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May 24, 2019
Austin Singleton
Chief Executive Officer
OneWater Marine Inc.
6275 Lanier Islands Parkway
Buford, GA 30518
Re: OneWater Marine Inc.
Draft Registration Statement on Form S-1
Submitted April 26, 2019
CIK No. 0001772921
Dear Mr. Singleton:
We have reviewed your draft registration statement and have the
following comments. In
some of our comments, we may ask you to provide us with information so we may
better
understand your disclosure.
Please respond to this letter by providing the requested information and
either submitting
an amended draft registration statement or publicly filing your registration
statement on
EDGAR. If you do not believe our comments apply to your facts and circumstances
or do not
believe an amendment is appropriate, please tell us why in your response.
After reviewing the information you provide in response to these comments
and your
amended draft registration statement or filed registration statement, we may
have additional
comments.
Draft Registration Statement on Form S-1
Acquisition Strategy, page 7
1. Reference is made to your disclosure of the estimated Adjusted EBITDA
that you believe
your pipeline of acquisitions could contribute. Please provide the
disclosures required by
Item 10(e)(i) of Regulation S-K. If you do not believe the disclosure
represents a non-
GAAP measure, please explain why. Refer to Item 10(e) of Regulation S-K
and Section
101 of the Division's Compliance and Disclosure Interpretations on the
use of non-GAAP
financial measures.
Austin Singleton
FirstName Marine Inc.
OneWater LastNameAustin Singleton
Comapany NameOneWater Marine Inc.
May 24, 2019
May 24, 2019 Page 2
Page 2
FirstName LastName
Corporate Reorganization, page 7
2. Please ensure that the diagram on page 10 depicts the fact that
certain Legacy Holders will
also hold shares of Class A Common Stock, as you disclose elsewhere.
Summary Historical Consolidated Financial and Operating Data, page 17
3. Reference is made to footnote (3) and your calculation of pro forma
per share data. We
note that your calculation reflects the estimated number of shares of
common stock
you expect to have outstanding upon the completion of your corporate
reorganization
described under "--Corporate Reorganization" and the offering. Per
page 100, the
corporate reorganization includes exercise of warrants and the net
offering proceeds will
be used to redeem all of the outstanding Opco Preferred Units. Please
tell us your
consideration of adjusting the numerator in your calculation of pro
forma per share data
for these transactions.
Capitalization, page 53
4. Please tell us your consideration of including the warrant liability
and redeemable
preferred interest in subsidiary in the table.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Critical Accounting Policies and Significant Estimates
Goodwill and Other Intangible Assets, page 60
5. We note your disclosure on page F-12 that the CODM has determined that
the marine
retail business operating segment is the company's reporting unit. In
that regard, please
clarify for us if you aggregate multiple components into your
reporting unit. If so, please
tell us the components you have aggregated and provide us with your
analysis that
supports aggregation is appropriate pursuant to ASC 350-20-35-35.
Fair Value of Financial Instruments, page 61
6. Please expand your critical accounting policy disclosure to also
include a discussion
regarding equity based compensation. Please address the methods that
management used
to determine the fair value of the warrants and equity awards and the
nature of the
material assumptions involved. If you utilized the market and income
approaches to
arrive at fair value, please discuss how you weighted each approach
used in your valuation
and what factors you considered in determining these weightings. If
you used the income
approach, please disclose that this method involves estimating future
cash flows and
discounting those cash flows at an appropriate rate. Disclose the
extent to which the
estimates are considered highly complex and subjective and that
estimates will not be
necessary to determine the fair value of new awards once your shares
begin trading.
Austin Singleton
FirstName Marine Inc.
OneWater LastNameAustin Singleton
Comapany NameOneWater Marine Inc.
May 24, 2019
May 24, 2019 Page 3
Page 3
FirstName LastName
Results of Operations, page 65
7. Revise your discussions of Revenues to quantify the extent to which
the increase
in revenues is attributable to same-store sales.
Gross Profit, page 66
8. We note that you quantify gross profit by product categories. Please
expand your
disclosure to describe how you calculate gross profit. In doing so,
please supplement your
discussion and analysis of gross profit by disclosing the nature of
costs included in cost of
sales.
