OneWater Marine Inc

Previous wording

We believe that we are one of the largest and fastest-growing marine retailers in the United States with 98 dealerships,10 distribution centers/warehouses and multiple online marketplaces as of June 30, 2024. Our dealer groups are located within highly attractive markets throughout the Southeast, Gulf Coast, Mid-Atlantic and Northeast, many of which are in the top twenty states for marine retail expenditures. We believe that we are a market leader by volume in sales of premium boats in many of the markets in which we operate. In addition to boat sales, we also generate sales from related products including finance & insurance and service, parts & other sales. The acquisitions of T-H Marine Supplies, LLC (“T-H Marine”) and Ocean Bio-Chem, LLC (f/k/a Ocean Bio-Chem, Inc. ("Ocean Bio-Chem")) significantly expanded our sales of marine parts and accessories. The combination of our significant scale, diverse inventory, access to premium boat brands, access to a broad array of parts and accessories, and meaningful brand equity enables us to provide a consistently professional experience as reflected in the number of our repeat customers and Dealership same-store sales growth.

Current wording

We believe that we are one of the largest and fastest-growing marine retailers in the United States with 96 dealerships,10 distribution centers/warehouses and multiple online marketplaces as of December 31, 2024. Our dealer groups are located within highly attractive markets throughout the Southeast, Gulf Coast, Mid-Atlantic and Northeast, many of which are in the top twenty states for marine retail expenditures. We believe that we are a market leader by volume in sales of premium boats in many of the markets in which we operate. In addition to boat sales, we also generate sales from related products including finance & insurance and service, parts & other sales. The acquisitions of T-H Marine Supplies, LLC (“T-H Marine”) and Ocean Bio-Chem, LLC (f/k/a Ocean Bio-Chem, Inc. ("Ocean Bio-Chem")) significantly expanded our sales of marine parts and accessories. The combination of our significant scale, diverse inventory, access to premium boat brands, access to a broad array of parts and accessories, and meaningful brand equity enables us to provide a consistently professional experience as reflected in the number of our repeat customers and Dealership same-store sales growth.

Previous wording

As of June 30, 2024, the Dealerships segment includes operations of 98 dealerships in 16 states including Florida, Texas, Alabama and Georgia, among others, and represents approximately 92% of revenues for the three and nine months ended June 30, 2024, respectively. The Dealerships segment engages in the sale of new and pre-owned boats, arranges financing and insurance products, performs repairs and maintenance services, offers marine-related parts and accessories and offers slip and storage accommodations in certain locations. In fiscal year 2023, we sold over 10,000 new and pre-owned boats, many of which were sold to customers who had a trade-in or with whom we otherwise had established relationships. The combination of our significant scale, diverse inventory and revenue streams, access to premium boat brands and meaningful brand equity enables us to provide a consistently professional experience as reflected by the number of our repeat customers and Dealership same-store sales growth.

Current wording

As of December 31, 2024, the Dealerships segment includes operations of 96 dealerships in 17 states including Florida, Texas, Alabama and Georgia, among others, and represents approximately 93% of revenues for the three months ended December 31, 2024. The Dealerships segment engages in the sale of new and pre-owned boats, arranges financing and insurance products, performs repairs and maintenance services, offers marine-related parts and accessories and offers slip and storage accommodations in certain locations. In fiscal year 2024, we sold over 9,500 new and pre-owned boats, many of which were sold to customers who had a trade-in or with whom we otherwise had established relationships. The combination of our significant scale, diverse inventory and revenue streams, access to premium boat brands and meaningful brand equity enables us to provide a consistently professional experience as reflected by the number of our repeat customers and Dealership same-store sales growth.

Previous wording

As of June 30, 2024, the Distribution segment includes the activity of three of our fully-owned businesses and their subsidiaries, which together operate 10 distribution centers/warehouses in Alabama, Florida, Oklahoma, Indiana and Tennessee and represents approximately 8% of revenues for the three and nine months ended June 30, 2024, respectively. The Distribution segment engages in the manufacturing, assembly and distribution of primarily marine-related products for sale to distributors, big box retailers, online retailers and direct to consumers. We offer a wide array of branded parts and accessories including jack plates, rigging parts, plumbing components, LED lighting, storage systems, and appearance, cleaning, and maintenance products for the marine and ancillary industries. All revenue for the Distribution segment is reported in service, parts & other in our consolidated statements of operations.

Current wording

As of December 31, 2024, the Distribution segment includes the activity of three of our fully-owned businesses, Central Assets & Operations, LLC d/b/a PartsVu ("PartsVu"), Ocean Bio-Chem and its subsidiaries and T-H Marine and its subsidiaries, which together operate 10 distribution centers/warehouses in Alabama, Florida, Oklahoma, Indiana and Tennessee and represents approximately 7% of revenues for the three months ended December 31, 2024. The Distribution segment engages in the manufacturing, assembly and distribution of primarily marine-related products for sale to distributors, big box retailers, online retailers and direct to consumers. We offer a wide array of branded parts and accessories including jack plates, rigging parts, plumbing components, LED lighting, storage systems, and appearance, cleaning, and maintenance products for the marine and ancillary industries. All revenue for the Distribution segment is reported in service, parts & other in our consolidated statements of operations.

Previous wording

The boat dealership market is highly fragmented and is comprised of approximately 4,000 dealerships nationwide. Most competing boat retailers are operated by local business owners who own three or fewer stores; however, we do have other large competitors including MarineMax and Bass Pro Shops. Despite our size, we comprise less than 3% of total industry sales. Our scale and business model allow us to leverage our extensive inventory to provide consumers with the ability to find a boat that matches their preferences (e.g., make, model, color, configuration and other options) and to deliver the boat within days while providing a personalized sales experience. In addition to boat sales, we also generate sales from related products including finance & insurance and service, parts and other sales. The acquisitions of T-H Marine and Ocean Bio-Chem have significantly expanded our sales of marine parts & accessories. Our strategic growth in this area is also expected to materially expand our addressable market in the parts and accessories business. We are able to operate with a comparatively higher degree of profitability than other independent retailers because we allocate support resources across our broader base, focus on high margin service, parts and accessories, utilize floor plan financing and provide core back-office functions on a scale that many independent retailers are unable to match. We seek to be the leading marine retailer by total market share within each boating market and within the product segments in which we participate. To the extent that we are not, we will evaluate acquiring other local retailers in order to increase our sales, to add additional brands or to provide us with additional high-quality personnel.

