☒
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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☐ |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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83-4330138
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(State or other jurisdiction of incorporation or organization)
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(IRS Employer Identification No.)
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6275 Lanier Islands Parkway
Buford, Georgia
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30518
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(Address of principal executive offices)
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(Zip Code)
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Title of Each Class
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Trading Symbol(s)
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Name of Each Exchange on Which Registered
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||
Class A common stock, par value $0.01 per share
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ONEW
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The Nasdaq Global Market
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Large accelerated filer ☐
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Accelerated filer ☐
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Non-accelerated filer ☒
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Smaller reporting company ☒
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Emerging growth company ☒
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PART I
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Item 1.
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3
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Item 1A.
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18
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Item 1B.
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46
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Item 2.
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46
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Item 3.
|
47 | ||
Item 4.
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47 | ||
PART II
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|||
Item 5.
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48
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Item 6.
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48
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Item 7.
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50
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Item 7A.
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75
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Item 8.
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76 | ||
Item 9.
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106
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Item 9A.
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106 | ||
Item 9B.
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106 | ||
PART III
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Item 10.
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107 | ||
Item 11.
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107 | ||
Item 12.
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107 | ||
Item 13.
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107 | ||
Item 14.
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107 | ||
PART IV
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Item 15.
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108 |
Item 16.
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111 |
• |
the impact of COVID-19 on our business and results of operations;
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• |
general economic conditions, including changes in employment levels, consumer demand, preferences and confidence levels, fuel prices, levels of discretionary income, consumer spending patterns and uncertainty regarding the timing, pace
and extent of an economic recovery in the United States;
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• |
economic conditions in certain geographic regions in which we primarily generate our revenue;
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• |
credit markets and the availability and cost of borrowed funds;
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• |
our business strategy, including acquisitions and same-store growth;
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• |
our ability to integrate acquired dealer groups;
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• |
our ability to maintain our relationships with manufacturers, including meeting the requirements of our dealer agreements and receiving the benefits of certain manufacturer incentives;
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• |
our ability to finance working capital and capital expenditures;
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• |
general domestic and international political and regulatory conditions, including changes in tax or fiscal policy and the effects of current restrictions on various commercial and economic activities in response to the COVID-19 pandemic;
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• |
global public health concerns, including the COVID-19 pandemic;
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• |
demand for our products and our ability to maintain acceptable pricing for our products and services, including financing, insurance and extended service contracts;
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• |
our operating cash flows, the availability of capital and our liquidity;
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• |
our future revenue, same-store sales, income, financial condition, and operating performance;
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• |
our ability to sustain and improve our utilization, revenue and margins;
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• |
competition;
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• |
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;
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• |
our ability to manage our inventory and retain key personnel;
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• |
environmental conditions and real or perceived human health or safety risks;
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• |
any potential tax savings we may realize as a result of our organizational structure;
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• |
uncertainty regarding our future operating results and profitability;
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• |
other risks associated with the COVID-19 pandemic including, among others, the ability to safely operate our stores, access to inventory and customer demand; and
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• |
plans, objectives, expectations and intentions contained in this Form 10-K that are not historical.
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Item 1. |
Business.
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State
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Number of
Stores
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Percent of 2020
Revenue
|
||||||
Florida
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20
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41.2
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%
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|||||
Texas
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8
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16.5
|
||||||
Georgia
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10
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11.0
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||||||
Alabama
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8
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9.1
|
||||||
Ohio
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3
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7.1
|
||||||
Massachusetts
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3
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5.6
|
||||||
South Carolina
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4
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4.1
|
||||||
Maryland
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2
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3.5
|
||||||
Kentucky
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2
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1.1
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||||||
North Carolina
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1
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0.5
|
||||||
New York
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0
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0.3
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||||||
Total
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61
|
100.0
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%
|
• |
Revenue increased 33.3% to $1,023.0 million for the fiscal year ended September 30, 2020 from $767.6 million for the fiscal year ended September 30, 2019.
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• |
Revenue generated from same-store sales increased 24.4% for the fiscal year ended September 30, 2020 as compared to the fiscal year ended September 30, 2019.
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• |
Gross profit increased 36.8% to $235.5 million for the fiscal year ended September 30, 2020 from $172.1 million for the fiscal year ended September 30, 2019.
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• |
Operating expenses as a percentage of revenue decreased 116 basis points for the fiscal year ended September 30, 2020 compared to the fiscal year ended September 30, 2019.
