☑ |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
☐ |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Delaware
|
83-4330138
|
|
(State or other jurisdiction of incorporation or organization)
|
(IRS Employer Identification No.)
|
6275 Lanier Islands Parkway
Buford, Georgia
|
30518
|
|
(Address of principal executive offices)
|
(Zip code)
|
Title of Each Class
|
Trading Symbol(s)
|
Name of Each Exchange on Which
Registered |
||
Class A common stock, par value $0.01 per share
|
ONEW
|
The Nasdaq Global Market
|
Large accelerated filer
|
☐
|
Accelerated filer ☐
|
Non-accelerated filer
|
☒
|
Smaller reporting company ☒
|
Emerging growth company ☒
|
Page
|
|||
3
|
|||
5 |
|||
Item 1.
|
5 |
||
OneWater Marine Inc.
|
|||
5 |
|||
5 | |||
One Water Marine Holdings, LLC
|
|||
9
|
|||
10
|
|||
11
|
|||
12
|
|||
13
|
|||
Item 2.
|
27 | ||
Item 3.
|
46 | ||
Item 4.
|
46 | ||
47 | |||
Item 1.
|
47 | ||
Item 1A.
|
47 | ||
Item 2.
|
47 | ||
Item 3.
|
48 | ||
Item 4.
|
48 | ||
Item 5.
|
48 | ||
Item 6.
|
49 |
● |
general economic conditions, including changes in employment levels, consumer demand, preferences and confidence levels, fuel prices, levels of discretionary income and consumer spending patterns;
|
● |
economic conditions in certain geographic regions in which we primarily generate our revenue;
|
● |
credit markets and the availability and cost of borrowed funds;
|
● |
our business strategy, including acquisitions and same-store growth;
|
● |
our ability to integrate acquired dealer groups;
|
● |
our ability to maintain our relationships with manufacturers, including meeting the requirements of our dealer agreements and receiving the benefits of certain manufacturer incentives;
|
● |
our ability to finance working capital and capital expenditures;
|
● |
general domestic and international political and regulatory conditions, including changes in tax or fiscal policy and global public health concerns;
|
● |
our ability to maintain acceptable pricing for our products and services, including financing, insurance and extended service contracts;
|
● |
our operating cash flows, the availability of capital and our liquidity;
|
● |
our future revenue, same-store sales, income, financial condition, and operating performance;
|
● |
our ability to sustain and improve our utilization, revenue and margins;
|
● |
competition;
|
● |
seasonality and inclement weather such as hurricanes, severe storms, fire and floods, generally and in certain geographic regions in which we primarily generate our revenue;
|
● |
our ability to manage our inventory and retain key personnel;
|
● |
environmental conditions and real or perceived human health or safety risks;
|
● |
any potential tax savings we may realize as a result of our organizational structure;
|
● |
uncertainty regarding our future operating results and profitability; and
|
● |
plans, objectives, expectations and intentions that are not historical.
|
December 31, 2019
|
September 30, 2019
|
|||||||
(Unaudited)
(In whole dollars)
|
||||||||
Assets
|
||||||||
Cash
|
$
|
10
|
$
|
10
|
||||
Total assets:
|
$
|
10
|
$
|
10
|
||||
Liabilities and Stockholder’s Equity
|
||||||||
Commitments and Contingencies (Note 4)
|
||||||||
Stockholder’s Equity:
|
||||||||
Common stock, $0.01 par value per share, 1,000 shares authorized, 1,000 shares issued and outstanding at December 31, 2019 and September 30, 2019
|
$
|
10
|
$
|
10
|
||||
Total liabilities and stockholder’s equity:
|
$
|
10
|
$
|
10
|
1. |
Organization
|
2 |
Summary of Significant Accounting Policies
|
3 |
Stockholder’s Equity
|
4 |
Commitments and Contingencies
|
5 |
Subsequent Events
|
● |
OneWater LLC amended and restated its limited liability company agreement to, among other things, provide for a single class of common units representing ownership interests in OneWater LLC and provide a mechanism pursuant to which
LLC Unitholders may exchange LLC Units, together with an equal number of shares of Class B common stock of OneWater Inc, for shares of Class A common stock of OneWater Inc on a one-for-one basis or, at OneWater LLC’s elections, cash;
|
● |
OneWater Inc amended and restated its certificate of incorporation and bylaws to, among other things, provide for Class A and Class B common stock and Preferred stock;
|
● |
Legacy Owners (references made herein to “Legacy Owners” refer to the owners of OneWater LLC as they existed immediately prior to OneWater Inc’s public offering) exchanged their existing membership interests in OneWater LLC for LLC
Units;
|
● |
Certain Legacy Owners contributed, directly or indirectly, their OneWater LLC Units to OneWater Inc in exchange for 780,213 shares of Class A common stock;
|
● |
OneWater Inc issued 5,307,693 shares of Class A common stock (including the full exercise of the underwriters’ option to purchase additional shares of Class A common stock) to purchasers in the Offering in exchange for $59.2 million,
net of underwriting discounts and commissions;
|
● |
OneWater Inc contributed the $59.2 million of net proceeds of the Offering to OneWater LLC in exchange for an additional number of OneWater LLC Units such that OneWater Inc holds a total number of OneWater LLC Units equal to the
number of shares of Class A common stock outstanding following the Offering;
|
● |
OneWater LLC used the net proceeds, cash on hand and borrowings under the Amended and Restated Credit and Guaranty Agreement (the “Term and Revolver Credit Facility”) by and among OneWater Inc,
OneWater LLC and its subsidiaries, with Goldman Sachs Specialty Lending Group, L.P. (i) to pay $3.2 million to one Legacy Owner in exchange for the surrender of a preferred distribution right and (ii) to contribute cash to OWAO in
exchange for additional units therein, and OWAO used such cash to fully redeem the preferred interest in subsidiary held by Goldman Sachs & Co. LLC and certain of its affiliates (collectively, “Goldman”) and affiliates of The
Beekman Group (“Beekman”).
