BUFORD, Ga., – OneWater Marine Inc. (NASDAQ: ONEW) (“OneWater” or the “Company”) today announced results for its fiscal first quarter ended December 31, 2022.
“Our first quarter results came in largely as we anticipated as the industry experienced a return to more normalized seasonality, with revenue growing high-single digits, on top of a 57% increase in the prior year. Notably, our high margin service, parts and other sales grew 86%, driven by strategic acquisitions over the last 18-months, strengthening our overall gross margins as expected,” commented Austin Singleton, Chief Executive Officer at OneWater. “Signs are pointing to a strong selling season, with positive boat show activity and healthy demand levels, but given the considerable amount of unknowns driven by a cloudy macro-ecnomic environment, we are lowering our full-year outlook.”
“Over the past two years, OneWater has successfully executed on our growth and diversification strategy, adding 38 dealership locations and building out our parts and service platform. As the industry returns to historical seasonal cycles, we believe our flexible and diversified operating model positions us to continue to outperform the market and return value to our shareholders.”
Fiscal First Quarter 2023 Highlights
- Revenue increased 9% to $367 million, a new fiscal first quarter record
- Service, parts & other revenue surged 86% to $70 million
- Same-store sales decreased 14% as seasonality returns
- Gross profit margin of 30%, remains strong as expected
- Net income was $11 million in the quarter or $0.61 per diluted share
- Adjusted EBITDA1 of $28 million
- Completed two strategic dealership acquisitions
Complete details can be found here.
Fiscal First Quarter 2023 Results
Revenue for fiscal first quarter 2023 was $366.7 million, an increase of 9.0% compared to $336.3 million in fiscal first quarter 2022. The growth was primarily attributable to strong service, parts and other sales from acquired businesses. During fiscal first quarter 2023 same-store sales decreased 14% following a 28% and 38% increase in fiscal first quarter 2022 and 2021, respectively. We believe the decline is primarily due to the return of seasonality in the business where we realize lower sales and higher levels of inventory in the fiscal first quarter. Historically, the December 31 quarter has represented approximately 15% of our annual sales, which has been bolstered by our investments in service, parts & other sales. The timing of sales from quarter to quarter can also fluctuate based on our ability to deliver presold boats to our customers, and sales activity remains lean in areas of Florida that were heavily impacted by Hurricane Ian as customers continue to rebuild.
New boat revenue decreased 1.6%, driven by a decrease in unit sales, muted by an increase in average unit price. Pre-owned boat revenue increased 4.4% compared to the prior year quarter, driven by an increase in unit sales. Finance & insurance income decreased 4.0% compared to the prior year quarter. Service, Parts and other sales were up 86.3% compared to the prior year quarter, largely as a result of the Company’s strategic focus on expanding its high margin, less cyclical revenue streams.
Gross profit totaled $110.0 million for fiscal first quarter 2023, up $9.0 million from $101.0 million for fiscal first quarter 2022. Gross profit margin of 30.0% was flat compared to the prior year period, due primarily to the shift in the volume, mix and size of boat models sold during the quarter, offset by the significant increase in higher margin service, parts & other revenue.
Fiscal first quarter 2023 selling, general and administrative expenses totaled $77.8 million, or 21.2% of revenue, compared to $59.1 million, or 17.6% of revenue, in fiscal first quarter 2022. The increase in selling, general and administrative expenses as a percentage of revenue was due primarily to higher personnel expenses related to acquisitions as well as higher marketing expenses related to the increased boat show activity during the quarter.
Net income for fiscal first quarter 2023 totaled $11.4 million, compared to $23.5 million in fiscal first quarter 2022. Earnings per diluted share for fiscal first quarter 2023 was $0.61 per diluted share, compared to $1.45 per diluted share in 2022. For fiscal first quarter 2023, interest expense increased $10.0 million compared to the prior year driven by an increase in the average outstanding borrowings and higher interest rates.
Fiscal first quarter 2023 Adjusted EBITDA1 decreased 32.0% to $27.9 million compared to $41.0 million for first quarter 2022.
As of December 31, 2022, the Company’s cash and cash equivalents balance was $43.5 million and total liquidity, including cash and availability under credit facilities, was in excess of $100.0 million. Total inventory as of December 31, 2022, increased year-over-year to $527.0 million compared to $248.2 million on December 31, 2021, primarily driven by acquisitions completed during the year, the return of the traditional seasonal cycles where we build inventory in the winter months and the continued easing of industry-wide supply chain constraints.
Total long-term debt as of December 31, 2022, was $463.9 million, and adjusted long-term net debt (net of $43.5 million cash)1 was 1.8 times trailing twelve-month Adjusted EBITDA1.
Fiscal Year 2023 Guidance
The Company’s is updating its previously issued fiscal full year 2023 outlook. For fiscal full year 2023, OneWater now anticipates same store sales to be flat to up mid-single digits. Adjusted EBITDA2 is expected to be in the range of $200 million to $225 million and earnings per diluted share is expected to be in the range of $7.50 to $8.00.
Conference Call and Webcast
OneWater will host a conference call to discuss its fiscal first quarter earnings on Thursday, February 2, 2023, at 8:30 am Eastern time. To access the conference call via phone, participants will need to register using the following link where they will be provided a phone number and access code:
Alternatively, a live webcast of the conference call can be accessed through the “Events” section of the Company’s website at https://investor.onewatermarine.com/ where it will be archived for one year.
1 See reconciliation of Non-GAAP financial measures below.
2 See reconciliation of Non-GAAP financial measures below for a discussion of why reconciliations of forward-looking Adjusted EBITDA are not available without unreasonable effort.
About OneWater Marine Inc.
OneWater Marine Inc. is one of the largest and fastest-growing premium marine retailers in the United States. OneWater operates a total of 100 retail locations, 12 distribution centers / warehouses and multiple online marketplaces in 20 different states, several of which are in the top twenty states for marine retail expenditures. OneWater offers a broad range of products and services and has diversified revenue streams, which include the sale of new and pre-owned boats, finance and insurance products, parts and accessories, maintenance, repair and other services.