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• |
Net income increased to $48.5 million for the fiscal year ended September 30, 2020 from $37.3 million for the fiscal year ended September 30, 2019.
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• |
Adjusted EBITDA increased 80.1% to $83.3 million for the fiscal year ended September 30, 2020 from $46.2 million for the fiscal year ended September 30, 2019.
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Fiscal 2020 Revenue
|
Fiscal 2020 Gross Profit
|
![]() |
![]() |
(1)
|
Adjusted EBITDA is a non-GAAP financial measure. For the definition of Adjusted EBITDA and a reconciliation to our most directly comparable financial measure calculated and presented in accordance with GAAP, please read “Management’s
Discussion and Analysis of Financial Condition and Results of Operations—Comparison of Non-GAAP Financial Measure.”
|
• |
the Clean Air Act (“CAA”), which restricts the emission of air pollutants from many sources, including outboard marine engines, 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 of which waterways are subject to federal jurisdiction and
rulemaking as protected waters of the United States;
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• |
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;
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• |
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;
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• |
the Resource Conservation and Recovery Act (“RCRA”), which governs the generation, treatment, storage, transport, and disposal of solid wastes, including hazardous wastes;
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• |
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
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• |
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.
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• |
We are not required to engage an auditor to report on our internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”);
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• |
We are not required to comply with any requirement that may be adopted by the Public Company Accounting Oversight Board (the “PCAOB”) regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional
information about the audit and the financial statements (i.e., an auditor discussion and analysis);
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• |
We are not required to submit certain executive compensation matters to stockholder advisory votes, such as “say-on-pay,” “say-on-frequency” and “say-on-golden parachutes”; and
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• |
We are not required to disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the chief executive officer’s compensation to median employee
compensation.
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Item 1A. |
Risk Factors.
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• |
General economic conditions and consumer spending patterns can have a material adverse effect on our business, financial condition and results of operations.
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• |
The ongoing COVID-19 pandemic may adversely affect our revenues, results of operations and financial condition.
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• |
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.
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• |
Failure to implement strategies to enhance our performance could have a material adverse effect on our business and financial condition.
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• |
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 dealer groups and each dealer group we acquire
in the future.
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• |
We are required to obtain the consent of our manufacturers prior to the acquisition of other dealer groups.
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• |
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.
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• |
OneWater Inc. is a holding company. 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.
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• |
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.
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• |
The Legacy Owners own a significant amount of our voting stock, and their interests may conflict with those of our other stockholders.
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• |
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.
|
• |
the termination or nonrenewal of the dealer agreement;
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• |
the imposition of additional conditions in subsequent dealer agreements;
|
• |
limitations on boat inventory allocations;
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• |
reductions in reimbursement rates for warranty work performed by the dealer;
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• |
loss of certain manufacturer-to-dealer incentives;
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• |
denial of approval of future acquisitions; or
|
• |
the loss of exclusive rights to sell in the geographic territory.
|
• |
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.
|
• |
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;
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• |
our ability to hire, train and retain qualified personnel;
|
• |
the timely and effective integration of new stores into existing operations;
|
• |
our ability to achieve adequate market penetration at favorable operating margins without the acquisition of existing dealer groups; and
|
• |
our financial resources.
|
• |
compliance with U.S. and local laws and regulatory requirements as well as changes in those laws and requirements;
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• |
transportation delays or interruptions and other effects of less developed infrastructures;
|
• |
limitations on imports and exports;
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• |
foreign exchange rate fluctuations;
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• |
imposition of restrictions on currency conversion or the transfer of funds;
|
• |
maintenance of quality standards;
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• |
unexpected changes in regulatory requirements;
|
• |
differing labor regulations;
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• |
potentially adverse tax consequences;
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• |
possible employee turnover or labor unrest;
|
• |
the burdens and costs of compliance with a variety of foreign laws; and
|
• |
political or economic instability.
|
• |
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 store;
|
• |
atypical weather patterns;
|
• |
changes in our product mix;
|
• |
changes in sales of services; and
|
• |
changes in pricing and average unit sales.