|
● |
OneWater Inc entered into a tax receivable agreement (the ‘‘Tax Receivable Agreement”) with certain of the Legacy Owners that will continue to be LLC Unitholders. The Tax Receivable Agreement generally provides for the payment by
OneWater Inc to such LLC Unitholders of 85% of the net cash savings, if any, in U.S. federal, state and local income 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 Offering as a result of, as applicable to each such LLC Unitholder, (i) certain increases in tax basis that occur as a result of OneWater Inc’s acquisition (or
deemed acquisition for U.S. federal income tax purposes) of all or a portion of such LLC Unitholder’s LLC Units pursuant to the exercise of the Redemption Right or the Call Right (each as defined in the Tax Receivable Agreement) or that
relate to prior transfers of such LLC Units that will be available to OneWater Inc as a result of its acquisitions of those units and (ii) imputed interest deemed to be paid by OneWater Inc as a result of, and additional tax basis
arising from, any payments OneWater Inc makes under the Tax Receivable Agreement. OneWater Inc will retain the benefit of the remaining 15% of these net cash savings;
|
● |
In connection with the Offering, the Board of Directors of OneWater Inc (the “Board”) adopted a long-term incentive plan (the “LTIP”) to incentivize individuals providing services to OneWater Inc and its subsidiaries and affiliates.
The total number of shares reserved for issuance under the LTIP that may be issued pursuant to incentive stock options (which generally are stock options that meet the requirements of Section 422 of the code) is 1,385,799. The LTIP will be administered by the Board, except to the extent the Board elects a committee of directors to administer the LTIP;
|
● |
In connection with the consummation of the Offering, OneWater Inc granted to its named executive officers equity-based awards under the LTIP, which consist of (i) 17,333 restricted stock units subject
to time-based vesting (“RSUs”) for each of Messrs. Singleton (Chief Executive Officer) and Aisquith (Chief Operating Officer), and (ii) 10,000 RSUs for Mr. Ezzell (Chief Financial Officer).
|
● |
OneWater Inc’s shareholders purchasing in the Offering collectively own approximately 5.3 million shares of the Class A common stock;
|
● |
Legacy Owners collectively own approximately 0.8 million shares of the Class A common stock;
|
● |
LLC Unitholders own approximately 8.5 million LLC Units and approximately 8.5 million shares of Class B common stock;
|
● |
the Class A common stock collectively represents 100% of the economic interest and approximately 42% of the voting power in OneWater Inc; and
|
● |
the Class B common stock collectively represents approximately 58% of the voting power in OneWater Inc.
|
December 31,
2019
|
September 30,
2019
|
|||||||
($ in thousands)
(Unaudited)
|
||||||||
Assets
|
||||||||
Current assets:
|
||||||||
Cash
|
$
|
10,461
|
$
|
11,108
|
||||
Restricted cash
|
250
|
384
|
||||||
Accounts receivable
|
9,574
|
15,294
|
||||||
Inventories
|
313,837
|
277,338
|
||||||
Prepaid expenses and other current assets
|
11,945
|
9,969
|
||||||
Total current assets
|
346,067
|
314,093
|
||||||
Property and equipment, net
|
17,489
|
15,954
|
||||||
Other assets:
|
||||||||
Deposits
|
345
|
345
|
||||||
Identifiable intangible assets
|
61,304
|
61,304
|
||||||
Goodwill
|
113,059
|
113,059
|
||||||
Total other assets
|
174,708
|
174,708
|
||||||
Total assets:
|
$
|
538,264
|
$
|
504,755
|
||||
Liabilities and Members’ Equity
|
||||||||
Current liabilities:
|
||||||||
Accounts payable
|
$
|
5,610
|
$
|
5,546
|
||||
Other payables and accrued expenses
|
14,188
|
16,567
|
||||||
Customer deposits
|
7,736
|
4,880
|
||||||
Notes payable – floor plan
|
264,481
|
225,377
|
||||||
Current portion of long-term debt
|
6,823
|
11,124
|
||||||
Total current liabilities
|
298,838
|
263,494
|
||||||
Long-term Liabilities:
|
||||||||
Other long-term liabilities
|
1,569
|
1,598
|
||||||
Warrant liability
|
50,116
|
50,887
|
||||||
Long-term debt, net of current portion and unamortized debt issuance costs
|
67,013
|
64,789
|
||||||
Total liabilities
|
417,536
|
380,768
|
||||||
Redeemable preferred interest in subsidiary
|
87,053
|
86,018
|
||||||
Members’ Equity:
|
||||||||
Members’ Equity attributable to One Water Marine Holdings, LLC
|
27,961
|
31,770
|
||||||
Equity attributable to non-controlling interests
|
5,714
|
6,199
|
||||||
Total liabilities and Members’ Equity:
|
$
|
538,264
|
$
|
504,755
|
For the three months ended December 31
|
2019
|
2018
|
||||||
($ in thousands except share and per
share data)
(Unaudited)