Current wording

The boat dealership market is highly fragmented and is comprised of approximately 4,000 dealerships nationwide. Most competing boat retailers are operated by local business owners who own three or fewer stores; however, we do have other large competitors. Despite our size, we comprise less than 4% of total industry sales. Our scale and business model allow us to leverage our extensive inventory to provide consumers with the ability to find a boat that matches their preferences (e.g., make, model, color, configuration and other options) and to deliver the boat within days while providing a personalized sales experience. In addition to boat sales, we also generate sales from related products including finance & insurance and service, parts & other sales. The addition of our Distribution segment has significantly expanded our sales of marine parts and accessories. Our strategic growth in this area is also expected to materially expand our addressable market in the parts and accessories business. We are able to operate with a comparatively higher degree of profitability than other independent retailers because we allocate support resources across our broader base, focus on high margin service, parts and accessories, utilize floor plan financing and provide core back-office functions on a scale that many independent retailers are unable to match. We seek to be the leading marine retailer by total market share within each boating market and within the product segments in which we participate. To the extent that we are not, we will evaluate acquiring other local retailers in order to increase our sales, to add additional brands or to provide us with additional high-quality personnel.

Previous wording

We have an extensive acquisition track record within the retail marine industry and believe we have developed a reputation for treating sellers and their staff in an honest and fair manner. We typically retain the management team and name of the acquired group. We believe this practice preserves the acquired dealer's customer relationships and goodwill in the local marketplace. We believe our reputation and scale have positioned us as a buyer of choice for marine retailers who want to sell their businesses. Our strategy is to acquire dealerships at attractive EBITDA multiples and then grow same-store sales while benefiting from cost-reducing synergies. Historically, we have typically acquired dealerships for less than 4.0x EBITDA on a trailing twelve-month basis and believe that we will be able to continue to make attractive acquisitions within this range. With the expansion of our Distribution segment, we look to acquire parts and accessories manufacturing and distribution companies within a range of 5.0x – 10.0x EBITDA on a trailing twelve-month basis, depending on the size of the business.

Current wording

We have an extensive acquisition track record within the retail marine industry and believe we have developed a reputation for treating sellers and their staff in an honest and fair manner. We typically retain the management team and name of the acquired group. We believe this practice preserves customer relationships and goodwill in the local marketplace. We believe our reputation and scale have positioned us as a buyer of choice for marine retailers who want to sell their businesses. Our strategy is to acquire dealerships at attractive EBITDA multiples and then grow same-store sales while benefiting from cost-reducing synergies. Historically, we have typically acquired dealerships for less than 4.0x EBITDA on a trailing twelve-month basis and believe that we will be able to continue to make attractive acquisitions within this range. With the expansion of our Distribution segment, we look to acquire parts and accessories manufacturing and distribution companies within a range of 5.0x – 10.0x EBITDA on a trailing twelve-month basis, depending on the size of the business.

Previous wording

General economic conditions and consumer spending patterns can negatively impact our operating results. Unfavorable local, regional, national, or global economic developments or uncertainties, including the adverse economic effects of a global pandemic, supply chain constraints, or a prolonged economic downturn, could reduce consumer spending and adversely affect our business. Consumer spending on discretionary goods may also decline as a result of lower consumer confidence levels, higher interest rates or higher fuel costs, even if prevailing economic conditions are otherwise favorable. Economic conditions in areas in which we operate dealerships, particularly in the Southeast, can have a major impact on our overall results of operations. Local influences, such as corporate downsizing, inclement weather such as hurricanes, tornadoes, and other storms, environmental conditions, and global public health concerns and events have and could adversely affect our 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 our business.

Current wording

General economic conditions and consumer spending patterns can negatively impact our operating results. Unfavorable local, regional, national, or global economic developments or uncertainties, including the adverse economic effects of higher interest rates or inflation, supply chain constraints, or a prolonged economic downturn, could reduce consumer spending and adversely affect our business. Consumer spending on discretionary goods may also decline as a result of lower consumer confidence levels, higher interest rates or higher fuel costs, even if prevailing economic conditions are otherwise favorable. Economic conditions in areas in which we operate dealerships, particularly in the Southeast, can have a major impact on our overall results of operations. Local influences, such as corporate downsizing, inclement weather such as hurricanes, tornadoes, and other storms, environmental conditions, and global public health concerns and events have and could adversely affect our 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 our business.

Previous wording

Our business was significantly impacted during the recessionary period that began in 2007. This period of weakness in consumer spending and depressed economic conditions had a substantial negative effect on our operating results. In response to these conditions we reduced our inventory purchases, closed certain dealerships and reduced headcount. Additionally, in an effort to counteract the downturn, we increased our focus on pre-owned sales, parts and repair services, and finance & insurance services. As a result, we surpassed our pre-recession sales levels in less than 24 months. While we believe the measures we took significantly reduced the impact of the downturn on the business, we cannot guarantee similar results in the event of a future downturn. Additionally, we cannot predict the timing or length of unfavorable economic or industry conditions, including a downturn as a result of pandemics, rising interest rates, inflation, or the extent to which they could adversely affect our operating results.

Current wording

Our business was significantly impacted during the recessionary period that began in 2007. This period of weakness in consumer spending and depressed economic conditions had a substantial negative effect on our operating results. In response to these conditions we reduced our inventory purchases, closed certain dealerships and reduced headcount. Additionally, in an effort to counteract the downturn, we increased our focus on pre-owned sales, parts and repair services, and finance & insurance services. As a result, we surpassed our pre-recession sales levels in less than 24 months. While we believe the measures we took significantly reduced the impact of the downturn on the business, we cannot guarantee similar results in the event of a future downturn. Additionally, we cannot predict the timing or length of unfavorable economic or industry conditions, including a downturn as a result of a global health crisis, rising interest rates, inflation, or the extent to which they could adversely affect our operating results.

