UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
For the quarterly period ended December 31, 2021
or
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
For the transition period from ___________ to ___________
Commission file number: 001-39213
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of incorporation or organization)
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(IRS Employer Identification No.)
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(Address of principal executive offices)
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(Zip code)
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(Registrant’s telephone number, including area code): (678 )
541-6300
Securities registered pursuant to Section 12(b) of the Exchange Act:
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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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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.☒ Yes ☐ No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such
shorter period that the registrant was required to submit such files). ☒ Yes ☐ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,”
“accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Large accelerated filer
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☐
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Non-accelerated filer
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☐
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Smaller reporting company
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Emerging growth company
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the
Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No
The registrant had 13,852,296 shares of Class A common stock, par value $0.01 per share, and 1,429,940 shares of Class B common stock, par value $0.01 per share, outstanding as of January 24, 2022.
ONEWATER MARINE INC.
FORM 10-Q
FOR THE QUARTER ENDED DECEMBER 31, 2021
TABLE OF CONTENTS
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Page
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Item 1.
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5 |
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| 6 |
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| 7 |
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| 8 |
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| 9 |
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Item 2.
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21 |
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Item 3.
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33 |
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Item 4.
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34 |
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| 34 | ||
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Item 1.
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34 | |
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Item 1A.
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34 | |
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Item 2.
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34 | |
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Item 3.
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34 | |
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Item 4.
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34 | |
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Item 5.
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34 | |
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Item 6.
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35 |
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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
The information in this Quarterly Report on Form 10-Q includes “forward-looking
statements.” All statements, other than statements of historical fact included in this Quarterly Report on Form 10-Q, regarding our strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects,
plans and objectives of management are forward-looking statements. When used in this Quarterly Report on Form 10-Q, the words “could,” “believe,” “anticipate,” “intend,” “estimate,” “expect,” “project” and similar expressions are intended
to identify forward-looking statements, although not all forward-looking statements contain such identifying words. These forward-looking statements are based on our current expectations and assumptions about future events and are based on
currently available information as to the outcome and timing of future events. When considering forward-looking statements, you should keep in mind the risk factors and other cautionary statements described under the headings “Risk
Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business” included in our Annual Report on Form 10-K for the year ended September 30, 2021, filed with the U.S. Securities and Exchange
Commission (the “SEC”) on December 17, 2021, and under the headings “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Quarterly Report on Form 10-Q. These forward-looking
statements are based on management’s current belief, based on currently available information, as to the outcome and timing of future events.
Forward-looking statements may include statements about:
| • |
the impact of the novel coronavirus (“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;
|
| • |
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;
|
| • |
demand for our products and 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;
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| • |
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;
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•
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effects of industry-wide supply chain challenges and our ability to manage our inventory;
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|
•
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our ability to 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
|
| • |
plans, objectives, expectations and intentions contained in this Form 10-Q that are not historical.
|
We caution you that these forward-looking statements are subject to all of the risks and uncertainties, most of which are difficult to predict and many of which are beyond our control. Should one or more of the
risks or uncertainties occur, or should underlying assumptions prove incorrect, our actual results and plans could differ materially from those expressed in any forward-looking statements. These risks include, but are not limited to, decline
in demand for our products and services, the effects of the COVID-19 pandemic on the Company’s business, the seasonality and volatility of the boat industry, our acquisition strategies, the inability to comply with the financial and other
covenants and metrics in our Credit Facilities, cash flow and access to capital, the timing of development expenditures and the other risks described under “Risk Factors” and discussed elsewhere in our Annual Report on Form 10-K for the year
ended September 30, 2021 and discussed elsewhere in this Quarterly Report on Form 10-Q.
All forward-looking statements, expressed or implied, included in this Quarterly Report on Form 10-Q are expressly qualified in their entirety by this cautionary statement. This cautionary statement should also
be considered in connection with any subsequent written or oral forward-looking statements that we or persons acting on our behalf may issue.
Any forward-looking statement that we make in this Quarterly Report on Form 10-Q speaks only as of the date of such statement. Except as otherwise required by applicable law, we disclaim any duty to update any
forward-looking statements, all of which are expressly qualified by the statements in this section, to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q.
| Item 1. |
Condensed Consolidated
Financial Statements (Unaudited)
|
ONEWATER MARINE INC.
($ in thousands, except par value and share data)
|
December 31,
2021
|
September 30,
2021 |
|||||||
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Assets
|
||||||||
|
Current assets:
|
||||||||
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Cash
|
$
|
|
$
|
|
||||
|
Restricted cash
|
|
|
||||||
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Accounts receivable, net
|
|
|
||||||
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Inventories
|
|
|
||||||
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Prepaid expenses and other current assets
|
|
|
||||||
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Total current assets
|
|
|
||||||
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Property and equipment, net
|
|
|
||||||
| Operating lease right-of-use assets |
||||||||
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Other assets:
|
||||||||
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Deposits
|
|
|
||||||
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Deferred tax assets
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|
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||||||
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Identifiable intangible assets
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|
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||||||
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Goodwill
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|
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||||||
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Total other assets
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|
|
||||||
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Total assets
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$
|
|
$
|
|
||||
|
Liabilities and Stockholders’ Equity
|
||||||||
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Current liabilities:
|
||||||||
|
Accounts payable
|
$
|
|
$
|
|
||||
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Other payables and accrued expenses
|
|
|
||||||
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Customer deposits
|
|
|
||||||
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Notes payable – floor plan
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|
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||||||
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Current portion of operating lease liabilities
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||||||||
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Current portion of long-term debt
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Current portion of tax receivable agreement liability
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Total current liabilities
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|
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Long-term Liabilities:
|
||||||||
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Other long-term liabilities
|
|
|
||||||
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Tax receivable agreement liability
|
|
|
||||||
| Noncurrent operating lease liabilities | ||||||||
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Long-term debt, net of current portion and unamortized debt issuance costs
|
|
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||||||
| Total liabilities |
||||||||
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Stockholders’ Equity:
|
||||||||
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Preferred stock, $
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|
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||||||
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Class A common stock, $
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|
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||||||
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Class B common stock, $
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|
|
||||||
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Additional paid-in capital
|
|
|
||||||
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Retained earnings
|
|
|
||||||
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Total stockholders’ equity attributable to OneWater Marine Inc.
|
|
|
||||||
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Equity attributable to non-controlling interests
|
|
|
||||||
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Total stockholders’ equity
|
|
|
||||||
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Total liabilities and stockholders’ equity
|
$
|
|
$
|
|
||||
ONEWATER MARINE INC.