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• |
maintain a comprehensive compliance function;
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• |
comply with rules promulgated by Nasdaq;
|
• |
prepare and distribute periodic public reports in compliance with our obligations under the federal securities laws;
|
• |
accurately implement and interpret GAAP;
|
• |
comply with certain internal policies, such as those relating to insider trading; and
|
• |
involve and retain to a greater degree outside counsel and accountants in the above activities.
|
• |
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;
|
• |
changes in revenue, same-store sales or earnings estimates, or changes in recommendations or withdrawal of research coverage, by equity research analysts;
|
• |
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;
|
• |
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.
|
• |
dividing our board of directors into three classes of directors, with each class serving staggered three-year terms;
|
• |
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 66 2⁄3% 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 or all of the directors from office at any time, and directors will be removable only for “cause”;
|
• |
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.
|
• |
changes in the valuation of its deferred tax assets and liabilities;
|
• |
expected timing and amount of the release of any tax valuation allowances;
|
• |
tax effects of stock-based compensation; or
|
• |
changes in tax laws, regulations or interpretations thereof.
|
Item 1B. |
Unresolved Staff Comments.
|
Item 2. |
Properties.
|
Store Location & Dealer Group
|
Stores Leased
|
Stores Owned
|
||||||
Alabama
|
||||||||
Singleton Marine
|
3
|
1
|
||||||
Rambo Marine
|
2
|
—
|
||||||
Sunrise Marine
|
1
|
—
|
||||||
Legendary Marine
|
1
|
—
|
||||||
Florida
|
||||||||
Grande Yachts
|
4
|
—
|
||||||
Legendary Marine
|
3
|
—
|
||||||
Sundance Marine
|
3
|
—
|
||||||
Marina Mike’s
|
1
|
—
|
||||||
Ocean Blue Yacht Sales
|
3
|
—
|
||||||
Sunrise Marine
|
2
|
—
|
||||||
Caribee Boat
|
1
|
—
|
||||||
Central Marine
|
3
|
—
|
||||||
Georgia
|
||||||||
Singleton Marine
|
9
|
—
|
||||||
American Boat Brokers
|
1
|
—
|
||||||
Kentucky
|
||||||||
Lookout Marine
|
2
|
—
|
||||||
Massachusetts
|
||||||||
Bosun’s
|
3
|
—
|
||||||
Maryland
|
||||||||
Grande Yachts
|
2
|
—
|
||||||
North Carolina
|
||||||||
Grande Yachts
|
1
|
—
|
||||||
Ohio
|
||||||||
South Shore Marine
|
1
|
—
|
||||||
Spend-A-Day Marina
|
2
|
—
|
||||||
South Carolina
|
||||||||
Captain’s Choice Marine
|
2
|
—
|
||||||
Singleton Marine
|
2
|
—
|
||||||
Texas
|
||||||||
Texas Marine
|
3
|
—
|
||||||
SMG Boats
|
2
|
—
|
||||||
Slalom Shop
|
2
|
—
|
||||||
Phil Dill Boats
|
1
|
—
|
Item 3. |
Legal Proceedings.
|
Item 4. |
Mine Safety Disclosures.
|
Item 5. |
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
|
Item 6. |
Selected Financial Data.
|
Years Ended September 30,
|
||||||||||||||||
2020
|
2019
|
2018
|
2017
|
|||||||||||||
(in thousands, except percentages and store amounts)
|
||||||||||||||||
Consolidated Statement of Operations Data:
|
||||||||||||||||
Revenues
|
$
|
1,022,970
|
$
|
767,624
|
$
|
602,805
|
$
|
391,483
|
||||||||
Cost of sales
|
787,446
|
595,498
|
465,151
|
305,782
|
||||||||||||
Selling, general and administrative expenses
|
143,396
|
116,503
|
91,297
|
65,352
|
||||||||||||
Depreciation and amortization
|
3,249
|
2,682
|
1,685
|
1,055
|
||||||||||||
Transaction costs(1)
|
3,648
|
1,323
|
438
|
327
|
||||||||||||
Loss (gain) on contingent consideration
|
6,762
|
(1,674
|
)
|
—
|
—
|
|||||||||||
Income from operations
|
78,469
|
53,292
|
44,234
|
18,967
|
||||||||||||
Other expense (income)
|
||||||||||||||||
Interest expense – floor plan
|
8,861
|
9,395
|
5,534
|
2,686
|
||||||||||||
Interest expense – other
|
8,828
|
6,568
|
3,836
|
2,266
|
||||||||||||
Change in fair value of warrant liability
|
(771
|
)
|
(1,336
|
)
|
33,187
|
18,057
|
||||||||||
Loss (gain) on extinguishment of debt
|
6,559
|
-
|
(209
|
)
|
-
|
|||||||||||
Other expense (income), net(2)
|
155
|
1,402
|
(60
|
)
|
217
|
|||||||||||
Income before income tax expense
|
54,837
|
37,263
|
1,946
|
(4,259
|
)
|
|||||||||||
Income tax expense
|
6,329
|
—
|
—
|
—
|
||||||||||||
Net income (loss)
|
$
|
48,508
|
$
|
37,263
|
$
|
1,946
|
$
|
(4,259
|
)
|
|||||||
Less: Net income attributable to non-controlling interests
|
350
|
1,606
|
830
|
13
|
||||||||||||
Net income (loss) attributable to One Water Marine Holdings, LLC
|
$
|
35,657
|
$
|
1,116
|
$
|
(4,272
|
)
|
|||||||||
Less: Net income attributable to non-controlling interests of One Water Marine Holdings, LLC
|
30,733
|
|||||||||||||||
Net income attributable to OneWater Inc.