Previous wording

We have a diversified revenue profile that is comprised of new boat sales, pre-owned boat sales, finance & insurance products, repair and maintenance services, and parts and accessories sales. During different phases of the economic cycle, consumer behavior may shift away from new boats; however, we are well-positioned to generate revenue from pre-owned boats, repair and maintenance services, and parts and accessories, which have all historically increased during periods of economic uncertainty. We generate pre-owned sales from boats traded-in for new and pre-owned boats, boats purchased from customers, brokerage transactions, consignment sales and wholesale sales. We continue to focus on all aspects of our business including non-boat sales of finance & insurance products, repair and maintenance services, and parts and accessories. Although non-boat sales contributed 18.9% and 18.7% to revenue in the three months ended June 30, 2024 and 2023, respectively, and 18.2% and 19.1% to revenue in the nine months ended June 30, 2024 and 2023, respectively, due to the higher gross margin on these product and service lines, non-boat sales contributed 40.4% and 36.5% to gross profit in the three months ended June 30, 2024 and 2023, respectively, and 38.6% and 34.8% to gross profit in the nine months ended June 30, 2024 and 2023, respectively. We have also diversified our business across geographies, dealership types (e.g., fresh water and salt water), and product offerings (e.g., focus on parts and accessories businesses through our Distribution segment) in order to reduce the effects of seasonality and cyclicality of our business. In addition to seasonality, revenue and operating results may be significantly affected by quarter-to-quarter changes in economic conditions, manufacturer incentive programs, adverse weather conditions and other developments outside of our control.

Current wording

We have a diversified revenue profile that is comprised of new boat sales, pre-owned boat sales, finance & insurance products, repair and maintenance services, and parts and accessories sales. During different phases of the economic cycle, consumer behavior may shift away from new boats; however, we are well-positioned to generate revenue from pre-owned boats, repair and maintenance services, and parts and accessories, which have all historically increased during periods of economic uncertainty. We generate pre-owned sales from boats traded-in for new and pre-owned boats, boats purchased from customers, brokerage transactions, consignment sales and wholesale sales. We continue to focus on all aspects of our business including non-boat sales of finance & insurance products, repair and maintenance services, and parts and accessories. Although non-boat sales contributed approximately 18.9% and 19.1% to revenue in the three months ended December 31, 2024 and 2023, respectively, due to the higher gross margin on these product and service lines, non-boat sales contributed 42.8% and 38.1% to gross profit in the three months ended December 31, 2024 and 2023, respectively. We have also diversified our business across geographies, dealership types (e.g., fresh water and salt water), and product offerings (e.g., focus on parts and accessories businesses through our Distribution segment) in order to reduce the effects of seasonality and cyclicality of our business. In addition to seasonality, revenue and operating results may be significantly affected by quarter-to-quarter changes in economic conditions, manufacturer incentive programs, adverse weather conditions and other developments outside of our control.

Previous wording

Selling, general and administrative expenses consist primarily of salaries and incentive-based compensation, advertising, rent, insurance, utilities, and other customary operating expenses. A portion of our cost structure is variable (such as sales commissions and incentive compensation), or controllable (such as advertising), which we believe allows us to adapt to changes in the retail environment over the long term. We typically evaluate our variable expenses, selling expenses and all other selling, general and administrative expenses in the aggregate as a percentage of total revenue.

Current wording

Selling, general and administrative expenses consist primarily of base salaries and incentive-based compensation, advertising, rent, insurance, utilities, and other customary operating expenses. A portion of our cost structure is variable (such as sales commissions and incentive compensation), or controllable (such as advertising), which we believe allows us to adapt to changes in the retail environment over the long term. We typically evaluate our variable expenses, selling expenses and all other selling, general and administrative expenses in the aggregate as a percentage of total revenue.

Previous wording

We define Adjusted EBITDA as net income (loss) before interest expense – other, income tax (benefit) expense, depreciation and amortization and other (income) expense, further adjusted to eliminate the effects of items such as the change in fair value of contingent consideration, loss on extinguishment of debt, transaction costs, stock-based compensation and restructuring and impairment. See ‘‘—Comparison of Non-GAAP Financial Measure’’ for more information and a reconciliation of Adjusted EBITDA to net income, the most directly comparable financial measure calculated and presented in accordance with GAAP.

Current wording

We define Adjusted EBITDA as net income (loss) before interest expense – other, income tax (benefit) expense, depreciation and amortization and other (income) expense, further adjusted to eliminate the effects of items such as the change in fair value of contingent consideration, transaction costs, stock-based compensation and restructuring and impairment. See ‘‘—Comparison of Non-GAAP Financial Measures’’ for more information and a reconciliation of Adjusted EBITDA to net income (loss), the most directly comparable financial measure calculated and presented in accordance with GAAP.

Previous wording

We define Adjusted Net Income Attributable to OneWater Marine Inc. as Net Income Attributable to OneWater Marine Inc. before transaction costs, intangible amortization, change in fair value of contingent consideration, restructuring and impairment and other (income) expense, all of which are then adjusted for an allocation to the non-controlling interest of OneWater LLC. Each of these adjustments are subsequently adjusted for income tax at an estimated effective tax rate. Management also reports Adjusted Diluted Earnings Per Share which presents all of the adjustments to net income attributable to OneWater Marine Inc. on a per share basis. See ‘‘—Comparison of Non-GAAP Financial Measure’’ for more information and a reconciliation of Adjusted Net Income Attributable to OneWater Marine Inc. and Adjusted Diluted Earnings Per Share to net income and net earnings per share, respectively, the most directly comparable financial measures calculated and presented in accordance with GAAP.