($ in thousands except per share data)
(Unaudited)
|
Three Months Ended
December 31,
|
||||||||
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2021
|
2020
|
|||||||
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Revenues
|
||||||||
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New boat
|
$
|
|
$
|
|
||||
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Pre-owned boat
|
|
|
||||||
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Finance & insurance income
|
|
|
||||||
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Service, parts & other
|
|
|
||||||
|
Total revenues
|
|
|
||||||
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Cost of sales (exclusive of depreciation and amortization shown separately below)
|
||||||||
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New boat
|
|
|
||||||
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Pre-owned boat
|
|
|
||||||
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Service, parts & other
|
|
|
||||||
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Total cost of sales
|
|
|
||||||
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Selling, general and administrative expenses
|
|
|
||||||
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Depreciation and amortization
|
|
|
||||||
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Transaction costs
|
|
|
||||||
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Change in fair value of contingent consideration
|
|
|
||||||
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Income from operations
|
|
|
||||||
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Other expense (income)
|
||||||||
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Interest expense – floor plan
|
|
|
||||||
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Interest expense – other
|
|
|
||||||
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Other expense (income), net
|
|
(
|
)
|
|||||
|
Total other expense, net
|
|
|
||||||
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Income before income tax expense
|
|
|
||||||
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Income tax expense
|
|
|
||||||
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Net income
|
|
|
||||||
| Less: Net income attributable to non-controlling interests |
||||||||
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Less: Net income attributable to non-controlling interests of One Water Marine Holdings, LLC
|
(
|
)
|
(
|
)
|
||||
|
Net income attributable to OneWater Marine Inc
|
$
|
|
$
|
|
||||
|
Earnings per share of Class A common stock – basic
|
$
|
|
$
|
|
||||
|
Earnings per share of Class A common stock – diluted
|
$
|
|
$
|
|
||||
|
Basic weighted-average shares of Class A common stock outstanding
|
|
|
||||||
|
Diluted weighted-average shares of Class A common stock outstanding
|
|
|
|
|||||
ONEWATER MARINE INC.
($ in thousands)
(Unaudited)
|
Class A Common Stock
|
Class B Common Stock
|
|||||||||||||||||||||||||||||||
|
Shares
|
Amount
|
Shares
|
Amount
|
Additional Paid-in Capital
|
Retained Earnings
|
Non-controlling Interest
|
Total Stockholders’ Equity
|
|||||||||||||||||||||||||
|
Balance at September 30, 2021
|
|
$
|
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||||
|
Net income
|
-
|
|
-
|
|
|
|
|
|
||||||||||||||||||||||||
|
Distributions to members
|
-
|
|
-
|
|
|
(
|
)
|
(
|
)
|
(
|
)
|
|||||||||||||||||||||
|
Non-controlling interest in subsidiary
|
-
|
|
-
|
|
|
|
|
|
||||||||||||||||||||||||
|
Exchange of B shares for A shares
|
|
|
(
|
)
|
(
|
)
|
|
|
(
|
)
|
|
|||||||||||||||||||||
|
Establishment of liabilities under tax receivable agreement and related changes to deferred tax assets associated with increases in tax basis
|
-
|
|
-
|
|
(
|
)
|
|
|
(
|
)
|
||||||||||||||||||||||
|
Shares issued upon vesting of equity-based awards, net of tax withholding
|
|
|
|
|
(
|
)
|
|
|
(
|
)
|
||||||||||||||||||||||
|
Shares issued in connection with a business combination
|
||||||||||||||||||||||||||||||||
|
Equity-based compensation
|
-
|
|
-
|
|
|
|
|
|
||||||||||||||||||||||||
|
Balance at December 31, 2021
|
|
$
|
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||||
|
Class A Common Stock
|
Class B Common Stock
|
|||||||||||||||||||||||||||||||
|
Shares
|
Amount
|
Shares
|
Amount
|
Additional Paid-in Capital
|
Retained Earnings
|
Non-controlling Interest
|
Total Stockholders’ Equity
|
|||||||||||||||||||||||||
|
Balance at September 30, 2020
|
|
$
|
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||||
|
Net income
|
-
|
|
-
|
|
|
|
|
|
||||||||||||||||||||||||
|
Distributions to members
|
-
|
|
-
|
|
|
|
(
|
)
|
(
|
)
|
||||||||||||||||||||||
|
Effect of September offering, including underwriter exercise of option to purchase shares
|
|
|
(
|
)
|
(
|
)
|
|
|
(
|
)
|
(
|
)
|
||||||||||||||||||||
|
Exchange of B shares for A shares
|
|
|
(
|
)
|
(
|
)
|
|
|
(
|
)
|
|
|||||||||||||||||||||
|
Establishment of liabilities under tax receivable agreement and related changes to deferred tax assets associated with increases in tax basis
|
-
|
|
-
|
|
(
|
)
|
|
|
(
|
)
|
||||||||||||||||||||||
|
Adjustment to adopt Topic 842
|
-
|
|
-
|
|
|
|
|
|
||||||||||||||||||||||||
|
Equity-based compensation
|
-
|
|
-
|
|
|
|
|
|
||||||||||||||||||||||||
|
Balance at December 31, 2020
|
|
$
|
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||||
|
For the Three Months Ended December 31
|
2021
|
2020
|
||||||
|
Cash flows from operating activities
|
||||||||
|
Net income
|
$
|
|
$
|
|
||||
|
Adjustments to reconcile net income to net cash used in operating activities:
|
||||||||
|
Depreciation and amortization
|
|
|
||||||
|
Equity-based awards
|
|
|
||||||
|
Gain on asset disposals
|
(
|
)
|
(
|
)
|
||||
|
Non-cash interest expense, net
|
|
|
||||||
|
Deferred income tax provision
|
|
(
|
)
|
|||||
|
Loss on change in fair value of contingent consideration
|
||||||||
|
(Increase) decrease in assets:
|
||||||||
|
Accounts receivable
|
|
|
||||||
|
Inventories
|
(
|
)
|
(
|
)
|
||||
|
Prepaid expenses and other current assets