|
||||||||
Revenues
|
||||||||
New boat sales
|
$
|
98,102
|
$
|
67,564
|
||||
Pre-owned boat sales
|
37,821
|
19,914
|
||||||
Finance & insurance income
|
4,325
|
2,164
|
||||||
Service, parts & other sales
|
13,450
|
13,636
|
||||||
Total revenues
|
153,698
|
103,278
|
||||||
Cost of sales (exclusive of depreciation and amortization shown separately below)
|
||||||||
New boat cost of sales
|
81,601
|
55,322
|
||||||
Pre-owned boat cost of sales
|
32,220
|
16,881
|
||||||
Service, parts & other cost of sales
|
7,688
|
7,756
|
||||||
Total cost of sales
|
121,509
|
79,959
|
||||||
Selling, general and administrative expenses
|
28,440
|
21,629
|
||||||
Depreciation and amortization
|
760
|
607
|
||||||
Income from operations
|
2,989
|
1,083
|
||||||
Other expense (income)
|
||||||||
Interest expense – floor plan
|
2,659
|
1,787
|
||||||
Interest expense – other
|
1,853
|
1,228
|
||||||
Transaction costs
|
437
|
298
|
||||||
Change in fair value of warrant liability
|
(771
|
)
|
(4,695
|
)
|
||||
Other income, net
|
(122
|
)
|
(45
|
)
|
||||
Total other expense (income), net
|
4,056
|
(1,427
|
)
|
|||||
Net (loss) income
|
(1,067
|
)
|
2,510
|
|||||
Less: Net income attributable to non-controlling interest
|
247
|
277
|
||||||
Net (loss) income attributable to One Water Marine Holdings, LLC
|
(1,314
|
)
|
2,233
|
|||||
Redeemable preferred interest, dividends and accretion
|
2,345
|
2,214
|
||||||
OneWater LLC preferred distribution
|
49
|
47
|
||||||
Net loss attributable to common interest holders
|
$
|
(3,708
|
)
|
$
|
(28
|
) |
||
Loss per unit attributable to common interest holders:
|
||||||||
Basic
|
$
|
(48.42
|
)
|
$
|
(0.37
|
) |
||
Diluted
|
$
|
(48.42
|
)
|
$
|
(0.37
|
) |
($ in thousands)
(Unaudited)
|
|||||||||||||||||
Members’ Equity
|
|||||||||||||||||
Redeemable
Preferred
Interest in
Subsidiary
|
Common
Interest
|
Non-
controlling
interest in
Subsidiary
|
Total
Members’
Equity
|
||||||||||||||
Balance at September 30, 2018
|
$
|
79,965
|
$
|
15,963
|
$
|
5,093
|
$
|
21,056
|
|||||||||
Net income
|
-
|
2,233
|
277
|
2,510
|
|||||||||||||
Distributions to members
|
(823
|
)
|
(126
|
)
|
(500
|
)
|
(626
|
)
|
|||||||||
Accumulated unpaid preferred returns
|
2,057
|
(2,057
|
)
|
-
|
(2,057
|
)
|
|||||||||||
Accretion of redeemable preferred and issuance costs
|
157
|
(157
|
)
|
-
|
(157
|
)
|
|||||||||||
Equity-based compensation
|
-
|
39
|
-
|
39
|
|||||||||||||
Balance at December 31, 2018
|
$
|
81,356
|
$
|
15,895
|
$
|
4,870
|
$
|
20,765
|
Members’ Equity
|
|||||||||||||||||
Redeemable
Preferred
Interest in
Subsidiary
|
Common
Interest
|
Non-
controlling
interest in
Subsidiary
|
Total
Members’
Equity
|
||||||||||||||
Balance at September 30, 2019
|
$
|
86,018
|
$
|
31,770
|
$
|
6,199
|
$
|
37,969
|
|||||||||
Net (loss) income
|
-
|
(1,314
|
)
|
247
|
(1,067
|
)
|
|||||||||||
Distributions to members
|
(1,310
|
)
|
(189
|
)
|
(732
|
)
|
(921
|
)
|
|||||||||
Accumulated unpaid preferred returns
|
2,183
|
(2,183
|
)
|
-
|
(2,183
|
)
|
|||||||||||
Accretion of redeemable preferred and issuance costs
|
162
|
(162
|
)
|
-
|
(162
|
)
|
|||||||||||
Equity-based compensation
|
-
|
39
|
-
|
39
|
|||||||||||||
Balance at December 31, 2019
|
$
|
87,053
|
$
|
27,961
|
$
|
5,714
|
$
|
33,675
|
For the three months ended December 31
|
2019
|
2018
|
||||||
($ in thousands)
(Unaudited)
|
||||||||
Cash flows from operating activities
|
||||||||
Net (loss) income
|
$
|
(1,067
|
)
|
$
|
2,510
|
|||
Adjustments to reconcile net (loss) income to net cash used in operating activities:
|
||||||||
Depreciation and amortization
|
760
|
607
|
||||||
Equity-based awards
|
39
|
39
|
||||||
(Gain) loss on asset disposals
|
(143
|
)
|
27
|
|||||
Change in fair value of long-term warrant liability
|
(771
|
)
|
(4,695
|
)
|
||||
Non-cash interest expense
|
1,721
|
708
|
||||||
(Increase) decrease in assets:
|
||||||||
Accounts receivable
|
5,720
|
1,553
|
||||||
Inventories
|
(36,499
|
)
|
(60,179
|
)
|
||||
Prepaid expenses and other current assets
|
70
|
(566
|
)
|
|||||
Deposits
|
-
|
22
|
||||||
Increase (decrease) in liabilities:
|
||||||||
Accounts payable
|
64
|
(2,066
|
)
|
|||||
Other payables and accrued expenses
|
(1,472
|
)
|
(1,331
|
)
|
||||
Customer deposits
|
2,855
|
1,639
|
||||||
Net cash used in operating activities
|
(28,723
|
)
|
(61,732
|
)
|
||||
Cash flows from investing activities
|
||||||||
Purchases of property and equipment and construction in progress
|
(1,997
|
)
|
(1,979
|
)
|
||||
Proceeds on disposal of property and equipment
|
235
|
27
|
||||||
Cash used in acquisitions
|
-
|
(1,567
|
)
|
|||||
Net cash used in investing activities
|
(1,762
|
)
|
(3,519
|
)
|