Selling, General & Administrative Expenses, page 67
9. We note that you identify two or more factors that contributed to a
change in your
operating expenses. As a best practice, please quantify the impact of
each material factor
that resulted in the increase in selling, general and administrative
expenses. Similar
revisions should be made regarding the increases/decreases in
depreciation and
amortization, interest expense-floor plan and interest expense-other
to provide investors
with better insight into the underlying reasons for such changes.
Please refer to Item
303(a)(3) of Regulation S-K.
Liquidity and Capital Resources, page 70
10. Please expand your disclosure to discuss that you are a holding
company with no
operations on your own, and that you will depend upon the subsidiaries
for cash. Please
more specifically describe dividend restrictions in relation to your
debt agreements and
any other factors that could inhibit your subsidiaries' ability to pay
dividends or make
other distributions. Refer to Item 303(a)(1) of Regulation S-K.
Debt Agreements
GS/BIP Credit Facility, page 71
11. You indicate that this offering will trigger mandatory repayment of
the GS/BIP Credit
Facility and, to the extent offering proceeds are not sufficient to
repay the entire amount
outstanding, that OneWater LLC intends to repay the remaining portion
with a
refinancing. Given the stated importance of the GS/BIP Credit Facility
to acquisitions and
related growth prospects, please disclose, if known, more information
on how OneWater
LLC intends to replace this source of cash. If you anticipate new
financing agreements
will be in effect following this offering, disclose whether you
anticipate that OneWater
LLC will be restricted from making distributions to you under such
arrangements.
Austin Singleton
FirstName Marine Inc.
OneWater LastNameAustin Singleton
Comapany NameOneWater Marine Inc.
May 24, 2019
May 24, 2019 Page 4
Page 4
FirstName LastName
Liquidity and Capital Resources
Tax Receivable Agreement, page 74
12. As you are dependent upon OneWater LLC to fund your obligations,
please add
disclosure regarding how OneWater LLC plans to fund your obligations
under the Tax
Receivable Agreement, whether from cash from operations, from
financing activities, or
otherwise. Also add disclosure about the effect the Tax Receivable
Agreement will have
on your liquidity, including a reduction in overall cash flow, and
about your plans to
address the issue.
13. Revise your discussion of the Tax Receivable Agreement throughout the
prospectus to
quantify, if possible, the likely tax benefits to be realized and paid
to the Unit Holders.
Business, page 83
14. The charts on pages 6 and 83 depict year-on-year growth for the last
two years. As
operations began in 2014, please revise to expand the charts to
include additional years or
tell us why you believe this information is not material.
15. Given the importance to your business model of local and regional
dealer group branding,
please describe the post-acquisition agreements you have in place that
"[maintain]" the
long term engagement of former owners," including the typical duration
of the
agreements.
One Water Marine Holdings, LLC Consolidated Financial Statements
Consolidated Statement of Operations, page F-4
16. Because the fiscal 2018 dividends you paid exceeded fiscal 2018
earnings, please tell us
your consideration of including pro forma per unit data giving effect
to the number of
common units whose proceeds would be necessary to pay the distribution
in excess of the
current year s earnings. To the extent you include such pro forma per
unit data in
response to this comment, please include your calculation as a
footnote. Refer to SAB
Topic 1:B.3.
Notes to the Consolidated Financial Statements, page F-6
17. Please describe in more detail the most significant restrictions on
the payment of
dividends, indicating their sources, their pertinent provisions and
the amount of members'
equity or net income restricted or free of restrictions as required by
Rule 4-08(e)(1) of
Regulation S-X.
18. Please tell us the nature of any restrictions on the ability of your
consolidated subsidiaries
to transfer funds to One Water Marine Holdings, LLC in the form of
cash dividends, loans
or advances. In addition, please tell us: (i) the amount of restricted
net assets of
unconsolidated and consolidated subsidiaries as of the most recent
balance sheet date and
Austin Singleton
FirstName Marine Inc.
OneWater LastNameAustin Singleton
Comapany NameOneWater Marine Inc.
May 24, 2019
May 24, 2019 Page 5
Page 5
FirstName LastName
how you computed the amount; (ii) your consideration of providing the
disclosures
required by Rule 4-08(e)(3)(ii) of Regulation S-X; and (iii) your
consideration of
providing the condensed financial information prescribed by Rule 12-04
of Regulation S-
X in accordance with Rule 5-04 of Regulation S-X.