|
$
|
17,425
|
||||||||||||||
Consolidated Statement of Cash Flows Data:
|
||||||||||||||||
Cash flows provided by (used in) operating activities
|
$
|
212,477
|
$
|
(5,725
|
)
|
$
|
(4,250
|
)
|
$
|
6,514
|
||||||
Cash flows used in investing activities
|
(4,672
|
)
|
(10,998
|
)
|
(23,920
|
)
|
(23,304
|
)
|
||||||||
Cash flows (used in) provided by financing activities
|
(151,144
|
)
|
12,458
|
34,257
|
16,993
|
|||||||||||
Other Financial Data:
|
||||||||||||||||
Capital expenditures(3)
|
$
|
6,309
|
$
|
7,291
|
$
|
10,135
|
$
|
4,112
|
||||||||
Adjusted EBITDA(4)
|
$
|
83,267
|
$
|
46,228
|
$
|
40,823
|
$
|
17,663
|
||||||||
Number of stores
|
61
|
63
|
53
|
45
|
||||||||||||
Same-store sales growth%
|
24.4
|
%
|
11.8
|
%
|
22.2
|
%
|
||||||||||
Consolidated Balance Sheet Data (at end of period):
|
||||||||||||||||
Total assets
|
$
|
458,067
|
$
|
504,755
|
$
|
375,360
|
$
|
258,347
|
||||||||
Long-term debt (including current portion)
|
89,396
|
75,913
|
41,844
|
27,285
|
||||||||||||
Total liabilities
|
284,780
|
380,768
|
274,339
|
158,578
|
||||||||||||
Redeemable preferred equity interest
|
-
|
86,018
|
79,965
|
71,695
|
||||||||||||
Total stockholders’ and members’ equity
|
173,287
|
37,969
|
21,056
|
28,074
|
|
|
(1) |
Consists of transaction costs related to the acquisitions made in the corresponding period and the IPO and the September 2020 offering. Certain transaction costs recorded as other expenses in 2019, 2018 and 2017 have been reclassified as
operating expenses to conform to the September 30, 2020 presentation.
|
(2) |
Other expense for the fiscal year ended September 30, 2019 was primarily attributable to a loss related to the sale and leaseback of certain operating facilities and equipment, partially offset by insurance proceeds received from
hurricane-related claims.
|
(3) |
Includes $4.3 million for growth capital expenditures and $2.0 million for maintenance capital expenditures for fiscal year 2020. Includes $4.2 million for growth capital expenditures and $3.1 million for maintenance capital expenditures
for fiscal year 2019, compared to $6.9 million and $3.2 million, respectively, for fiscal year 2018 and $1.5 million and $2.6 million, respectively, for fiscal year 2017.
|
(4) |
Adjusted EBITDA is a non-GAAP financial measure. For the definition of Adjusted EBITDA and a reconciliation to our most directly comparable financial measure calculated and presented in accordance with GAAP, please see “Management’s
Discussion and Analysis of Financial Condition and Results of Operations—Comparison of Non-GAAP Financial Measure.”
|
Item 7. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations.
|
• |
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.
|
• |
Effective June 1, 2018, OneWater LLC acquired Bosun’s Marine, Inc. (“Bosun’s”), a dealer group based in Massachusetts with four stores. Bosun’s was acquired by our subsidiary Bosun’s Assets & Operations, LLC, in which we hold a 75%
ownership interest. The results of operations for Bosun’s have been included in our consolidated financial statements from that date and the former owner’s minority interest in our relevant subsidiary has been recorded accordingly.