||||
Cash flows from financing activities
|
||||||||
Net borrowings from floor plan
|
39,105
|
55,728
|
||||||
Proceeds from long-term debt
|
-
|
3,000
|
||||||
Payments on long-term debt
|
(2,504
|
)
|
(127
|
)
|
||||
Payments of debt issuance costs
|
(79
|
)
|
-
|
|||||
Payments of deferred offering costs
|
(3,547
|
)
|
-
|
|||||
Payment of acquisition contingent consideration
|
(1,040
|
)
|
-
|
|||||
Distributions to redeemable preferred interest members
|
(1,310
|
)
|
(823
|
)
|
||||
Distributions to members
|
(921
|
)
|
(626
|
)
|
||||
Net cash provided by financing activities
|
29,704
|
57,152
|
||||||
Net change in cash
|
(781
|
)
|
(8,099
|
)
|
||||
Cash and restricted cash at beginning of period
|
11,492
|
15,757
|
||||||
Cash and restricted cash at end of period
|
$
|
10,711
|
$
|
7,658
|
||||
Supplemental cash flow disclosures
|
||||||||
Cash paid for interest
|
$
|
2,791
|
$
|
2,307
|
||||
Noncash items
|
||||||||
Acquisition purchase price funded by seller notes payable
|
$
|
-
|
$
|
6,354
|
||||
Purchase of property and equipment funded by long-term debt
|
419
|
293
|
1. |
Description of Company and Basis of Presentation
|
2. |
Summary of Significant Accounting Policies
|
Three Months
Ended December
31, 2019
|
||||
Beginning contract liability
|
$
|
4,880
|
||
Revenue recognized from contract liabilities included in the beginning balance
|
(4,673 | ) |
||
Increases due to cash received, net of amounts recognized in revenue during the period
|
7,529 | |||
Ending contract liability
|
$
|
7,736
|
Three Months Ended
December 31, 2019
|
||||
Goods and services transferred at a point in time
|
94.9
|
%
|
||
Goods and services transferred over time
|
5.1
|
%
|
||
Total Revenue
|
100.0
|
%
|
For the three months ended December 31
|
2019
|
2018
|
||||||
Common units outstanding
|
76,573
|
75,816
|
||||||
Weighted average common unit equivalents outstanding
|
26,545
|
27,217
|
||||||
Diluted common unit equivalents
|
103,118
|
103,033
|
3. |
New Accounting Pronouncements
|
4. |
Acquisitions
|
($ in thousands)
|
Three months
ended
December 31,
2018
|
|||
Prepaid expenses
|
$
|
26
|
||
Inventory
|
6,726
|
|||
Property and equipment
|
3
|
|||
Identifiable intangible assets
|
3,003
|
|||
Goodwill
|
3,348
|
|||
Liabilities assumed
|
(5,185
|
)
|
||
Total purchase price
|
$
|
7,921
|
5. |
Inventories
|
($ in thousands)
|
December 31,
2019
|
September 30,
2019
|
||||||
New vessels
|
$
|
268,552
|
$
|
234,312
|
||||
Pre-owned vessels
|
35,169
|
33,729
|
||||||
Work in process, parts and accessories
|
10,116
|
9,297
|
||||||
$
|
313,837
|
$
|
277,338
|
6. |
Goodwill and Other Identifiable Intangible Assets
|
7. |
Notes Payable — Floor Plan
|
8. |
Long-term Debt and Line of Credit
|
($ in thousands)
|
December 31,
2019
|
September 30,
2019
|
||||||
Multi-draw term note payable to Goldman Sachs Specialty Lending Group, L.P. and OWM BIP Investor, LLC, secured and bearing interest at 10.0% per annum. Refinanced on February 11, 2020. See
Note 13 for further details
|
$
|
57,203
|
$
|
58,000
|
||||
Revolving note payable for an amount up to $5.0 million to Goldman Sachs Specialty Lending Group, L.P. and OWM BIP Investor, LLC, secured and bearing interest at 10.0% per annum. Refinanced on
February 11, 2020. See Note 13 for further details
|
-
|
-
|
||||||
Note payable to Rambo Marine, Inc., unsecured and bearing interest at 7.5% per annum. The note requires annual interest payments, with a balloon payment of principal due on July 1, 2020
|
3,133
|
3,133
|
||||||
Note payable to commercial vehicle lenders secured by the value of the vehicles bearing interest at rates ranging from 0.0% to 8.9% per annum. The note requires monthly installment payments of
principal and interest ranging from $100 to $5,600 through July 2025
|
2,482
|
2,371
|
||||||
Note payable to Central Marine Services, Inc., unsecured and bearing interest at 5.5% per annum. The note requires monthly interest payments, with a balloon payment of principal due on
February 1, 2022
|
2,164
|
2,164
|
||||||
Note payable to Marina Mikes, LLC, unsecured and bearing interest at 5.0% per annum. The note requires annual interest payments, with a balloon payment of principal due on June 1, 2020
|
2,125
|
2,125
|
||||||
Note payable to Ocean Blue Yacht Sales, unsecured and bearing interest at 5.0% per annum. The note requires quarterly interest payments, with a balloon payment of principal due on February 1,
2022
|
1,920
|
1,920
|
||||||
Note payable to Lab Marine, Inc., unsecured and bearing interest at 6.0% per annum. The note requires annual interest payments, with a balloon payment of principal due on March 1, 2021
|
1,500
|
1,500
|