1 Description of Company and Basis of Presentation
Description of the Business, page F-7
19. We note that you refer to One Water Marine Holdings, LLC as "OWMH" in
your
consolidated financial statements and you refer to One Water Marine
Holdings, LLC as
"OneWater LLC" in all other parts of the registration statement.
Please tell us your
consideration of providing a consistent reference.
2 Summary of Significant Accounting Policies, page F-8
20. Please revise to disclose your accounting policy for operating leases.
Goodwill and Other Identifiable Intangible Assets, page F-9
21. Please revise your disclosure in the first paragraph to clarify that
the excess of cost over
the "fair value" of the identifiable net assets acquired is recorded
as goodwill. Refer to
ASC 805-30-30-1b.
Revenue Recognition, page F-10
22. Please tell us whether you establish finance, insurance and extended
warranty contract
chargeback reserves. If so, please tell us and disclose the amount of
the chargeback
reserves for the periods presented, and disclose the method and
assumptions used in
establishing such reserves.
23. We note your disclosure on page 62 that you generate pre-owned sales
from brokerage
transactions and consignment sales. Please expand your revenue
recognition accounting
policy to discuss these transactions.
Segment Information, page F-11
24. We reference your diversified revenue stream discussion at the bottom
of page 5 that non-
boat product and service lines contributed 27% of gross profit for
fiscal year 2018. You
have diversified your business across geographies and dealership types
(e.g., fresh water
and salt water) in order to reduce the effects of seasonality.
Further, in an effort to
counteract economic downturn, you increased your focus on pre-owned
sales, parts and
repair services, and finance and insurance services as disclosed in
the fourth paragraph on
page 59. In light of the foregoing and the 2017 and 2018 acquisitions
that expanded your
product offerings, please tell us your basis in GAAP for concluding
that you have one
operating segment. Please also clarify that the operating segment
which is a reporting unit
is also a reportable segment. Refer to ASC 280.
Austin Singleton
OneWater Marine Inc.
May 24, 2019
Page 6
5 Acquisitions, page F-14
25. Please explain the nature of the reinvestments in BAO and SSAO. Also
explain your
accounting for the reinvestments referencing authoritative literature
that supports your
accounting treatment.
17 Members' Equity
OWMH Preferred Interest, page F-26
26. Please explain the nature of the OWMH Preferred Interest and how you
account for it
referencing authoritative literature that supports your accounting
treatment. In doing so,
please address the interest rate of 5.0% per annum and how relevant
elements of the
OWMH Preferred Interest are considered in the calculation of net loss
attributable to
common interest holders.
19 Contingencies and Commitments
Claims and Litigation, page F-28
27. We note your disclosure that the company is involved in various legal
proceedings.
Please enhance your disclosure to describe the nature of the legal
proceedings, the
amounts accrued and reflected in the financial statements, and whether
such proceedings
will materially affect your financial position, results of operations
and/or cash flows.
Further, if it is reasonably possible that a material additional loss
above the amount
accrued may be incurred, please disclose an estimate of the additional
possible loss or
range of loss or a statement that such an estimate cannot be made.
Refer to ASC 450-20-
50-3 through 450-20-50-4.
General
28. If Goldman Sachs & Co. will be effecting sales of your securities in
the secondary
market after this offering, please tell us whether a market making
prospectus will be
included in this registration statement.
29. Please supplementally provide us with copies of all written
communications, as defined in
FirstName LastNameAustin Singleton
Rule 405 under the Securities Act, that you, or anyone authorized to do
so on your behalf,
Comapany NameOneWater Marine Inc.
present to potential investors in reliance on Section 5(d) of the
Securities Act, whether or
May 24, 2019 Page 6 copies of the communications.
not they retain
FirstName LastName
Austin Singleton
FirstName Marine Inc.
OneWater LastNameAustin Singleton
Comapany NameOneWater Marine Inc.
May 24, 2019
Page 7
May 24, 2019 Page 7
FirstName LastName
You may contact Yolanda Guobadia, Staff Accountant at 202-551-3562 or
Adam
Phippen, Staff Accountant at 202-551-3336 if you have questions regarding
comments on the
financial statements and related matters. Please contact Charles Guidry, Staff
Attorney at 202-
551-3621 or Mara Ransom, Assistant Director at 202-551-3264 with any other
questions.
Sincerely,
Division of
Corporation Finance
Office of Consumer
Products