|
|
|
||||||
|
Deposits
|
(
|
)
|
(
|
)
|
||||
|
Increase (decrease) in liabilities:
|
||||||||
|
Accounts payable
|
|
(
|
)
|
|||||
|
Other payables and accrued expenses
|
(
|
)
|
(
|
)
|
||||
|
Tax receivable agreement liability
|
||||||||
|
Customer deposits
|
|
|
||||||
|
Net cash used in operating activities
|
(
|
)
|
(
|
)
|
||||
|
Cash flows from investing activities
|
||||||||
|
Purchases of property and equipment and construction in progress
|
(
|
)
|
(
|
)
|
||||
|
Proceeds from disposal of property and equipment
|
|
|
||||||
|
Cash used in acquisitions
|
(
|
)
|
(
|
)
|
||||
|
Net cash used in investing activities
|
(
|
)
|
(
|
)
|
||||
|
Cash flows from financing activities
|
||||||||
|
Net borrowings from floor plan
|
|
|
||||||
|
Proceeds from long-term debt
|
|
|
||||||
|
Payments on long-term debt
|
(
|
)
|
(
|
)
|
||||
|
Payments of debt issuance costs
|
(
|
)
|
(
|
)
|
||||
|
Payments of September 2020 offering costs
|
|
(
|
)
|
|||||
|
Payments of tax withholdings for equity-based awards
|
(
|
)
|
||||||
|
Distributions to members
|
(
|
)
|
(
|
)
|
||||
|
Net cash provided by financing activities
|
|
|
||||||
|
Net change in cash
|
|
(
|
)
|
|||||
|
Cash and restricted cash at beginning of period
|
|
|
||||||
|
Cash and restricted cash at end of period
|
$
|
|
$
|
|
||||
|
Supplemental cash flow disclosures
|
||||||||
|
Cash paid for interest
|
$
|
|
$
|
|
||||
|
Cash paid for income taxes
|
|
|
||||||
|
Noncash items
|
||||||||
|
Acquisition purchase price funded by seller notes payable
|
$
|
|
$
|
|
||||
|
Acquisition purchase price funded by contingent consideration
|
|
|
||||||
|
Accrued purchase consideration
|
||||||||
|
Acquisition purchase price funded by issuance of Class A common stock
|
||||||||
|
Purchase of property and equipment funded by long-term debt
|
|
|
||||||
| Initial operating lease right-of-use assets for adoption of Topic 842 |
||||||||
| Right-of-use assets obtained in exchange for new operating lease liabilities | ||||||||
| Distributions, declared not yet paid |
||||||||
OneWater Marine Inc. and Subsidiaries
(Unaudited)
| 1. |
Description of Company and Basis of Presentation
|
Description of the Business
OneWater Marine Inc. (“OneWater Inc.”) was incorporated in Delaware on
April 3, 2019 and was a wholly-owned subsidiary of One Water Marine Holdings, LLC (“OneWater LLC”). Pursuant to a reorganization on February 11, 2020 into a holding company structure for the purpose of facilitating an initial public
offering (the “IPO”) and related transactions in order to carry on the business of OneWater LLC and its subsidiaries (together with OneWater Marine Inc., the “Company”), OneWater Inc. is the holding company and its sole material asset is
the equity interest in OneWater LLC. OneWater LLC was organized as a limited liability company under the law of the State of Delaware in 2014 and is the parent company of One Water Assets & Operations (“OWAO”), and its wholly-owned
and majority-owned subsidiaries.
The Company is one of the largest recreational boat retailers in the
United States. The Company engages primarily in the retail sale, brokerage, and service of new and pre-owned boats, motors, trailers, marine parts and accessories, and offers slip and storage accommodations in certain locations. The
Company also arranges related boat financing, insurance, and extended service contracts for customers with third-party lenders and insurance companies. As of December 31, 2021, the Company operated a total of 75 retail locations, 8
distribution centers/warehouses and multiple online marketplaces in fifteen states, several of which are in the top twenty
states for marine retail expenditures.
Operating results are generally subject to seasonal variations. Demand
for products is generally highest during the third and fourth quarters of the fiscal year and, accordingly, revenues are generally expected to be higher during these periods. General economic conditions and consumer spending patterns can
negatively impact the Company’s operating results. Unfavorable local, regional, national, or global economic developments, global public health concerns, including the COVID-19 pandemic, or uncertainties could reduce consumer spending and
adversely affect the Company’s business. Consumer spending on discretionary goods may also decline as a result of lower consumer confidence levels, even if prevailing economic conditions are otherwise favorable. Economic conditions in
areas in which the Company operates stores, particularly in the Southeast, can have a major impact on the Company’s overall results of operations. Local influences such as corporate downsizing, inclement weather such as hurricanes and
other storms, environmental conditions, and other events could adversely affect the Company’s operations in certain markets and in certain periods. Any extended period of adverse economic conditions or low consumer confidence is likely to
have a negative effect on the Company’s business.
Sales of new boats from the Company’s top ten brands represent approximately 34.5 %
and 41.2 % of total sales for the three months ended December 31, 2021 and 2020, respectively, making them major suppliers of
the Company. Of this amount, Malibu Boats, Inc., including its brands Malibu, Axis, Cobalt, Pursuit, Maverick, Hewes, Cobia and Pathfinder accounted for 14.1 % and 13.7 % of consolidated revenue for the three months ended
December 31, 2021 and 2020, respectively. As is typical in the industry, the Company contracts with most manufacturers under renewable annual dealer agreements, each of which provides the right to sell various makes and models of boats
within a given geographic region. Any change or termination of these agreements, or the agreements discussed above, for any reason, or changes in competitive, regulatory, or marketing practices, including rebate or incentive programs,
could adversely affect results of operations. Pre-owned boats are usually trade-ins from retail customers who are purchasing a boat from the Company.