||||||
Note payable to Sunrise Marine, Inc. and Sunrise Marine of Alabama, Inc., unsecured and bearing interest at 6.0% per annum. The note was repaid in full
|
-
|
1,400
|
||||||
Note payable to Slalom Shop, LLC, unsecured and bearing interest at 5.0% per annum. The note requires quarterly interest payments, with a balloon payment of principal due on December 1, 2021
|
1,271
|
1,271
|
||||||
Note payable to Bosun’s Marine, Inc., unsecured and bearing interest at 4.5% per annum. The note requires annual interest payments with a balloon payment due on June 1, 2021
|
1,227
|
1,227
|
||||||
Note payable to Rebo, Inc., unsecured and bearing interest at 5.5% per annum. The note requires annual interest payments with a balloon payment due on April 1, 2021
|
1,000
|
1,000
|
||||||
Note payable to Texas Marine, Inc., unsecured and bearing interest at 4.5% per annum. The note requires annual interest payments, with a balloon payment of principal due on August 1, 2020
|
815
|
815
|
||||||
74,840
|
76,926
|
|||||||
Less current portion
|
(6,823
|
)
|
(11,124
|
)
|
||||
Less unamortized portion of debt issuance costs
|
(1,004
|
)
|
(1,013
|
)
|
||||
$
|
67,013
|
$
|
64,789
|
9. |
Members’ Equity
|
Units
Outstanding |
Equity Interest
|
|||||||
Common Voting Membership Interests (Class A)
|
73,140
|
73.1
|
%
|
|||||
Common Non-Voting Membership Interests (Class B)
|
1,860
|
1.9
|
%
|
|||||
Investor Voting Warrants
|
25,000
|
25.0
|
%
|
|||||
100,000
|
100.0
|
%
|
10. |
Redeemable Preferred Interest in Subsidiary
|
11. |
Contingencies and Commitments
|
12. |
Related Party Transactions
|
13. |
Subsequent events
|
• |
Effective December 1, 2018, OneWater LLC acquired substantially all of the assets of The Slalom Shop, LLC, a dealer group based in Texas with two stores.
|
• |
Effective February 1, 2019, OneWater LLC acquired substantially all of the assets of Ray Clepper, Inc., d/b/a Ray Clepper Boat Center, a dealer group based in South Carolina with one store.
|
• |
Effective February 1, 2019, OneWater LLC acquired substantially all of the assets of Ocean Blue Yacht Sales, LLC, a dealer group based in Florida with three stores.
|
• |
Effective May 1, 2019, OneWater LLC acquired substantially all of the assets of Caribee Boat Sales and Marina, Inc., a dealer group based in Florida with one store.
|
• |
Effective August 1, 2019, OneWater LLC acquired substantially all of the assets of Central Marine, a dealer group based in Florida with three stores.
|
• |
OneWater Inc. is subject to U.S. federal, state and local income taxes as a corporation. Our accounting predecessor, OneWater LLC, was and is treated as a partnership for U.S. federal income tax purposes,
and as such, was generally not subject to U.S. federal income tax at the entity level. Rather, the tax liability with respect to its taxable income is passed through to its members. Accordingly, the financial data attributable to
our predecessor contains no provision for U.S. federal income taxes or income taxes in any state or locality. We currently estimate that OneWater Inc. will be subject to U.S. federal, state and local taxes at a blended statutory
rate of 24.6% of pre-tax earnings for periods after the Offering.
|
• |
As of December 31, 2019, the outstanding balance of the preferred units in One Water Assets & Operations, LLC (“Opco”) held by Goldman and Beekman in the aggregate was $88.2 million, exclusive of $1.1
million in issuance costs. On a pro forma basis giving effect to the Offering and the use of net proceeds therefrom, together with cash on hand and borrowings under the Term and Revolver Credit Facility, to fully redeem these
preferred units, we expect to eliminate the amount recorded as Redeemable Preferred Interest in Subsidiary in our balance sheet and eliminate any future dividends related to the preferred units for all periods after the Offering.
|
• |
As of December 31, 2019, Goldman and Beekman held the LLC Warrants, which contain conversion features that cause them to be accounted for as a liability on our balance sheet. Changes in this liability are
recognized as income or expense on our statements of operations and increase or reduce our net income in historical periods. In connection with the Offering, Goldman and Beekman exercised all of the LLC Warrants for common units of
OneWater LLC. On a pro forma basis giving effect to the Offering and the exercise of the LLC Warrants for common units of OneWater LLC held by Goldman and Beekman, we expect to eliminate the fair value adjustment for the LLC
Warrants for all periods after the Offering, which will eliminate the corresponding impact on our statements of operations.
