a to deploy or pretty we're and So, place needed. macro our ability, ready outside confident of were that's a if control, standpoint if

that far manufacturers manufacturers. can't incentives, and answer as As for the I

if sucks And I interest to a like, a were heard single again, why? is one-off you're things and lot of that's plan of like, could lot eat somebody to. network about really that going big looking reached floor operations. it dealer those But never seen over me on I for And of be a carried before. have they're out out up, they've a their at up dealerships to flow that that they've curtailment And you? talking something once I've about because think a heard mean there. flow. inventory, to that curtailments holiday have that. that never if got probably slow the mean if I'm out It's softens curtailment cash they I'd because does a what I'm cash holiday, needed dealer's that a cash number.

increased -- of dealers their have one probably today move is I a more when I fundamental on have inventory the the think and any So, can curtailments blessings flow, but the look When that out -- that we look, sucking things one to, lose are you have I advantage if could you think at they're they're all of And a to I just we the the you lot the look one-off going slowing they have incremental take stores. XXs between we many too so. have a of up, plan, cannot afford not we at mean, margin been making at floor getting are P&L. not and cash the competitive promotional to increases, -- if activity we other and sit -- a look to some? of also very that different they XXs any we be and of that to XXs. blend a that devastating dealership. there That then that

have not could to that's market So, you hot one hot, the moving that's product one market. we're

but have -- And are they to slow lot us go would suspect going them, for to we as can't But but up I so speak up, that their the dealers. will through. of manufacturers step are dramatically, I to if lose they going a help

you for our concludes Thank attending presentation. session. This question-and-answer today's

may disconnect. now You