Principles of Consolidation
As the sole managing member of OneWater LLC, OneWater Inc. operates and
controls all of the businesses and affairs of OneWater LLC, and through OneWater LLC and its wholly-owned subsidiaries as well as majority-owned subsidiaries over which the Company exercises control, conducts its business. As a result,
OneWater Inc. consolidates the financial results of OneWater LLC and its subsidiaries and reports non-controlling interests related to the portion of economic interest not owned units of OneWater LLC (the “OneWater LLC Units”) not owned
by OneWater Inc., which will reduce net income (loss) attributable to OneWater Inc.’s Class A stockholders. As of December 31, 2021, OneWater Inc. owned 90.6 % of the economic interest of OneWater LLC.
Additionally, the Company owns 80 % of the economic interest of Quality Assets and Operations, over which the Company exercises control and the minority interest in this
subsidiary has been recorded accordingly. See Note 4 for additional information regarding the acquisition.
Basis of Financial Statement Preparation
The accompanying unaudited condensed consolidated
financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial statements, which do not include all the information and notes required by such accounting
principles for annual financial statements. The unaudited condensed consolidated financial statements should be read in conjunction with OneWater Inc.’s Annual Report on Form 10-K for the year ended September 30, 2021. All adjustments,
consisting of only normal recurring adjustments considered necessary for fair presentation, have been reflected in these unaudited condensed consolidated financial statements.
All intercompany transactions have been eliminated in consolidation.
The Company operates on a fiscal year basis with the first day of the fiscal year being October 1, and the last day of the year ending on September 30. Additionally, since there are no differences between net income and comprehensive
income, all references to comprehensive income have been excluded from the accompanying unaudited condensed consolidated financial statements.
COVID-19 Pandemic
In March 2020, the Company began seeing the impact of the COVID-19
global pandemic on its business. During the subsequent months the Company followed the guidance of local governments and health officials, we temporarily closed or reduced staffing at certain departments and locations. All locations have
reopened and the Company has implemented cleaning and social distancing techniques at each of its locations. In light of the current environment, the Company’s sales team members are providing customers with the option of in-person or
virtual walkthroughs of inventory and/or private, at home or on water showings. The duration and related impact on the Company’s consolidated financial statements is currently uncertain, and it is possible that the pandemic, including the
resurgence of COVID-19 in certain geographic areas or the emergence of variant strains of the virus, may negatively impact the Company’s future results of operations. The impact of COVID-19 on our suppliers and the recent increase in
demand for marine retail products has led to industry-wide supply chain constraints. The Company is monitoring and assessing the situation and preparing for implications to the business, including the ability to safely operate its stores,
access to inventory and customer demand.
| 2. |
Summary of Significant Accounting Policies
|
Fair Value of Financial Instruments
The Company’s financial instruments include cash and cash equivalents, accounts
receivable, accounts payable, other payables and accrued expenses, floor plan notes payable, term note payable and revolving note payable with Truist Bank, seller notes payable and company vehicle notes payable. The carrying values approximate their fair values because of the nature of their terms and current market rates of these instruments.
Inventories
Inventories are stated at the lower of cost or net realizable value. The cost of
the new and pre-owned boat inventory is determined using the specific identification method. In assessing lower of cost or net realizable value, the Company considers the aging of the boats, historical sales of a brand and current market
conditions. The cost of parts and accessories is determined using the weighted average cost method.
Goodwill and Other Identifiable Intangible Assets
Goodwill
and intangible assets are accounted for in accordance with the Financial Accounting Standards Board (‘‘FASB’’) Accounting Standards Codification (‘‘ASC’’) 350, ‘‘Intangibles - Goodwill and Other’’ (‘‘ASC 350’’), which provides that the excess of cost over the fair value of the net assets
of businesses acquired, including other identifiable intangible assets, is recorded as goodwill. Goodwill is an asset representing operational synergies and future economic benefits arising from other assets acquired in a business
combination that are not individually identified and separately recognized. In accordance with ASC 350, Goodwill is tested for impairment at least annually, or more frequently when events or circumstances indicate that impairment might have occurred. ASC 350 also
states that if an entity determines, based on an assessment of certain qualitative factors, that it is more likely than not that the fair value of a reporting unit is greater than its carrying amount, then a quantitative goodwill impairment test
is unnecessary.
In
evaluating goodwill for impairment, if the fair value of a reporting unit is less than its carrying value, the difference would represent the amount of required goodwill impairment. To the extent the reporting unit’s earnings decline significantly
or there are changes in one or more of these inputs that would result in a lower valuation, it could cause the carrying value of the reporting unit to exceed its fair value and thus require the Company to record goodwill impairment.
Identifiable intangible assets consist of trade names related to the acquisitions
the Company has completed. The Company has determined that trade names have an indefinite life, as there are no economic, contractual or other factors that limit their useful lives and they are expected to generate value as long as the trade name
is utilized by the dealer group, and therefore, are not subject to amortization. Financial statement risk exists to the extent identifiable intangibles become impaired due to the decrease in the fair value of the identifiable assets.
Sales Tax
The Company collects sales tax on all of the Company’s sales to nonexempt
customers and remits the entire amount to the states that imposed the sales tax on and concurrent with specific sales transactions. The Company’s accounting policy is to exclude the tax collected and remitted to the states from revenues and cost of
sales.
Revenue Recognition
Revenue is recognized from the sale of products and commissions earned on new and
pre-owned boats (including used, brokerage, consignment and wholesale) when ownership is transferred to the customer, which is generally upon acceptance or delivery to the customer. At the time of acceptance or delivery, the customer is able to
direct the use of, and obtain substantially all of the benefits at such time. We are the principal with respect to revenue from new, pre-owned and consignment sales and such revenue is recorded at the gross sales price. With respect to brokerage
transactions, we are acting as an agent in the transaction, therefore the fee or commission is recorded on a net basis.