|
• |
As we further implement controls, processes and infrastructure applicable to companies with publicly traded equity securities, it is likely that we will incur additional SG&A expenses relative to
historical periods. See ‘‘—Post-Offering Taxation and Public Company Costs.’’
|
For the three months
ended December 31,
2019
|
For the three months
ended September 30,
2019
|
|||||||||||||||||||||||
Amount
|
% of Revenue
|
Amount
|
% of Revenue
|
$ Change
|
% Change
|
|||||||||||||||||||
Revenues
|
||||||||||||||||||||||||
New boat sales
|
$
|
98,102
|
63.8
|
%
|
$ |
67,564
|
65.4
|
%
|
$ |
30,538
|
45.2
|
%
|
||||||||||||
Pre-owned boat sales
|
37,821
|
24.6
|
%
|
19,914
|
19.3
|
%
|
17,907
|
89.9
|
%
|
|||||||||||||||
Finance & insurance income
|
4,325
|
2.8
|
%
|
2,164
|
2.1
|
%
|
2,161
|
99.9
|
%
|
|||||||||||||||
Service, parts and other sales
|
13,450
|
8.8
|
%
|
13,636
|
13.2
|
%
|
(186
|
)
|
-1.4
|
%
|
||||||||||||||
Total revenues
|
153,698
|
100.0
|
%
|
103,278
|
100.0
|
%
|
50,420
|
48.8
|
%
|
|||||||||||||||
Gross Profit
|
||||||||||||||||||||||||
New boat gross profit
|
16,501
|
10.7
|
%
|
12,242
|
11.9
|
%
|
4,259
|
34.8
|
%
|
|||||||||||||||
Pre-owned boat gross profit
|
5,601
|
3.6
|
%
|
3,033
|
2.9
|
%
|
2,568
|
84.7
|
%
|
|||||||||||||||
Finance & insurance gross profit
|
4,325
|
2.8
|
%
|
2,164
|
2.1
|
%
|
2,161
|
99.9
|
%
|
|||||||||||||||
Service, parts & other gross profit
|
5,762
|
3.7
|
%
|
5,880
|
5.7
|
%
|
(118
|
)
|
-2.0
|
%
|
||||||||||||||
Gross profit
|
32,189
|
20.9
|
%
|
23,319
|
22.6
|
%
|
8,870
|
38.0
|
%
|
|||||||||||||||
Selling, general and administrative expenses
|
28,440
|
18.5
|
%
|
21,629
|
20.9
|
%
|
6,811
|
31.5
|
%
|
|||||||||||||||
Depreciation and amortization
|
760
|
0.5
|
%
|
607
|
0.6
|
%
|
153
|
25.2
|
%
|
|||||||||||||||
Income from operations
|
2,989
|
1.9
|
%
|
1,083
|
1.0
|
%
|
1,906
|
176.0
|
%
|
|||||||||||||||
Interest expense - floor plan
|
2,659
|
1.7
|
%
|
1,787
|
1.7
|
%
|
872
|
48.8
|
%
|
|||||||||||||||
Interest expense - other
|
1,853
|
1.2
|
%
|
1,228
|
1.2
|
%
|
625
|
50.9
|
%
|
|||||||||||||||
Transaction costs
|
437
|
0.3
|
%
|
298
|
0.3
|
%
|
139
|
46.6
|
%
|
|||||||||||||||
Change in fair value of warrant liability
|
(771
|
)
|
-0.5
|
%
|
(4,695
|
)
|
-4.5
|
%
|
3,924
|
-83.6
|
%
|
|||||||||||||
Other income, net
|
(122
|
)
|
-0.1
|
%
|
(45
|
)
|
0.0
|
%
|
(77
|
)
|
171.1
|
%
|
||||||||||||
Pretax (loss) income
|
(1,067
|
)
|
-0.7
|
%
|
2,510
|
2.4
|
%
|
(3,577
|
)
|
-142.5
|
%
|
|||||||||||||
Income taxes
|
-
|
0.0
|
%
|
-
|
0.0
|
%
|
-
|
0.0
|
%
|
|||||||||||||||
Net (loss) income
|
(1,067
|
)
|
-0.7
|
%
|
2,510
|
2.4
|
%
|
(3,577
|
)
|
-142.5
|
%
|
|||||||||||||
Less: Net income attributable to non-controlling interest
|
247
|
0.2
|
%
|
277
|
0.3
|
%
|
(30
|
)
|
-10.8
|
%
|
||||||||||||||
Net (loss) income attributable to OneWater Marine Holdings, LLC
|
$ |
(1,314
|
)
|
-0.9
|
%
|
$ |
2,233
|
2.2
|
%
|
$ |
(3,547
|
)
|
-158.8
|
%
|
Description
|
Three months ended
December 31
|
|||||||
2019
|
2018
|
|||||||
($ in thousands)
|
||||||||
Net (loss) income
|
$
|
(1,067
|
)
|
$
|
2,510
|
|||
Interest expense – other
|
1,853
|
1,228
|
||||||
Income taxes
|
-
|
-
|
||||||
Depreciation and amortization
|
760
|
607
|
||||||
Gain on settlement of contingent consideration
|
-
|
-
|
||||||
Transaction costs (1)
|
437
|
298
|
||||||
Change in fair value of warrant liability (2)
|
(771
|
)
|
(4,695
|
)
|
||||
Other income, net
|
(122
|
)
|
(45
|
)
|
||||
Adjusted EBITDA
|
$
|
1,090
|
$
|
(97
|
)
|
(1) |
Consists of transaction costs related to the fiscal year 2019 Acquisitions.