Current wording

We define Adjusted Net Income (Loss) Attributable to OneWater Marine Inc. as net income (loss) attributable to OneWater Marine Inc. before transaction costs, intangible amortization, change in fair value of contingent consideration, restructuring and impairment and other (income) expense, all of which are then adjusted for an allocation to the non-controlling interest of OneWater LLC. Each of these adjustments are subsequently adjusted for income tax at an estimated effective tax rate. Management also reports Adjusted Diluted Earnings Per Share which presents all of the adjustments to net income (loss) attributable to OneWater Marine Inc. on a per share basis. See ‘‘—Comparison of Non-GAAP Financial Measures’’ for more information and a reconciliation of Adjusted Net Income (Loss) Attributable to OneWater Marine Inc. and Adjusted Diluted Earnings (Loss) Per Share to net income (loss) and net earnings (loss) per share, respectively, the most directly comparable financial measures calculated and presented in accordance with GAAP.

Previous wording

The comparability of our results of operations between the periods discussed below is naturally affected by the acquisitions and dispositions we have completed during such periods. We are also continuously evaluating and pursuing acquisitions on an ongoing basis, and such acquisitions, if completed, will continue to impact the comparability of our financial results. While we expect continued growth and strategic acquisitions in the future, our acquisitions may have materially different characteristics than our historical results, and such differences in economics may impact the comparability of our future results of operations to our historical results. Additionally, while we do not expect significant dispositions in the future, any such dispositions may impact the comparability of our future results of operations to our historical results.

Current wording

The comparability of our results of operations between the periods discussed below is naturally affected by the acquisitions we have completed during such periods. We are also continuously evaluating and pursuing acquisitions on an ongoing basis, and such acquisitions, if completed, will continue to impact the comparability of our financial results. While we expect continued growth and strategic acquisitions in the future, our acquisitions may have materially different characteristics than our historical results, and such differences in economics may impact the comparability of our future results of operations to our historical results.

Previous wording

We refer to the fiscal year 2024 acquisitions described above collectively as the “2024 Acquisitions.” The acquisition of Garden State Yacht Sales is partially reflected in our unaudited Condensed Consolidated Statements of operations for the three and nine months ended June 30, 2024.

Current wording

We refer to the fiscal year 2024 acquisition described above as the “2024 Acquisition.” The 2024 Acquisition is not reflected in our unaudited condensed consolidated statements of operations for the three months ended December 31, 2023.

Previous wording

•Effective October 31, 2023, we exercised our right to acquire the remaining 20% economic interest in Quality Assets and Operations, LLC. Subsequent to the acquisition, the Company now owns 100% of the economic interest in Quality Assets and Operations, LLC.

Current wording

On October 31, 2023, we exercised our right to acquire the remaining 20% economic interest in Quality Assets and Operations, LLC. Subsequent to the acquisition, the Company now owns 100% of the economic interest in Quality Assets and Operations, LLC.

Previous wording

New boat sales decreased by $38.5 million, or 10.4%, to $333.2 million for the three months ended June 30, 2024 from $371.6 million for the three months ended June 30, 2023. The decrease was primarily attributable to the decrease in average sales price resulting from a shift in sales mix and a decrease in the unit sales resulting from the continued normalization of consumer demand following the COVID-19 pandemic.

Current wording

New boat sales increased by $6.9 million, or 2.9%, to $248.0 million for the three months ended December 31, 2024 from $241.1 million for the three months ended December 31, 2023. The increase was primarily attributable to the increase in the unit sales resulting from the continued strategic management of our inventory.

Previous wording

Pre-owned boat sales decreased by $3.8 million, or 1.6%, to $238.8 million for the nine months ended June 30, 2024 from $242.6 million for the nine months ended June 30, 2023. We sell a wide range of brands and sizes of pre-owned boats under different types of sales arrangements (e.g., trade-ins, brokerage, consigned and wholesale), which causes periodic and seasonal fluctuations in the average sales price. The decrease in pre-owned boat sales was primarily attributable to the decrease in brokerage and consignment sales partially offset by the increase in pre-owned sales from trade in.

Current wording

Pre-owned boat sales increased by $3.5 million, or 6.6%, to $56.8 million for the three months ended December 31, 2024 from $53.3 million for the three months ended December 31, 2023. We sell a wide range of brands and sizes of pre-owned boats under different types of sales arrangements (e.g., trade-ins, brokerage, consigned and wholesale), which causes periodic and seasonal fluctuations in the average sales price. The increase in pre-owned boat sales was primarily attributable to the increase in both units sold and average unit price.

Previous wording

We generate revenue from arranging finance & insurance products, including financing, insurance and extended warranty contracts, to customers through various third-party financial institutions and insurance companies. Finance & insurance income decreased by $1.1 million, or 5.8%, to $17.9 million for the three months ended June 30, 2024 from $19.0 million for the three months ended June 30, 2023. The decrease was primarily due to the decline in new and pre-owned boat sales. We remain very focused on improving sales of finance & insurance products throughout our dealer network and implementing best practices at acquired dealer groups and existing dealerships. Finance & insurance income is recorded net of related fees, including fees charged back due to any early cancellation of loan or insurance contracts by a customer. Since finance & insurance income is fee-based, we do not incur any related cost of sale.

Current wording

We generate revenue from arranging finance & insurance products, including financing, insurance and extended warranty contracts, to customers through various third-party financial institutions and insurance companies. Finance & insurance income increased by $2.0 million, or 27.7%, to $9.4 million for the three months ended December 31, 2024 from $7.4 million for the three months ended December 31, 2023. The increase was primarily due to the increase in new and pre-owned boat sales. We remain very focused on improving sales of finance & insurance products throughout our dealer network and implementing best practices at acquired dealer groups and existing dealerships. Finance & insurance income is recorded net of related fees, including fees charged back due to any early cancellation of loan or insurance contracts by a customer. Since finance & insurance income is fee-based, we do not incur any related cost of sale.

Previous wording

Service, parts & other sales decreased by $7.7 million, or 8.4%, to $84.5 million for the three months ended June 30, 2024 from $92.2 million for the three months ended June 30, 2023. The decrease in service, parts & other sales is primarily due to a reduction in parts and accessories sold to OEMs as boat manufacturers have cut significantly back on production. Additionally, our 2023 Dispositions, specifically Roscioli Yachting Center, contributed to the decline. Revenues for the Distribution segment are reported in service, parts & other sales and totaled $44.8 million and $51.2 million for the three months ended June 30, 2024 and 2023, respectively.