Revenue from parts and service operations (boat maintenance and repairs) are recorded over time as services
are performed. Satisfaction of this performance obligation creates an asset with no alternative use for which an enforceable right to payment for performance to date exists within our contractual agreements. Each boat maintenance and repair
service is a single performance obligation that includes both the parts and labor associated with the service. Payment for boat maintenance and repairs is typically due upon the completion of the service, which is generally completed within a
period of one year or less from contract inception. The Company recorded contract assets in prepaid expenses and other current assets of $3.0
and $2.3 million as of December 31, 2021 and September 30, 2021, respectively. Revenue from parts and accessories sold directly to a
customer (not on a repair order) are recognized when control of the items is transferred to the customer, which is typically upon shipment.
Certain
parts and service transactions require the Company to perform shipping and handling activities after the transfer of control to the customer (e.g., when control transfers prior to delivery). They are considered fulfillment activities, and
accordingly, the costs are accrued when the related revenue is recognized and are included in selling, general and administrative expenses.
Revenue from storage and marina operations is recognized on a straight-line basis
over the term of the contract as services are completed. Revenue from arranging financing, insurance and extended warranty contracts to customers through various third-party financial institutions and insurance companies is recognized when the
related boats are sold. We do not directly finance our customers’ boat, motor or trailer purchases. We are acting as an agent in the transaction, therefore the commission is recorded on a net basis. Subject to our agreements and in the event of
early cancellation, prepayment or default of such loans or insurance contracts by the customer, we may be assessed a charge back for a portion of the commission paid by the third-party financial institutions and insurance companies. We reserve for
these chargebacks based on our historical experience with repayments or defaults. Chargebacks were not material to the unaudited condensed consolidated financial statements for the three months ended December 31, 2021.
Contract
liabilities consist of deferred revenues from marina and storage operations and customer deposits and are classified in customer deposits in the Company’s unaudited condensed consolidated balance sheets. Deposits received from customers are
recorded as a liability until the related sales orders have been fulfilled by us and control of the vessel or part/accessory is transferred to the customer. The activity in customer deposits for the three months ended December 31, 2021 is as
follows:
|
($ in thousands)
|
Three Months Ended
December 31, 2021
|
|||
|
Beginning contract liability
|
$
|
|
||
|
Revenue recognized from contract liabilities
included in the beginning balance
|
( |
) | ||
|
Increases due to cash received, net of amounts
recognized in revenue during the period
|
||||
|
Ending contract liability
|
$
|
|
||
The following tables set forth percentages on the timing of revenue recognition
for the three months ended December 31, 2021 and 2020.
| Three Months Ended
December 31, 2021
|
Three Months Ended December 31, 2020 |
|||||||
|
Goods and services transferred at a point in time
|
|
%
|
|
%
|
||||
|
Goods and services transferred over time
|
|
%
|
|
%
|
||||
|
Total Revenue
|
|
%
|
|
%
|
||||
Income Taxes
OneWater Inc. is a corporation and as a result, is subject to U.S. federal, state
and local income taxes. We account for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events included in the consolidated
financial statements. Under this method, we determine deferred tax assets and liabilities on the basis of the differences between the book value and tax bases of assets and liabilities by using enacted tax rates in effect for the year in which the
differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period in which the enactment date occurs. We recognize deferred tax assets to the extent we believe
these assets are more-likely-than-not to be realized. In making such a determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income,
tax planning strategies and recent results of operations.
OneWater LLC is treated as a partnership for U.S. federal income tax purposes and
therefore does not pay U.S. federal income tax on its taxable income. Instead, the OneWater LLC members are liable for U.S. federal income tax on their respective shares of the Company’s taxable income reported on the members’ U.S. federal income
tax returns.
When there are situations with uncertainty as to the timing of the deduction, the
amount of the deduction, or the validity of the deduction, the Company adjusts the financial statements to reflect only those tax positions that are more-likely-than-not to be sustained. Positions that meet this criterion are measured using the
largest benefit that is more than 50% likely to be realized. Interest and penalties related to income taxes are included in the benefit (provision) for income taxes in the consolidated statements of operations.
Vendor Consideration Received
Consideration received from vendors is accounted for in accordance with FASB
Accounting Standards Codification 330, ‘‘Inventory’’ (‘‘ASC 330’’). Pursuant to ASC 330, manufacturer incentives based upon cumulative volume of sales and purchases are recorded as a reduction of inventory cost and related cost of sales when the
amounts are probable and reasonably estimable.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires
management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities as of the date of the financial statements, and the reported amounts of revenues and expenses
during the periods presented. Actual results could differ materially from these estimates. Estimates and assumptions are reviewed periodically, and the effects of any revisions are reflected in the consolidated financial statements in the period
they are determined to be necessary. Significant estimates made in the accompanying unaudited condensed consolidated financial statements include, but are not limited to, those relating to inventory mark downs, certain assumptions related to
intangible and long-lived assets, share based compensation, valuation of acquisition contingent consideration and accruals for expenses relating to business operations.
Segment Information
As of December 31, 2021 and September 30, 2021, the Company had one
| 3. |
New Accounting Pronouncements
|
In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740) – Simplifying the Accounting for Income Taxes”. The pronouncement is effective for a public company’s annual reporting periods beginning after December 15,
2020, and interim periods within those annual periods. The Company adopted the new guidance in fiscal first quarter 2022. The adoption of the guidance did not have a material impact on the Company’s financial statement.
In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform”,
which provides temporary optional guidance to companies impacted by the transition away from the London Interbank Offered Rate (“LIBOR”). The guidance provides certain expedients and exceptions to applying GAAP in order to lessen the
potential accounting burden when contracts, hedging relationships, and other transactions that reference LIBOR as a benchmark rate are modified. The guidance is effective upon issuance and expires on December 31, 2022. The Company is
currently assessing the impact of the LIBOR transition and this ASU on the Company’s financial statements.