|
• |
Effective April 1, 2018, OneWater LLC acquired substantially all of the assets of Rebo, Inc., d/b/a Spend-A-Day Marina, a dealer group based in West Central Ohio with two stores.
|
• |
Effective February 1, 2018, OneWater LLC acquired substantially all of the assets of Texas Marine & Brokerage, Inc., d/b/a Texas Marine, a dealer group based in Texas 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 and is
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. OneWater Inc. was subject to U.S. federal, state and local taxes at a blended statutory rate of 24.3% of pre-tax earnings for fiscal year 2020.
|
• |
As of September 30, 2019, the outstanding balance of the preferred units in Opco held by Goldman and Beekman in the aggregate was $87.3 million, exclusive of $1.3 million in issuance costs. We used the net proceeds from our IPO, together
with cash on hand and borrowings under the Term and Revolver Credit Facility to fully redeem these preferred units, which eliminated the amount recorded as Redeemable Preferred Interest in Subsidiary in our balance sheet and also eliminates
any future dividends related to the preferred units for all periods after the IPO.
|
• |
As of September 30, 2019, Goldman and Beekman held the LLC Warrants, which contained conversion features that caused them to be accounted for as a liability on our balance sheet. Changes in this liability were recognized as income or
expense on our statements of operations and increased or reduced our net income in historical periods. In connection with the IPO, Goldman and Beekman exercised all of the LLC Warrants for common units of OneWater LLC. Giving effect to the
IPO and the exercise of the LLC Warrants for common units of OneWater LLC held by Goldman and Beekman, we have eliminated the fair value adjustment for the LLC Warrants for all periods after the IPO, which eliminated 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.” Our future results will depend on our ability to efficiently manage our combined operations and execute our business strategy.
|
For the Year Ended September 30,
|
||||||||||||||||||||||||
2020
|
2019
|
$ Change
|
% Change
|
|||||||||||||||||||||
Description
|
Amount
|
% of
Revenue |
Amount
|
% of
Revenue
|
||||||||||||||||||||
($ in thousands, unaudited)
|
||||||||||||||||||||||||
Revenues
|
||||||||||||||||||||||||
New boat sales
|
$
|
717,093
|
70.1
|
%
|
$
|
526,774
|
68.6
|
%
|
$
|
190,319
|
36.1
|
%
|
||||||||||||
Pre-owned boat sales
|
205,650
|
20.1
|
%
|
153,010
|
20.0
|
%
|
52,640
|
34.4
|
%
|
|||||||||||||||
Finance and insurance income
|
36,792
|
3.6
|
%
|
26,151
|
3.4
|
%
|
10,641
|
40.7
|
%
|
|||||||||||||||
Service, parts and other sales
|
63,435
|
6.2
|
%
|
61,689
|
8.0
|
%
|
1,746
|
2.8
|
%
|
|||||||||||||||
Total revenues
|
1,022,970
|
100.0
|
%
|
767,624
|
100.0
|
%
|
255,346
|
33.3
|
%
|
|||||||||||||||
Gross Profit
|
||||||||||||||||||||||||
New boat gross profit
|
131,373
|
12.8
|
%
|
92,532
|
12.1
|
%
|
38,481
|
42.0
|
%
|
|||||||||||||||