Current wording

Service, parts & other sales decreased by $0.7 million, or 1.1%, to $61.6 million for the three months ended December 31, 2024 from $62.3 million for the three months ended December 31, 2023. The decrease in service, parts & other sales is primarily due to a reduction in parts and accessories sold to OEMs as boat manufacturers continue to slow production. Revenues for the Distribution segment are reported in service, parts & other sales and totaled $28.2 million and $32.5 million for the three months ended December 31, 2024 and 2023, respectively.

Previous wording

Finance & insurance gross profit decreased by $1.1 million, or 5.8% to $17.9 million for the three months ended June 30, 2024 from $19.0 million for the three months ended June 30, 2023. Finance & insurance income is fee-based revenue for which we do not recognize incremental cost of sales.

Current wording

Finance & insurance gross profit increased by $2.0 million, or 27.7% to $9.4 million for the three months ended December 31, 2024 from $7.4 million for the three months ended December 31, 2023. Finance & insurance income is fee-based revenue for which we do not recognize incremental cost of sales.

Previous wording

Selling, general and administrative expenses decreased by $5.8 million, or 6.2%, to $87.1 million for the three months ended June 30, 2024 from $92.8 million for the three months ended June 30, 2023. This decrease was primarily due to our variable cost structure, including a decrease in commissions, as a result of declining gross margins and the cost savings resulting from the 2024 restructuring activities. Selling, general and administrative expenses as a percentage of revenue increased to 16.0% from 15.6% for the three months ended June 30, 2024 and 2023, respectively, and was driven by lower revenues.

Current wording

Selling, general and administrative expenses decreased by $0.5 million, or 0.7%, to $79.1 million for the three months ended December 31, 2024 from $79.6 million for the three months ended December 31, 2023. This decrease was primarily due tothe cost savings resulting from various restructuring activities. Selling, general and administrative expenses as a percentage of revenue decreased to 21.0% from 21.9% for the three months ended December 31, 2024 and 2023, respectively, and was driven by higher revenues.

Previous wording

Depreciation and amortization expense decreased $0.9 million, or 14.9%, to $5.1 million for the three months ended June 30, 2024 compared to $6.0 million for the three months ended June 30, 2023. The decrease in depreciation and amortization expense for the three months ended June 30, 2024 compared to the three months ended June 30, 2023 was primarily attributable to a reduction in intangible assets due to the prior year impairment charge as well as a reduction in property and equipment related to the 2023 Dispositions. These decreases were partially offset by the increase in property and equipment during the three months ended June 30, 2024 to support operations.

Current wording

Depreciation and amortization expense increased $1.1 million, or 25.9%, to $5.3 million for the three months ended December 31, 2024 compared to $4.2 million for the three months ended December 31, 2023. The increase in depreciation and amortization expense for the three months ended December 31, 2024 compared to the three months ended December 31, 2023 was primarily attributable to an increase in intangible assets and property and equipment to support operations.

Previous wording

During the three months ended June 30, 2024, we recognized a loss of $0.2 million related to accretion of contingent consideration liabilities related to acquisitions completed in fiscal year 2022.

Current wording

During the three months ended December 31, 2024, we recognized a loss of $0.2 million related to accretion of contingent consideration liabilities.

Previous wording

Income from operations decreased $20.1 million, or 33.4%, to $40.0 million for the three months ended June 30, 2024 compared to $60.1 million for the three months ended June 30, 2023. The decrease was primarily attributable to the $26.8 million decrease in gross profit for the three months ended June 30, 2024 as compared to the three months ended June 30, 2023, partially offset by a $5.8 million decrease in selling, general and administrative expenses during the same periods.

Current wording

(Loss) income from operations decreased $8.4 million, or 130.5%, to a $2.0 million loss for the three months ended December 31, 2024 compared to $6.5 million of income for the three months ended December 31, 2023. The decrease was primarily attributable to the $7.4 million decrease in gross profit and the $1.1 million increase in depreciation and amortization for the three months ended December 31, 2024 as compared to the three months ended December 31, 2023, partially offset by a $0.5 million decrease in selling, general and administrative expenses during the same periods.

Previous wording

Interest expense – floor plan increased $1.9 million, or 24.9%, to $9.3 million for the three months ended June 30, 2024 compared to $7.4 million for the three months ended June 30, 2023. Floor plan related interest expense increased primarily due to an increase in the average inventory for the three months ended June 30, 2024 compared to the three months ended June 30, 2023, as well as an increase in interest rates.

Current wording

Interest expense – floor plan decreased $0.8 million, or 10.1%, to $7.0 million for the three months ended December 31, 2024 compared to $7.8 million for the three months ended December 31, 2023. Floor plan related interest expense decreased primarily due to an decrease in the average inventory for the three months ended December 31, 2024 compared to the three months ended December 31, 2023, as well as the impact of our interest rate swaps for the three months ended December 31, 2024.

Previous wording

Interest expense – other decreased by $0.1 million, or 0.8%, to $9.0 million for the three months ended June 30, 2024 compared to $9.1 million for the three months ended June 30, 2023. The decrease in interest expense – other was primarily related to lower outstanding long term debt.

Current wording

Interest expense – other decreased by $0.2 million, or 1.8%, to $9.0 million for the three months ended December 31, 2024 compared to $9.2 million for the three months ended December 31, 2023. The decrease in interest expense – other was primarily related to the impact of our interest rate swaps for the three months ended December 31, 2024.

Previous wording

Other (income) expense, net changed by $1.7 million, or 475.9%, to $1.4 million of income for the three months ended June 30, 2024 compared to $0.4 million of expense for the three months ended June 30, 2023. The change was primarily related to insurance proceeds received during the three months ended June 30, 2024 for an EF3 tornado event that significantly impacted our operations in Russell's Point, Ohio during the second fiscal quarter.