|
(2) |
Represents the non-cash expense recognized during the period for the change in the fair value of the LLC Warrants held by Goldman and Beekman, which are accounted for as a liability on our balance sheets.
|
Three Months ended December 31,
|
||||||||||||
Description
|
2019
|
2018
|
Change
|
|||||||||
($ in thousands)
|
||||||||||||
Net cash used in operating activities
|
$
|
(28,723
|
)
|
$
|
(61,732
|
)
|
$
|
33,009
|
||||
Net cash used in investing activities
|
(1,762
|
)
|
(3,519
|
)
|
1,757
|
|||||||
Net cash provided by financing activities
|
29,704
|
57,152
|
(27,448
|
)
|
||||||||
Net change in cash
|
$
|
(781
|
)
|
$
|
(8,099
|
)
|
$
|
7,318
|
Applicable
Cash Rate
|
Applicable
PIK Rate
|
|||||||
October 28, 2016 through October 31, 2018
|
0.00
|
%
|
10.00
|
%
|
||||
November 1, 2018 through October 31, 2019
|
4.00
|
%
|
6.00
|
%
|
||||
November 1, 2019 through October 31, 2020
|
6.00
|
%
|
4.00
|
%
|
||||
November 1, 2020 through the maturity date and thereafter
|
8.00
|
%
|
2.00
|
%
|
Exhibit No.
|
Description
|
|
2.1¥
|
Master Reorganization Agreement, dated as of February 11, 2020, by and among One Water Marine Holdings, LLC, One Water Assets & Operations, LLC, OneWater Marine Inc. and the other parties thereto (incorporated by reference to
Exhibit 2.1 to the Registrant’s Current Report on Form 8-K, File No. 001-39213, filed with the Commission on February 18, 2020).
|
|
Amended and Restated Certificate of Incorporation of OneWater Marine Inc. (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K, File No. 001-39213, filed with the Commission on February 18, 2020).
|
||
Amended and Restated Bylaws of OneWater Marine Inc. (incorporated by reference to Exhibit 3.2 to the Registrant’s Current Report on Form 8-K, File No. 001-39213, filed with the Commission on February 18, 2020).
|
||
Registration Rights Agreement, dated as of February 11, 2020, by and among OneWater Marine Inc. and the stockholders named therein (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K, File No.
001-39213, filed with the Commission on February 18, 2020).
|
||
Indemnification Agreement (Austin Singleton) (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, File No. 001-39213, filed with the Commission on February 10, 2020).
|
||
Indemnification Agreement (Anthony Aisquith) (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K, File No. 001-39213, filed with the Commission on February 10, 2020).
|
||
Indemnification Agreement (Jack Ezzell) (incorporated by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K, File No. 001-39213, filed with the Commission on February 10, 2020).
|
||
Indemnification Agreement (Christopher W. Bodine) (incorporated by reference to Exhibit 10.4 to the Registrant’s Current Report on Form 8-K, File No. 001-39213, filed with the Commission on February 10, 2020).
|
||
Indemnification Agreement (Jeffrey B. Lamkin) (incorporated by reference to Exhibit 10.5 to the Registrant’s Current Report on Form 8-K, File No. 001-39213, filed with the Commission on February 10, 2020).
|
||
Indemnification Agreement (Mitchell W. Legler) (incorporated by reference to Exhibit 10.6 to the Registrant’s Current Report on Form 8-K, File No. 001-39213, filed with the Commission on February 10, 2020).
|
||
Indemnification Agreement (John F. Schraudenbach) (incorporated by reference to Exhibit 10.7 to the Registrant’s Current Report on Form 8-K, File No. 001-39213, filed with the Commission on February 10, 2020).
|
Indemnification Agreement (Keith R. Style) (incorporated by reference to Exhibit 10.8 to the Registrant’s Current Report on Form 8-K, File No. 001-39213, filed with the Commission on February 10, 2020).
|
||
Indemnification Agreement (John G. Troiano) (incorporated by reference to Exhibit 10.9 to the Registrant’s Current Report on Form 8-K, File No. 001-39213, filed with the Commission on February 10, 2020).
|
||
Tax Receivable Agreement, dated as of February 11, 2020, by and among OneWater Marine Inc. and the TRA Holders and the Agents named therein (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K,
File No. 001-39213, filed with the Commission on February 18, 2020).
|
||
Fourth Amended and Restated Limited Liability Company Agreement of One Water Marine Holdings, LLC, dated as of February 11, 2020 (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K, File No.