In October 2021, the FASB issued ASU 2021-08, “Business Combinations (Topic 805) – Accounting for Contract Assets and Contract Liabilities from
Contracts with Customers”, which is intended to improve the accounting for acquired revenue contracts with customers in a business combination by addressing diversity in practice and inconsistency related to the recognition of an
acquired contract liability and payment terms and their effect on subsequent revenue recognized by the acquirer. The pronouncement is effective for a public company’s annual reporting periods beginning after December 15, 2022, and
interim periods within those annual periods. The Company is currently evaluating the impact that this standard will have on the consolidated financial statements. The Company plans to adopt the pronouncement in fiscal year 2024.
| 4. |
Acquisitions
|
The results of operations of acquisitions are included in the
accompanying unaudited condensed consolidated financial statements from the acquisition date. The purchase price of acquisitions is allocated to identifiable tangible assets and intangible assets acquired based on their estimated fair
values at the acquisition date, with the excess being allocated to goodwill. Under the acquisition method of accounting, the purchase price is allocated to the tangible and intangible assets acquired and liabilities assumed based on
information currently available. For the fiscal first quarter 2022 acquisitions, the valuation of tangible assets, assumed liabilities and identifiable intangible assets are preliminary as the acquisitions are subject to certain customary
closing and post-closing adjustments and certain valuations are not complete. Any changes to the value of identifiable intangible assets will be reclassified from goodwill upon the completion of the valuations.
Fiscal First Quarter 2022
For the three months ended December 31, 2021, the Company completed the following
transactions:
|
•
|
On October 1, 2021, Naples Boat Mart with
|
|
•
|
On November 30, 2021, T-H Marine, a leading provider of branded marine parts and accessories, with locations in Alabama, Florida, Illinois, Indiana,
Oklahoma and Texas
|
|
•
|
On December 1, 2021, Norfolk Marine Company with
|
|
•
|
On December 31, 2021, a majority interest in Quality Boats with
|
Consideration paid for the acquisitions was $302.1 million with $278.8 million paid at closing (net of cash acquired), $1.1
million financed through a note payable to the sellers bearing interest at a rate of 4.0 % per year, estimated payments of $10.0 million in contingent consideration, $5.4
million in accrued purchase consideration and the remaining $6.8 million with the issuance of shares of Class A common stock.
The notes are payable in one lump sum on December 1, 2024, with interest payments due quarterly. The estimated payments of contingent consideration are part of multiple earnouts varying from the achievement of certain post-acquisition
increases in adjusted EBITDA of the Company to the generation of acquisition leads for the Company. The acquisition contingent consideration was developed using weighted average projections based on the Company’s historical experience,
current forecasts for the industry and current expectations of the ability to generate viable acquisition leads. There are no
minimum payouts on the acquisition contingent consideration and the maximum payout is $18.8 million.
The table below summarizes the preliminary fair values of the assets
acquired and liabilities assumed at the acquisition date, including the goodwill recorded as a result of the transaction:
|
Summary of Assets Acquired and Liabilities Assumed
|
||||||||||||||||
|
($ in thousands)
|
T-H Marine
|
Quality Boats
|
Other
Acquisitions
|
Total
Acquisitions |
||||||||||||
|
Accounts receivable
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
|
Inventories
|
|
|
|
|
||||||||||||
|
Prepaid expenses
|
|
|
|
|
||||||||||||
|
Property and equipment
|
|
|
|
|
||||||||||||
| Operating lease right-of-use assets |
||||||||||||||||
| Identifiable intangible assets |
||||||||||||||||
|
Goodwill
|
|
|
|
|
||||||||||||
|
Accounts payable
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||
|
Accrued expenses
|
(
|
)
|
|
(
|
)
|
(
|
)
|
|||||||||
|
Customer deposits
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||
| Operating lease liabilities |
( |
) | ( |
) | ( |
) | ||||||||||
|
Aggregate acquisition date fair value
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
|
Consideration transferred
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
|
Fair value of non-controlling interests
|
|
|
|
|
||||||||||||
|
Aggregate acquisition date fair value
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Included in our results for the three months ended December 31, 2021,
the acquisitions contributed $14.2 million to our consolidated revenue and $1.1 to our income before income tax expense, respectively. Costs related to acquisitions are included in transaction costs and primarily relate to legal, accounting,
valuation and other fees, which are charged directly to operations in the accompanying consolidated statements of operations as incurred in the amount of $3.0 for the three months ended December 31, 2021. Comparatively, we recorded $0.2
million in acquisition related transaction costs for the three months ended December 31, 2020.
The following unaudited pro forma summary presents consolidated
information as if all acquisitions in the three month periods ended December 31, 2021 and 2020, had occurred on October 1, 2020:
|
Three Months Ended
December 31, 2021
|
Three Months Ended
December 31, 2020
|
|||||||
|
($ in thousands)
|
||||||||
|
(Unaudited)
|
||||||||
|
Pro forma revenue
|
$
|
|
$
|
|
||||
|
Pro forma net income
|
$
|
|
$
|
|
||||
The amounts have been calculated by applying our accounting policies and estimates. The results of the acquired stores
have been adjusted to reflect the following: the reversal of goodwill amortization under the Private Company Council accounting alternative and the payment of management fees. Certain acquired entities completed acquisitions during the
periods presented, prior to our acquisition of the business. Their acquisitions are included in the results of their operations from the acquisition date forward but were not included on a pro forma basis. Pro forma net income has been
tax affected based on the Company’s effective tax rate in the historical periods presented.
We expect substantially all of the goodwill related to completed
acquisitions to be deductible for federal income tax purposes.
| 5. |
Inventories
|
Inventories consisted of the following at:
|
($ in thousands)
|
December 31,
2021
|
September 30,
2021
|
||||||
|
New vessels
|
$
|
|
$
|
|
||||
|
Pre-owned vessels
|
|
|
||||||
|
Work in process, parts and accessories
|
|
|
||||||
|
$
|
|
$
|
|
|||||
| 6. |
Goodwill and Other Identifiable Intangible Assets
|
Our acquisitions have resulted in the recording of goodwill and other identifiable intangible assets.