Current wording

Other expense (income), net changed by $1.1 million, or 459.1%, to $0.9 million of expense for the three months ended December 31, 2024 compared to $0.2 million of income for the three months ended December 31, 2023. The change was primarily related to hurricane related expenses during the three months ended December 31, 2024.

Previous wording

Net income decreased by $16.6 million to $16.7 million for the three months ended June 30, 2024 compared to $33.3 million for the three months ended June 30, 2023. The decrease was primarily attributable to the $20.1 million decrease in income from operations, partially offset by the $3.6 million decrease in income tax expense for the three months ended June 30, 2024 compared to the three months ended June 30, 2023.

Current wording

Net loss increased by $5.6 million to $13.6 million for the three months ended December 31, 2024 compared to $8.0 million for the three months ended December 31, 2023. The increase was primarily attributable to the $8.4 million decrease in income from operations, partially offset by the $3.0 million increase in income tax benefit for the three months ended December 31, 2024 compared to the three months ended December 31, 2023.

Previous wording

We view Adjusted EBITDA as an important indicator of performance. We define Adjusted EBITDA as net income (loss) before interest expense – other, income tax (benefit) expense, depreciation and amortization and other (income) expense, further adjusted to eliminate the effects of items such as the change in fair value of contingent consideration, gain (loss) on extinguishment of debt, restructuring and impairment, stock-based compensation and transaction costs.

Current wording

We view Adjusted EBITDA as an important indicator of performance. We define Adjusted EBITDA as net income (loss) before interest expense – other, income tax (benefit) expense, depreciation and amortization and other (income) expense, further adjusted to eliminate the effects of items such as the change in fair value of contingent consideration, restructuring and impairment, stock-based compensation and transaction costs.

Previous wording

Our Board, management team and lenders use Adjusted EBITDA to assess our financial performance because it allows them to compare our operating performance on a consistent basis across periods by removing the effects of our capital structure (such as varying levels of interest expense), asset base (such as depreciation and amortization) and other items (such as the change in the fair value of contingent consideration, gain (loss) on extinguishment of debt, income tax (benefit) expense, restructuring and impairment, stock-based compensation and transaction costs) that impact the comparability of financial results from period to period. We present Adjusted EBITDA because we believe it provides useful information regarding the factors and trends affecting our business in addition to measures calculated under GAAP. Adjusted EBITDA is not a financial measure presented in accordance with GAAP. We believe that the presentation of this non-GAAP financial measure will provide useful information to investors and analysts in assessing our financial performance and results of operations across reporting periods by excluding items we do not believe are indicative of our core operating performance. Net income is the GAAP measure most directly comparable to Adjusted EBITDA. Our non-GAAP financial measure should not be considered as an alternative to the most directly comparable GAAP financial measure. You are encouraged to evaluate each of these adjustments and the reasons we consider them appropriate for supplemental analysis. In evaluating Adjusted EBITDA, you should be aware that in the future we may incur expenses that are the same as or similar to some of the adjustments in such presentation. Our presentation of Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. There can be no assurance that we will not modify the presentation of Adjusted EBITDA in the future, and any such modification may be material. Adjusted EBITDA has important limitations as an analytical tool and you should not consider Adjusted EBITDA in isolation or as a substitute for analysis of our results as reported under GAAP. Because Adjusted EBITDA may be defined differently by other companies in our industry, our definition of this non-GAAP financial measure may not be comparable to similarly titled measures of other companies, thereby diminishing its utility.

Current wording

Our Board, management team and lenders use Adjusted EBITDA to assess our financial performance because it allows them to compare our operating performance on a consistent basis across periods by removing the effects of our capital structure (such as varying levels of interest expense), asset base (such as depreciation and amortization) and other items (such as the change in fair value of contingent consideration, income tax (benefit) expense, restructuring and impairment, stock-based compensation and transaction costs) that impact the comparability of financial results from period to period. We present Adjusted EBITDA because we believe it provides useful information regarding the factors and trends affecting our business in addition to measures calculated under GAAP. Adjusted EBITDA is not a financial measure presented in accordance with GAAP. We believe that the presentation of this non-GAAP financial measure will provide useful information to investors and analysts in assessing our financial performance and results of operations across reporting periods by excluding items we do not believe are indicative of our core operating performance. Net income (loss) is the GAAP measure most directly comparable to Adjusted EBITDA. Our non-GAAP financial measure should not be considered as an alternative to the most directly comparable GAAP financial measure. You are encouraged to evaluate each of these adjustments and the reasons we consider them appropriate for supplemental analysis. In evaluating Adjusted EBITDA, you should be aware that in the future we may incur expenses that are the same as or similar to some of the adjustments in such presentation. Our presentation of Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. There can be no assurance that we will not modify the presentation of Adjusted EBITDA in the future, and any such modification may be material. Adjusted EBITDA has important limitations as an analytical tool and you should not consider Adjusted EBITDA in isolation or as a substitute for analysis of our results as reported under GAAP. Because Adjusted EBITDA may be defined differently by other companies in our industry, our definition of this non-GAAP financial measure may not be comparable to similarly titled measures of other companies, thereby diminishing its utility.

Previous wording

The following tables present a reconciliation of Adjusted EBITDA to our net income, which is the most directly comparable GAAP measure for the periods presented.

Current wording

The following tables present a reconciliation of Adjusted EBITDA to our net income (loss), which is the most directly comparable GAAP measure for the periods presented.

Previous wording

Adjusted EBITDA was $39.2 million for the three months ended June 30, 2024 compared to $61.9 million for the three months ended June 30, 2023. The decrease in Adjusted EBITDA resulted primarily from the decrease in gross profit and the increase in interest expense - floor plan, partially offset by the decrease in selling, general and administrative expenses for the three months ended June 30, 2024 compared to the three months ended June 30, 2023.

Current wording

Adjusted EBITDA was $1.9 million for the three months ended December 31, 2024 compared to $7.1 million for the three months ended December 31, 2023. The decrease in Adjusted EBITDA resulted primarily from the decrease in gross profit, partially offset by the decrease in selling, general and administrative expenses and interest expense - floor plan for the three months ended December 31, 2024 compared to the three months ended December 31, 2023.