Pre-owned boat gross profit
|
37,389
|
3.7
|
%
|
25,992
|
3.4
|
%
|
11,397
|
43.8
|
%
|
|||||||||||||||
Finance & insurance gross profit
|
36,792
|
3.6
|
%
|
26,151
|
3.4
|
%
|
10,641
|
40.7
|
%
|
|||||||||||||||
Service, parts & other gross profit
|
29,970
|
2.9
|
%
|
27,451
|
3.6
|
%
|
2,519
|
9.2
|
%
|
|||||||||||||||
Total gross profit
|
235,524
|
23.0
|
%
|
172,126
|
22.4
|
%
|
63,398
|
36.8
|
%
|
|||||||||||||||
Selling, general and administrative expenses
|
143,396
|
14.0
|
%
|
116,503
|
15.2
|
%
|
26,893
|
23.1
|
%
|
|||||||||||||||
Depreciation and amortization
|
3,249
|
0.3
|
%
|
2,682
|
0.3
|
%
|
567
|
21.1
|
%
|
|||||||||||||||
Transaction costs
|
3,648
|
0.4
|
%
|
1,323
|
0.2
|
%
|
2,325
|
175.7
|
%
|
|||||||||||||||
Loss (gain) on contingent consideration
|
6,762
|
0.7
|
%
|
(1,674
|
)
|
(0.2
|
)%
|
8,436
|
*
|
|||||||||||||||
Income from operations
|
78,469
|
7.7
|
%
|
53,292
|
6.9
|
%
|
25,177
|
47.2
|
%
|
|||||||||||||||
Interest expense - floor plan
|
8,861
|
0.9
|
%
|
9,395
|
1.2
|
%
|
(534
|
)
|
(5.7
|
)%
|
||||||||||||||
Interest expense – other
|
8,828
|
0.9
|
%
|
6,568
|
0.9
|
%
|
2,260
|
34.4
|
%
|
|||||||||||||||
Change in fair value of warrant liability
|
(771
|
)
|
(0.1
|
)%
|
(1,336
|
)
|
(0.2
|
)%
|
565
|
(42.3
|
)%
|
|||||||||||||
Loss on extinguishment of debt
|
6,559
|
0.6
|
%
|
-
|
0.0
|
%
|
6,559
|
100
|
%
|
|||||||||||||||
Other expense (income), net
|
155
|
0.0
|
%
|
1,402
|
0.2
|
%
|
(1,247
|
)
|
(88.9
|
)%
|
||||||||||||||
Income before income tax expense
|
54,837
|
5.4
|
%
|
37,263
|
4.9
|
%
|
17,574
|
47.2
|
%
|
|||||||||||||||
Income tax expense
|
6,329
|
0.6
|
%
|
-
|
0.0
|
%
|
6,329
|
100
|
%
|
|||||||||||||||
Net income
|
48,508
|
4.7
|
%
|
37,263
|
4.9
|
%
|
11,245
|
30.2
|
%
|
|||||||||||||||
Less: Net income attributable to non-controlling interests
|
350
|
1,606
|
(1,256
|
)
|
(78.2
|
)%
|
||||||||||||||||||
Net income attributable to One Water Marine Holdings, LLC
|
-
|
$
|
35,657
|
|||||||||||||||||||||
Less: Net income attributable to non-controlling interests of One Water Marine Holdings, LLC
|
30,733
|
|||||||||||||||||||||||
Net income attributable to OneWater Marine Inc.
|
$
|
17,425
|
Years Ended September 30,
|
||||||||||||||||||||||||
2019
|
2018
|
$ Change
|
% Change
|
|||||||||||||||||||||
Description
|
Amount
|
% of
Revenue
|
Amount
|
% of
Revenue
|
||||||||||||||||||||
($ in thousands)
|
||||||||||||||||||||||||
Revenues
|
||||||||||||||||||||||||
New boat sales
|
$
|
526,774
|
68.6
|
%
|
$
|
409,947
|
66.1
|
%
|
$
|
116,827
|
28.5
|
%
|
||||||||||||
Pre-owned boat sales
|
153,010
|
19.9
|
%
|
129,570
|
23.4
|
%
|
23,440
|
18.1
|
%
|
|||||||||||||||
Finance & insurance income
|
26,151
|
3.4
|
%
|
16,623
|
2.8
|
%
|
9,528
|
57.3
|
%
|
|||||||||||||||
Service, parts & other sales
|
61,689
|
8.1
|
%
|
46,665
|
7.7
|
%
|
15,024
|
32.2
|
%
|
|||||||||||||||
Total revenues
|
767,624
|
100.0
|
%
|
602,805
|
100.0
|
%
|
164,819
|
27.3
|
%
|
|||||||||||||||
Gross Profit
|
||||||||||||||||||||||||
New boat gross profit
|
92,532
|