Goodwill is an asset representing operational synergies and future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized. Identifiable intangible
assets consist of trade names related to the acquisitions the Company has completed. The changes in goodwill and identifiable intangible assets are as follows:
|
($ in thousands)
|
Goodwill
|
|||
|
Balance as of September 30, 2021
|
$
|
|
||
|
Goodwill acquisitions during the
three months ended December 31, 2021
|
|
|||
|
Balance as of December 31, 2021
|
$
|
|
||
|
($ in thousands)
|
Identifiable
Intangible Assets
|
|||
|
Balance as of September 30, 2021
|
$
|
|
||
|
Acquired identifiable intangible assets
during the three months ended December 31, 2021
|
|
|||
|
Balance as of December 31, 2021
|
$
|
|
||
| 7. |
Notes Payable — Floor Plan
|
The Company maintains an ongoing wholesale marine products inventory
financing program with a syndicate of banks. The program is administered by Wells Fargo Commercial Distribution Finance, LLC (“Wells Fargo”). On December 29, 2021, the Company entered into the Seventh Amended and Restated Inventory
Financing Agreement (the “Inventory Financing Facility”) to increase the maximum borrowing amount available to $500.0 million.
The Inventory Financing Facility expires on December 1, 2023. The outstanding balance of the facility was $195.6 million and $114.2 million, as of December 31, 2021 and September 31, 2021, respectively.
On December
1, 2021, the Company entered into the Fifth Amendment to the Sixth Amended and Restated Inventory Financing Agreement to, among other things, increase the amount of Permitted Indebtedness to $380 million and to extend the term of the Inventory Financing Facility to January 1, 2022 . The maximum borrowing amount available and interest rates remained unchanged.
On October
29, 2021, the Company entered into the Fourth Amendment to the Sixth Amended and Restated Inventory Financing Agreement, to, among other things, increase the amount of Permitted Indebtedness to $360 million and to extend the term of the Inventory Financing Facility to December 1, 2021 . The maximum borrowing amount available and interest rates remained unchanged.
On
September 23, 2021, the Company entered into the Third Amendment to the Sixth Amended and Restated Inventory Financing Agreement, to, among other things, address the future discontinuance of LIBOR by clarifying the mechanics related to
the transition to a replacement benchmark rate and to extend the term of the Inventory Financing Facility to November 1, 2021. The maximum borrowing amount available remained unchanged
Effective October 1, 2021, interest on new boats and for rental units
is calculated using the Adjusted Average SOFR (as defined in the Inventory Financing Facility) (“SOFR”) plus an
applicable margin of 2.75 % to 5.00 %
depending on the age of the inventory. Interest on pre-owned boats is calculated at the new boat rate plus 0.25 %. Wells Fargo
will finance 100.0 % of the vendor invoice price for new boats, engines and trailers. As of December 31, 2021 the interest rate
on the Inventory Financing Facility ranged from 2.91 % to 5.16 % for new inventory and 3.16 % to 5.41 % for pre-owned inventory. As of September 30, 2021 the interest rate on the Inventory Financing Facility was calculated under the legacy
London Inter-Bank Offering Rate and ranged from 3.08 % to 5.33 % for new inventory and 3.33 % to 5.58 % for pre-owned inventory. Borrowing capacity available at December 31, 2021 and September 30, 2021 was $304.4 million and $278.3
million, respectively.
The Inventory Financing Facility has certain financial and
non-financial covenants as specified in the agreement. The financial covenants include requirements to comply with a maximum Funded Debt to EBITDA Ratio (as defined in the Inventory Financing Facility) as well as a minimum Fixed Charge
Coverage Ratio (as defined in the Inventory Financing Facility). In addition, certain non-financial covenants could restrict the Company’s ability to sell assets (excluding inventory in the normal course of business), engage in certain
mergers and acquisitions, incur additional debt and pay cash dividends or distributions, among others. The Company was in compliance with all covenants at December 31, 2021.
The collateral for the Inventory Financing Facility consists primarily
of our inventory that is financed through the Inventory Financing Facility and related assets, including accounts receivable, bank accounts and proceeds of the foregoing, and excludes the collateral that underlies the term note payable to
Truist Bank.
| 8. |
Long-term Debt and Line of Credit
|
On November 30, 2021, the Company entered into an Incremental Amendment No. 2 (the “Second Amendment”) to the Credit Facility.
The Second Amendment amends the Credit Facility to, among other things, provide for an incremental term loan (the “Incremental Term Loan) in an aggregate principal amount equal to $200.0 million, which will be added to, and constitute part of, the existing $110.0
million term loan and will be on the same terms. Additionally, the Second Amendment further provides a $20.0 million increase
in the revolving commitment, which will be added to, and constitute part of, the existing $30.0 revolving commitment.
The Credit Agreement is collateralized by certain real and personal property (including certain capital stock) of the Company
and its subsidiaries. The collateral does not include inventory and certain other assets of the Company’s subsidiaries financed under the Inventory Financing Facility. The Credit Agreement is subject to certain financial covenants related
to the maintenance of a minimum fixed charge coverage ratio and a maximum consolidated leverage ratio. The credit agreement also contains non-financial covenants and restrictive provisions that, among other things, limit the ability of
the Company to incur additional debt, transfer or dispose of all of its assets, make certain investments, loans or payments and engage in certain transactions with affiliates. The Company was in compliance with all covenants at December
31, 2021.