Previous wording

We view Adjusted Net Income Attributable to OneWater Marine Inc. and Adjusted Diluted Earnings Per Share as important indicators of performance. We define Adjusted Net Income Attributable to OneWater Marine Inc. as Net Income Attributable to OneWater Marine Inc. before transaction costs, intangible amortization, change in fair value of contingent consideration, restructuring and impairment and other expense (income), all of which are then adjusted for an allocation to the non-controlling interest of OneWater LLC. Each of these adjustments are subsequently adjusted for income tax at an estimated effective tax rate. Management also reports Adjusted Diluted Earnings Per Share which presents all of the adjustments to net income attributable to OneWater Marine Inc. noted above on a per share basis.

Current wording

We view Adjusted Net Income (Loss) Attributable to OneWater Marine Inc. and Adjusted Diluted Earnings (Loss) Per Share as important indicators of performance. We define Adjusted Net Income (Loss) Attributable to OneWater Marine Inc. as net income (loss) attributable to OneWater Marine Inc. before transaction costs, intangible amortization, change in fair value of contingent consideration, restructuring and impairment and other expense (income), all of which are then adjusted for an allocation to the non-controlling interest of OneWater LLC. Each of these adjustments are subsequently adjusted for income tax at an estimated effective tax rate. Management also reports Adjusted Diluted Earnings (Loss) Per Share which presents all of the adjustments to net income (loss) attributable to OneWater Marine Inc. noted above on a per share basis.

Previous wording

Our Board, management team and lenders use Adjusted Net Income Attributable to OneWater Marine Inc. and Adjusted Diluted Earnings Per Share to assess our financial performance because it allows them to compare our operating performance on a consistent basis across periods by removing the effects of unusual or one time charges and other items (such as the change in fair value of contingent consideration, intangible amortization, restructuring and impairment and transaction costs) that impact the comparability of financial results from period to period. We present Adjusted Net Income Attributable to OneWater Marine Inc. and Adjusted Diluted Earnings Per Share because we believe they provide useful information regarding the factors and trends affecting our business in addition to measures calculated under GAAP. Adjusted Net Income Attributable to OneWater Marine Inc. and Adjusted Diluted Earnings Per Share are not financial measures presented in accordance with GAAP. We believe that the presentation of these non-GAAP financial measures will provide useful information to investors and analysts in assessing our financial performance and results of operations across reporting periods by excluding items we do not believe are indicative of our core operating performance. Net income attributable to OneWater Marine Inc. is the GAAP measure most directly comparable to Adjusted Net Income Attributable to OneWater Marine Inc. and Net earnings per share of Class A common stock - diluted is the GAAP measure most directly comparable to Adjusted Diluted Earnings Per Share. Our non-GAAP financial measures should not be considered as an alternative to the most directly comparable GAAP financial measure. You are encouraged to evaluate each of these adjustments and the reasons we consider them appropriate for supplemental analysis. In evaluating Adjusted Net Income Attributable to OneWater Marine Inc. and Adjusted Diluted Earnings Per Share, you should be aware that in the future we may incur expenses that are the same as or similar to some of the adjustments in such presentation. Our presentation of Adjusted Net Income Attributable to OneWater Marine Inc. and Adjusted Diluted Earnings Per Share should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. There can be no assurance that we will not modify the presentation of Adjusted Net Income Attributable to OneWater Marine Inc. and Adjusted Diluted Earnings Per Share in the future, and any such modification may be material. Adjusted Net Income Attributable to OneWater Marine Inc. and Adjusted Diluted Earnings Per Share have important limitations as analytical tools and you should not consider Adjusted Net Income Attributable to OneWater Marine Inc. or Adjusted Diluted Earnings Per Share in isolation or as a substitute for analysis of our results as reported under GAAP. Because Adjusted Net Income Attributable to OneWater Marine Inc. and Adjusted Diluted Earni…

Excerpt shortened here; the source contains the full paragraph.

Current wording

Our Board, management team and lenders use Adjusted Net Income (Loss) Attributable to OneWater Marine Inc. and Adjusted Diluted Earnings (Loss) Per Share to assess our financial performance because it allows them to compare our operating performance on a consistent basis across periods by removing the effects of unusual or one time charges and other items (such as the change in fair value of contingent consideration, intangible amortization, restructuring and impairment and transaction costs) that impact the comparability of financial results from period to period. We present Adjusted Net Income (Loss) Attributable to OneWater Marine Inc. and Adjusted Diluted Earnings (Loss) Per Share because we believe they provide useful information regarding the factors and trends affecting our business in addition to measures calculated under GAAP. Adjusted Net Income (Loss) Attributable to OneWater Marine Inc. and Adjusted Diluted Earnings (Loss) Per Share are not financial measures presented in accordance with GAAP. We believe that the presentation of these non-GAAP financial measures will provide useful information to investors and analysts in assessing our financial performance and results of operations across reporting periods by excluding items we do not believe are indicative of our core operating performance. Net income (loss) attributable to OneWater Marine Inc. is the GAAP measure most directly comparable to Adjusted Net Income (Loss) Attributable to OneWater Marine Inc. and net earnings (loss) per share of Class A common stock - diluted is the GAAP measure most directly comparable to Adjusted Diluted Earnings (Loss) Per Share. Our non-GAAP financial measures should not be considered as an alternative to the most directly comparable GAAP financial measure. You are encouraged to evaluate each of these adjustments and the reasons we consider them appropriate for supplemental analysis. In evaluating Adjusted Net Income (Loss) Attributable to OneWater Marine Inc. and Adjusted Diluted Earnings (Loss) Per Share, you should be aware that in the future we may incur expenses that are the same as or similar to some of the adjustments in such presentation. Our presentation of Adjusted Net Income (Loss) Attributable to OneWater Marine Inc. and Adjusted Diluted Earnings (Loss) Per Share should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. There can be no assurance that we will not modify the presentation of Adjusted Net Income (Loss) Attributable to OneWater Marine Inc. and Adjusted Diluted Earnings (Loss) Per Share in the future, and any such modification may be material. Adjusted Net Income (Loss) Attributable to OneWater Marine Inc. and Adjusted Diluted Earnings (Loss) Per Share have important limitations as analytical tools and you should not consider Adjusted Net Income (Loss) Attributable to OneWater Marine Inc. or Adjusted Diluted Earnings (Loss) Per Share in isolation or as a substitute for…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

The following tables present a reconciliation of Adjusted Net Income Attributable to OneWater Marine Inc. to our net income attributable to OneWater Marine Inc. and Adjusted Diluted Earnings Per Share to our net earnings per share of Class A common stock - diluted, which are the most directly comparable GAAP measures for the periods presented.