001-39213, filed with the Commission on February 18, 2020).
|
||
10.12#¥
|
Amended and Restated Credit and Guaranty Agreement, dated as of February 11, 2020, by and among the Company, certain of its subsidiaries, the various lenders from time to time party thereto and Goldman Sachs Specialty Lending Group,
L.P., as administrative agent, collateral agent, syndication agent, documentation agent and lead arranger (incorporated by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K, File No. 001-39213, filed with the
Commission on February 18, 2020).
|
|
10.13#¥
|
Sixth Amended and Restated Inventory Financing Agreement, dated as of February 11, 2020, by and among the Company, certain of its subsidiaries, the lenders party thereto from time to time and Wells Fargo Commercial Distribution
Finance, LLC, in its individual capacity and as agent for the lenders and for itself (incorporated by reference to Exhibit 10.4 to the Registrant’s Current Report on Form 8-K, File No. 001-39213, filed with the Commission on February
18, 2020).
|
|
OneWater Marine Inc. 2020 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.5 to the Registrant’s Current Report on Form 8-K, File No. 001-39213, filed with the Commission on February 18, 2020).
|
||
Employment Agreement, dated as of February 11, 2020, between One Water Marine Holdings, LLC and Philip A. Singleton, Jr. (incorporated by reference to Exhibit 10.6 to the Registrant’s Current Report on Form 8-K, File No. 001-39213,
filed with the Commission on February 18, 2020).
|
||
Employment Agreement, dated as of February 11, 2020, between One Water Marine Holdings, LLC and Anthony Aisquith (incorporated by reference to Exhibit 10.7 to the Registrant’s Current Report on Form 8-K, File No. 001-39213, filed
with the Commission on February 18, 2020).
|
||
Employment Agreement, dated as of February 11, 2020, between One Water Marine Holdings, LLC and Jack Ezzell (incorporated by reference to Exhibit 10.8 to the Registrant’s Current Report on Form 8-K, File No. 001-39213, filed with the
Commission on February 18, 2020).
|
||
Form of Performance-Based Restricted Stock Unit Agreement (incorporated by reference to Exhibit 10.19 to the amendment to the Registrant’s Form S-1 Registration Statement (File No. 333-232639), originally filed with the Commission on
July 12, 2019).
|
Form of Restricted Stock Unit Agreement (incorporated by reference to Exhibit 10.20 to the amendment to the Registrant’s Form S-1 Registration Statement (File No. 333-232639), originally filed with the Commission on July 12, 2019).
|
||
31.1*
|
Certification of the Chief Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a).
|
|
31.2*
|
Certification of the Chief Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a).
|
|
32.1**
|
Certification of the Chief Executive Officer required by Rule 13a-14(b) or Rule 15d-14(b) and 18 U.S.C. 1350.
|
|
32.2**
|
Certification of the Chief Financial Officer required by Rule 13a-14(b) or Rule 15d-14(b) and 18 U.S.C. 1350.
|
|
101.INS(a)
|
XBRL Instance Document.
|
|
101.SCH(a)
|
XBRL Schema Document.
|
|
101.CAL(a)
|
XBRL Calculation Linkbase Document.
|
|
101.DEF(a)
|
XBRL Definition Linkbase Document.
|
|
101.LAB(a)
|
XBRL Labels Linkbase Document.
|
|
101.PRE(a)
|
XBRL Presentation Linkbase Document.
|
* |
Filed herewith.
|
* |
Furnished herewith.
|
† |
Compensatory plan or arrangement.
|
# |
Specific terms in this exhibit (indicated therein by asterisks) have been omitted because such terms are both not material and would likely cause competitive harm to the Company if publicly disclosed.
|
¥ |
Certain schedules and exhibits to this agreement have been omitted in accordance with Item 601(a)(5) of Regulation S-K. A copy of any omitted schedule and/or exhibit will be furnished to the Securities and Exchange Commission on
request.
|
ONEWATER MARINE INC.
|
||
(Registrant)
|
||
By:
|
/s/ Philip Austin Singleton, Jr.
|
|
Philip Austin Singleton, Jr.
|
||
Chief Executive Officer
|
||
By:
|
/s/ Jack Ezzell
|
|
Jack Ezzell
|
||
Chief Financial Officer
|
||
Date: March 20, 2020
|
1. |
I have reviewed this Quarterly Report on Form 10-Q of OneWater Marine Inc. (the “registrant”) for the quarter ended December 31, 2019;
|
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made,
not misleading with respect to the period covered by this report;
|
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of,
and for, the periods presented in this report;
|
4. |
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
|
a. |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b. |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by
this report based on such evaluation; and
|
c. |
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report)
that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5. |
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of
directors (or persons performing the equivalent functions):
|
a. |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and
report financial information; and
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b. |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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By:
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/s/ Philip Austin Singleton, Jr.
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|
Philip Austin Singleton, Jr.
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||
Chief Executive Officer
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||
(Principal Executive Officer)
|
1. |
I have reviewed this Quarterly Report on Form 10-Q of OneWater Marine Inc. (the “registrant”) for the quarter ended December 31, 2019;
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2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made,
not misleading with respect to the period covered by this report;
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3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of,
and for, the periods presented in this report;
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4. |
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
|
a. |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b. |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by
this report based on such evaluation; and
|
c. |
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report)
that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5. |
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of
directors (or persons performing the equivalent functions):
|
a. |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and
report financial information; and
|
b. |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Dated: March 20, 2020
|
By:
|
/s/ Jack Ezzell
|
Jack Ezzell
|
||
Chief Financial Officer
|
||
(Principal Financial Officer)
|
1. |
the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
2. |
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Dated: March 20, 2020
|
By:
|
/s/ Philip Austin Singleton, Jr.
|
Philip Austin Singleton, Jr.
|
||
Chief Executive Officer
|
||
(Principal Executive Officer)
|
1. |
the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
2. |
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Dated: March 20, 2020
|
By:
|
/s/ Jack Ezzell
|
Jack Ezzell
|
||
Chief Financial Officer
|
||
(Principal Financial Officer)
|