12.0
|
%
|
77,219
|
12.7
|
%
|
15,313
|
19.8
|
%
|
|||||||||||||||
Pre-owned boat gross profit
|
25,992
|
3.5
|
%
|
23,715
|
4.1
|
%
|
2,277
|
9.6
|
%
|
|||||||||||||||
Finance & insurance gross profit
|
26,151
|
3.4
|
%
|
16,623
|
2.8
|
%
|
9,528
|
57.3
|
%
|
|||||||||||||||
Service, parts & other gross profit
|
27,451
|
3.5
|
%
|
20,097
|
3.3
|
%
|
7,354
|
36.6
|
%
|
|||||||||||||||
Total gross profit
|
172,126
|
22.4
|
%
|
137,654
|
22.8
|
%
|
34,472
|
25.0
|
%
|
|||||||||||||||
Selling, general and administrative expenses
|
116,503
|
15.2
|
%
|
91,297
|
15.1
|
%
|
25,206
|
27.6
|
%
|
|||||||||||||||
Depreciation and amortization
|
2,682
|
0.3
|
%
|
1,685
|
0.3
|
%
|
997
|
59.2
|
%
|
|||||||||||||||
Transaction costs
|
1,323
|
0.2
|
%
|
438
|
0.1
|
%
|
885
|
202.1
|
%
|
|||||||||||||||
Gain on settlement of contingent consideration
|
(1,674
|
)
|
(0.2
|
)%
|
—
|
0.0
|
%
|
(1,674
|
)
|
(100.0
|
)%
|
|||||||||||||
Income from operations
|
53,292
|
6.9
|
%
|
44,234
|
7.3
|
%
|
9,058
|
20.5
|
%
|
|||||||||||||||
Interest expense – floor plan
|
9,395
|
1.2
|
%
|
5,534
|
0.9
|
%
|
3,861
|
69.8
|
%
|
|||||||||||||||
Interest expense – other
|
6,568
|
0.9
|
%
|
3,836
|
0.6
|
%
|
2,732
|
71.2
|
%
|
|||||||||||||||
Change in fair value of warrant liability
|
(1,336
|
)
|
(0.2
|
)%
|
33,187
|
5.5
|
%
|
(34,523
|
)
|
(104.0
|
)%
|
|||||||||||||
Other expense (income), net
|
1,402
|
0.2
|
%
|
(269
|
)
|
0.0
|
%
|
1,671
|
*
|
|||||||||||||||
Income before income tax expense
|
37,263
|
4.9
|
%
|
1,946
|
0.3
|
%
|
35,317
|
*
|
||||||||||||||||
Income tax expense
|
—
|
0.0
|
%
|
—
|
0.0
|
%
|
—
|
0.0
|
%
|
|||||||||||||||
Net income
|
37,263
|
4.9
|
%
|
1,946
|
0.3
|
%
|
35,317
|
*
|
||||||||||||||||
Less: Net income attributable to non-controlling interests
|
1,606
|
0.2
|
%
|
830
|
0.1
|
%
|
776
|
93.5
|
%
|
|||||||||||||||
Net income attributable to OneWater LLC
|
$
|
35,657
|
4.6
|
%
|
$
|
1,116
|
0.2
|
%
|
$
|
34,541
|
*
|
|
|
* |
Denotes that % change is such that it is not useful.
|
Year Ended September 30,
|
||||||||||||
Description
|
2020
|
2019
|
Change
|
|||||||||
($ in thousands, unaudited)
|
||||||||||||
Net income
|
$
|
48,508
|
$
|
37,263
|
$
|
11,245
|
||||||
Interest expense – other
|
8,828
|
6,568
|
2,260
|
|||||||||
Income tax expense
|
6,329
|
-
|
6,329
|
|||||||||
Depreciation and amortization
|
3,249
|
2,682
|
567
|
|||||||||
Change in fair value of warrant liability(1)
|
(771
|
)
|
(1,336
|
)
|
565
|
|||||||
Loss (gain) on contingent consideration
|
6,762
|
(1,674
|
)
|
8,436
|
||||||||
Transaction costs(2)
|
3,648
|
1,323
|
2,325
|
|||||||||
Loss on extinguishment of debt
|
6,559
|
-
|
6,559
|
|||||||||
Other expense (income), net
|
155
|
1,402
|
(1,247
|
)
|
||||||||
Adjusted EBITDA
|
$
|
83,267
|
$
|
46,228
|
37,039
|
|
|
(1) |
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 liabilities on our balance sheet.
|
(2) |
Consists of transaction costs related to the 2019 Acquisitions, 2018 Acquisitions and costs related to the IPO and September 2020 offering.