Current wording

The following tables present a reconciliation of Adjusted Net Income (Loss) Attributable to OneWater Marine Inc. to our net income (loss) attributable to OneWater Marine Inc. and Adjusted Diluted Earnings (Loss) Per Share to our net earnings (loss) per share of Class A common stock - diluted, which are the most directly comparable GAAP measures for the periods presented.

Previous wording

Adjusted Net Income Attributable to OneWater Marine Inc. and Adjusted Diluted Earnings Per Share were $15.5 million and $1.05, respectively, for the three months ended June 30, 2024 compared to Adjusted Net Income Attributable to OneWater Marine Inc. and Adjusted Diluted Earnings Per Share of $31.6 million and $2.15, respectively, for the three months ended June 30, 2023. The decrease in Adjusted Net Income Attributable to OneWater Marine Inc. resulted from the decrease in gross profit and the increase in interest expense - floor plan, all partially offset by the decreases in selling, general and administrative expenses and income tax expense for the three months ended June 30, 2024, each as compared to the three months ended June 30, 2023. The decrease in Adjusted Diluted Earnings Per Share resulted from the decrease in Adjusted Net Income Attributable to OneWater Marine Inc.

Current wording

Adjusted Net Loss Attributable to OneWater Marine Inc. and Adjusted Diluted Loss Per Share were $8.0 million and $0.54, respectively, for the three months ended December 31, 2024 compared to Adjusted Net Loss Attributable to OneWater Marine Inc. and Adjusted Diluted Loss Per Share of $5.4 million and $0.38, respectively, for the three months ended December 31, 2023. The decrease in Adjusted Net Income (Loss) Attributable to OneWater Marine Inc. resulted from the decrease in gross profit, partially offset by the decreases in selling, general and administrative expenses and interest expense - floor plan for the three months ended December 31, 2024, each as compared to the three months ended December 31, 2023. The decrease in Adjusted Diluted Earnings (Loss) Per Share resulted from the decrease in Adjusted Net Income (Loss) Attributable to OneWater Marine Inc.

Previous wording

We have no material off balance sheet arrangements, except for purchase commitments under supply agreements entered into in the normal course of business.

Current wording

We have no material off balance sheet arrangements.

Previous wording

Analysis of Cash Flow Changes Between the Nine Months Ended June 30, 2024 and 2023

Current wording

Analysis of Cash Flow Changes Between the Three Months Ended December 31, 2024 and 2023

Previous wording

Operating Activities. Net cash provided by operating activities was $7.5 million for the nine months ended June 30, 2024 compared to net cash used in operating activities of $134.2 million for the nine months ended June 30, 2023. The $141.7 million increase in cash provided by operating activities was primarily attributable to a $211.6 million increase in the change in inventory, offset by a $67.5 million decrease in net income for the nine months ended June 30, 2024 as compared to the nine months ended June 30, 2023.

Current wording

Operating Activities. Net cash used in operating activities was $37.4 million for the three months ended December 31, 2024 compared to net cash used in operating activities of $110.0 million for the three months ended December 31, 2023. The $72.6 million decrease in cash used in operating activities was primarily attributable to a $51.4 million decrease in the change in inventory and a $31.9 million decrease in the change in prepaid expenses and other current assets, offset by a $9.8 million decrease in the change in customer deposits for the three months ended December 31, 2024 as compared to the three months ended December 31, 2023.

Previous wording

Investing Activities. Net cash provided by investing activities was $17.6 million for the nine months ended June 30, 2024 compared to net cash used in investing activities of $46.8 million for the nine months ended June 30, 2023. The $64.3 million increase in cash provided by investing activities was primarily attributable to a $45.1 million increase in proceeds from the disposal of Roscioli Yachting Center and a $22.9 million decrease in cash used in acquisitions for the nine months ended June 30, 2024 as compared to the nine months ended June 30, 2023.

Current wording

Investing Activities. Net cash used in investing activities was $2.8 million for the three months ended December 31, 2024 compared to net cash provided by investing activities of $39.8 million for the three months ended December 31, 2023. The $42.6 million increase in cash used in investing activities was primarily attributable to a $45.1 million decrease in proceeds from the disposal of a business, offset by a $2.3 million decrease in cash used in purchases of property and equipment for the three months ended December 31, 2024 as compared to the three months ended December 31, 2023.

Previous wording

Financing Activities. Net cash used in financing activities was $66.5 million for the nine months ended June 30, 2024 compared to net cash provided by financing activities of $173.2 million for the nine months ended June 30, 2023. The $239.6 million decrease in financing cash flow was primarily attributable to a $177.9 million decrease in net borrowings on our Inventory Financing Facility, a $51.4 million increase in payments on long-term debt, and a $18.8 million payment to purchase the non-controlling interest of Quality Assets & Operations, LLC for the nine months ended June 30, 2024 as compared to the nine months ended June 30, 2023.

Current wording

Financing Activities. Net cash provided by financing activities was $49.4 million for the three months ended December 31, 2024 compared to net cash provided by financing activities of $31.1 million for the three months ended December 31, 2023. The $18.3 million increase in financing cash flow was primarily attributable to the $18.8 million payment to purchase the non-controlling interest of Quality Assets & Operations, LLC during the three months ended December 31, 2023 and a$35.0 million decrease in payments on long-term debt, partially offset by an $11.1 million decrease in proceeds from long-term debt and a $27.1 million decrease in net borrowings from floor plan duringthe three months ended December 31, 2024 as compared to the three months ended December 31, 2023.