Long-term debt consisted of the following at:
|
($ in thousands)
|
December 31, 2021
|
September 30, 2021
|
||||||
|
Term note payable to Truist Bank, secured
and bearing interest at
|
$
|
|
$
|
|
||||
|
Revolving note payable for an amount up
to $
|
|
|
||||||
|
Note payable to commercial vehicle
lenders secured by the value of the vehicles bearing interest at rates ranging from
|
|
|
||||||
|
Note payable to Central Marine Services,
Inc., unsecured and bearing interest at
|
|
|
||||||
|
Note payable to Tom George Yacht Sales,
Inc., unsecured and bearing interest at
|
|
|
||||||
|
Note payable to Ocean Blue Yacht Sales,
unsecured and bearing interest at
|
|
|
||||||
|
Note payable to Norfolk Marine Company,
unsecured and bearing interest at
|
|
|
||||||
|
Note payable to Slalom Shop, LLC,
unsecured and bearing interest at
|
|
|
||||||
|
Total debt outstanding
|
|
|
||||||
|
Less current portion (net of debt
issuance costs)
|
(
|
)
|
(
|
)
|
||||
|
Less unamortized portion of debt issuance
costs
|
(
|
)
|
(
|
)
|
||||
|
Long-term debt, net of current portion of
unamortized debt issuance costs
|
$
|
|
$
|
|
||||
| 9. |
Stockholders’ and Members’ Equity
|
Equity-Based Compensation
We maintain the OneWater Marine Inc. Omnibus Incentive Plan (the “LTIP”) to incentivize individuals
providing services to OneWater Inc. and its subsidiaries and affiliates. The LTIP provides for the grant, from time to time, at the discretion of the board of directors of OneWater Marine Inc. (the “Board”) or a committee thereof, of (1) stock
options, (2) stock appreciation rights, (3) restricted stock, (4) restricted stock units, (5) stock awards, (6) dividend equivalents, (7) other stock-based awards, (8) cash awards, (9) substitute awards and (10) performance awards. 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 1,528,224 . The LTIP is and will continue to be administered by the Board, except to the extent the Board elects a committee of directors to administer the LTIP. Class A
common stock subject to an award that expires or is cancelled, forfeited, exchanged, settled in cash or otherwise terminated without delivery of shares (including forfeiture of restricted stock awards) and shares withheld to pay the exercise
price of, or to satisfy the withholding obligations with respect to, an award will again be available for delivery pursuant to other awards under the LTIP.
During the three months ended December 31, 2021, the Board approved the grant
of 52,227 performance-based restricted stock units, which represents 100 % of the target award. Performance-based restricted stock units provide an opportunity for the recipient to receive a number of shares of our common stock based on our
performance during fiscal year 2022 as measured against objective performance goals as determined by the Board. The actual number of units earned may range from 0 % to 200 % of the target number of units depending upon achievement of the performance goals.
Performance-based restricted stock units vest in three equal annual installments, commencing on September 30, 2022. Upon vesting, each
performance-based restricted stock unit equals one share of common stock of the Company. As of December 31, 2021, the Company
estimated achievement of the performance targets at 100 %.
During the three months ended December 31, 2021, the Board approved the grant
of 105,880 time-based restricted stock units. 13,062 restricted stock units fully vest on September 30, 2022 and the remaining 92,818 restricted
stock units vest in three equal annual installments commencing on September 30, 2022.
Compensation cost for time-based restricted stock units is based on the closing price of our common stock on the date immediately
preceding the grant and is recognized on a graded basis over the applicable vesting periods. Compensation cost for performance share units is based on the closing price of our common stock on the date immediately preceding the grant and the
ultimate performance level achieved and is recognized on a graded basis over the three-year vesting period. The Company recognized $2.1 million and $1.1 million of
compensation expense for the three months ended December 31, 2021 and 2020, respectively, which includes $1.0 million and $0.4 million of compensation expense for the three months ended December 31, 2021 and 2020, respectively, for performance share units.
The following table further summarizes activity related to restricted stock units for the three months ended December 31, 2021:
|
Restricted Stock Unit Awards
|
||||||||
|
Number of Shares
|
Weighted Average
Grant Date Fair Value
($)
|
|||||||
|
Unvested at September 30, 2021
|
|
$
|
|
|||||
|
Awarded
|
|
|
||||||
|
Vested
|
(
|
)
|
|
|||||
|
Forfeited
|
|
|
||||||
|
Unvested at December 31, 2021
|
|
$
|
|
|||||
As of December 31, 2021, the total unrecognized compensation expense related to outstanding equity
awards was $11.3 million, which the Company expects to recognize over a weighted-average period of 1.5 years.
We issue shares of our Class A common stock upon the vesting of performance-based
restricted stock units and time-based restricted stock units. These shares are issued from our authorized and not outstanding common stock. In addition, in connection with the vesting of restricted stock units, we repurchase a portion of shares
issued equal to the amount of employee income tax withholding.
Earnings Per Share
Basic and diluted earnings per share of Class A common stock is computed by dividing net income
attributable to OneWater Inc. by the weighted-average number of Class A common stock outstanding during the period. Diluted earnings per share is computed by giving effect to all potentially dilutive shares.
The following table sets forth the calculation of earnings per share for the three months ended December
31, 2021 and 2020 (in thousands, except per share data):
|
Earnings per share:
|
Three Months Ended
December 31, 2021
|
Three Months Ended
December 31, 2020
|
||||||
|
Numerator:
|
||||||||
|
Net income attributable to OneWater Inc
|
$
|
|
$
|
|
||||
|
Denominator:
|
||||||||
|
Weighted-average number of unrestricted
outstanding common shares used to calculate basic net income per share
|
|
|
||||||
|
Effect of dilutive securities:
|
||||||||
|
Restricted stock units
|
|
|
||||||
|
Diluted weighted-average shares of Class A common
stock outstanding used to calculate diluted earnings per share
|
|
|
||||||
|
Earnings per share of Class A
common stock – basic
|
$
|
|
$
|
|
||||
|
Earnings per share of Class A
common stock – diluted
|
$
|
|
$
|
|
||||
Shares of Class B common stock and unvested restricted stock units do not share
in the income (losses) of the Company and are therefore not participating securities. As such, separate presentation of basic and diluted earnings per share under the two-class method has not been presented.
The following number of weighted-average potentially dilutive shares were
excluded from the calculation of diluted earnings per share because the effect of including such potentially dilutive shares would have been antidilutive upon conversion (in thousands):
|
Three Months Ended
December 31, 2021
|
Three Months Ended
December 31, 2020
|
|||||||
|
Class B common stock
|
|
|||||||