|
Years Ended September 30,
|
||||||||||||
Description
|
2019
|
2018
|
Change
|
|||||||||
($ in thousands)
|
||||||||||||
Net income (loss)
|
$
|
37,263
|
$
|
1,946
|
$
|
35,317
|
||||||
Interest expense – other
|
6,568
|
3,836
|
2,732
|
|||||||||
Income tax expense
|
—
|
—
|
—
|
|||||||||
Depreciation and amortization
|
2,682
|
1,685
|
997
|
|||||||||
Change in fair value of warrant liability(1)
|
(1,336
|
)
|
33,187
|
(34,523
|
)
|
|||||||
Gain on settlement of contingent consideration
|
(1,674
|
)
|
—
|
(1,674
|
)
|
|||||||
Transaction costs(2)
|
1,323
|
438
|
885
|
|||||||||
Other expense (income), net
|
1,402
|
(269
|
)
|
1,671
|
||||||||
Adjusted EBITDA
|
$
|
46,228
|
$
|
40,823
|
$
|
5,405
|
(1) |
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 liabilities on our balance sheet.
|
(2) |
Consists of transaction costs related to the 2019 Acquisitions and the 2018 Acquisitions.
|
Year Ended September 30,
|
||||||||||||
Description
|
2020
|
2019
|
Change
|
|||||||||
($ in thousands, unaudited)
|
||||||||||||
Net cash provided by (used in) operating activities
|
$
|
212,477
|
$
|
(5,725
|
)
|
$
|
218,202
|
|||||
Net cash used in investing activities
|
(4,672
|
)
|
(10,998
|
)
|
6,326
|
|||||||
Net cash (used in) provided by financing activities
|
(151,144
|
)
|
12,458
|
(163,602
|
)
|
|||||||
Net change in cash
|
$
|
56,661
|
$
|
(4,265
|
)
|
$
|
60,926
|
Years Ended September 30,
|
||||||||||||
Description
|
2019
|
2018
|
Change
|
|||||||||
($ in thousands)
|
||||||||||||
Net cash used in operating activities
|
$
|
(5,725
|
)
|
$
|
(4,250
|
)
|
$
|
(1,475
|
)
|
|||
Net cash used in investing activities
|
(10,998
|
)
|
(23,920
|
)
|
12,922
|
|||||||
Net cash provided by financing activities
|
12,458
|
34,257
|
(21,799
|
)
|
||||||||
Net change in cash
|
$
|
(4,265
|
)
|
$
|
6,087
|
$
|
(10,352
|
)
|
Payments Due by Period
|
||||||||||||||||||||
Less than 1
year
|
1 – 3 years
|
3 – 5 years
|
More than 5
years
|
Total
|
||||||||||||||||
(in thousands)
|
||||||||||||||||||||
Refinanced Credit Facility(1)
|
$
|
3,375
|
$
|
10,687
|
$
|
65,938
|
$
|
-
|
$
|
80,000
|
||||||||||
Inventory Financing Facility(2)
|
124,035
|
-
|
-
|
-
|
124,035
|
|||||||||||||||
Notes Payable(3)
|
4,574
|
6,559
|
403
|
-
|
11,536
|
|||||||||||||||
Estimated interest payments(4)
|
2,828
|
4,478
|
2,189
|
-
|
9,495
|
|||||||||||||||
Operating lease obligations(5)
|
10,195
|
18,208
|
17,098
|
48,983
|
94,484
|
|||||||||||||||
Total
|
$
|
145,007
|
$
|
39,932
|
$
|
85,628
|
$
|
48,983
|
$
|
319,550
|
|
|
(1) |
Payments are generally made as required pursuant to the Refinanced Credit Facility discussed above under “—Debt Agreements—Refinanced Credit Facility.”
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(2) |
Payments are generally made as required pursuant to the Inventory Financing Facility discussed above under “—Debt Agreements—Inventory Financing Facility.” Amounts do not include estimated interest payments.
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(3) |
Includes notes payable entered into in connection with certain of our acquisitions of dealer groups and notes payable entered into with various commercial lenders in connection with our acquisition of certain vehicles. Payments are
generally made as required pursuant to the terms of the relevant notes payable and as discussed above under “—Debt Agreements—Notes Payable.”
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(4) |
Estimated interest payments based on the outstanding principal and stated interest rates on the Refinanced Credit Facility and Notes Payable.
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(5) |
Includes certain physical facilities and equipment that we lease under noncancelable operating leases.
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Item 7A. |
Quantitative and Qualitative Disclosures About Market Risk.
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OneWater Marine Inc.
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Page
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Consolidated Financial Statements
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77 | |
78 | |
79 | |
80 | |
81 | |
82 |