Q4 2025 OneWater Marine Inc Earnings Call
Speaker #1: Good morning. My name is Angeline, and I will be your conference operator today. At this time, I would like to welcome everyone to the conference call.
Speaker #1: All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your touchstone phone.
Speaker #1: If you would like to withdraw your question, press the pound key. I would like to turn the conference over to Jack Ezzell, Chief Executive Officer and Chief Operating Officer.
Speaker #1: Please go
Speaker #1: ahead.
Speaker #2: Good morning and
Speaker #2: Welcome to OneWater Marine's fiscal fourth quarter and full year 2025 earnings conference call. I'm joined on the call today by Austin Singleton, Executive Chairman of the Board, and Anthony Aisquith, Chief Executive Officer.
Speaker #2: Before we statements made by management in this morning's begin, I would like to remind you that certain conference call regarding OneWater Marine and its operations may be considered forward-looking statements under securities laws and involve a number of risks and uncertainties.
Speaker #2: As a result, the company cautions you that there are a number of factors, many of which are beyond the company's control. Which could cause actual results described in the forward-looking statements.
Speaker #2: As a result, the company cautions you that there are a number of factors, many of which are beyond the company's control. Which could cause actual results and events to differ materially from those Factors that might affect future results are discussed in the company's earnings release, which can be found in the investor relations section of the company's website, and in its filings with the SEC.
Speaker #2: obligation or undertaking to The company disclaims any update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made, except as required by law.
Speaker #2: Please note that all comparisons of our fourth quarter or fiscal year 2025 results are made against the fourth quarter or fiscal year 2024 unless otherwise noted.
Speaker #2: With that, I'd like to turn the call over to Austin Singleton, who will begin with a few opening remarks. Austin.
Speaker #3: Good morning, everyone, and thank you for joining us today. We finished 2025 with solid results and meaningful priorities. Industry conditions remain progress on our strategic pandemic highs, promotional activity increased, continued to normalize from and multiple hurricanes created disruption in key Florida markets.
Speaker #3: Against that backdrop, our team executed with discipline and focus. We delivered a 6% same-store sales growth for the year, outperforming the broader industry in the categories where we compete.
Speaker #3: New boat sales were strong in sales remained a standout throughout the the fourth quarter, and pre-owned full-year results. This resilience in our model and the depth of our retail network.
Speaker #3: We also took thoughtful cost actions and leveraged our flexible operating model to align expenses with demand and protect margins. Finishing the year with performance demonstrates our strength and positive momentum headed into 2026.
Speaker #3: Maintaining a disciplined approach to our team's executed exceptionally inventory has been a top priority, and well. We exited this year with the cleanest inventory levels we've seen in years, given us a significant competitive 2026.
Speaker #3: This enables us to respond quickly to shifting advantage as we enter retail conditions and support a healthier balance between price and volume. We also completed our strategic exit from discontinued brands, allowing us to sharpen our focus on our core portfolio with high-performing brands.
Speaker #3: While this transition created some margin pain during the year, it laid the groundwork for meaningful long-term margin improvement as we move through 2026 and beyond.
Speaker #3: Looking ahead, we are encouraged by signs that channel inventories across the industry are returning to healthier levels and OEM production is beginning to normalize.
Speaker #3: operating model and strong customer We believe these relationships, position factors, combined with our flexible us well to capture demand and drive stabilizes. positive, highlighting strong customer interest Early boat show feedback has been in innovative new features and fresh models from our manufacturing partners.
Speaker #3: And one of our largest events of the year, the Fort Lauderdale Boat Show, sales were up year over year. Unit sales were lower, reflecting the impact of the brands we as the liquidation of excess inventory in the prior year.
Speaker #3: The good news is that we are beginning to see improvements in overall new boat gross margins. We are excited to build on this momentum through the winter boat show season.
Speaker #3: Finally, I want to thank our entire exited in 2025, as well OneWater team for their hard work, resilience, and dedication to our customers throughout the year.
Speaker #3: I'm confident we have the right people, structure, and strategy in place to continue delivering long-term shareholder value. With that, I will turn it over to Anthony to discuss the
Speaker #2: Thanks, Austin. And good morning, everyone. I'd like to start by echoing Austin's comments and thanking our
Speaker #2: year. Despite a challenging marine market, our focus on serving positive same-store sales growth customers drove another year of and continued market share gains. New boat demand normalized after several years of outsized growth, business operations.
Speaker #2: a rebound in trade-in during the pandemic. We entered the year focused on right-sizing inventory and exited with one of the cleanest positions we've seen.
Speaker #2: That disciplined execution allowed us to begin rebuilding inventory in the fourth quarter, slightly ahead of typical seasonal patterns. Our inventory agent has significantly improved compared to a year ago, and early response to new model activity which reached historic lows year has been encouraging.
Speaker #2: Finance and insurance penetration remained healthy and continues to be a key strength. Further interest rate cuts should support customer affordability and enhance unit economics for boats financed through OneWater.
Speaker #2: Service parts and other sales were solid for the year, despite modestly lower sales in our distribution segment due to reduced OEM production. As inventory levels reset across the industry and OEM output normalizes, we believe there's growth opportunity heading into 2026.
Speaker #2: I'd like to turn the call over to Jack to discuss the financials.
Speaker #4: Anthony. Fiscal fourth quarter 2025 revenue increased 22% to Thanks, $460 million compared to $378 million in the prior year period, which was significantly affected by hurricane-related disruptions along the west coast of Florida.
Speaker #4: New boat sales were up 27% to $275 million in the fourth quarter, while pre-owned sales increased 25% to $91 million. Overall, same-store sales were up 23%.
Speaker #4: Revenue from service parts and other sales for the quarter increased 7% to $81 million, driven by steady retail service activity, and our dealership segment and modest growth in our distribution segment.
Speaker #4: Finance and insurance revenue increased year over year on a dollar basis, but declined slightly as a percentage of total sales. Gross profit increased to $104 million in 2025 compared to $91 million in the prior year, primarily driven by higher new boat volumes as a result of the hurricane-related disruptions on the west coast of Florida in the prior year.
Speaker #4: Fourth quarter selling, general and administrative expenses increased 6% to $84 million. FG&A, as a percentage of sales, was 18%, down 270 basis points, primarily driven by higher revenues in the quarter.
Speaker #4: In the fourth quarter, the operating loss was $130 million, and adjusted EBITDA was $18 million. The net loss for the fiscal fourth quarter totaled $113 million, or $6.90 per diluted share, compared to a net loss of $10 million, or $0.63 per diluted share in the prior year.
Speaker #4: The decrease was largely due to non-cash goodwill and intangible asset impairments of $146 million, driven principally by the decline in our market capitalization relative to the book value.
Speaker #4: As a reminder, this adjustment does not impact cash flow, liquidity, or operational flexibility. Adjusted diluted earnings per share was less than diluted loss per share of $0.36 in $0.01 compared to adjusted the prior year.
Speaker #4: Turning to our full year results, total revenue for 2025 increased 6% to $1.9 billion, for fiscal year '25. Driven by a slight in the average selling price of both increase in units, as well as an increase new and pre-owned boats.
Speaker #4: Same-store sales increased 6% in 2025, outperforming the industry backdrop where SSI data indicated a decline of over 13% in the categories in which we compete.
Speaker #4: Additionally, service parts and other revenue increased 2% to $295 million, driven by growth in our dealership segment as we continue to expand this important part of our business and support our customers.
Speaker #4: This was partially offset by lower sales in our distribution segment, reflecting reduced production levels from boat manufacturers. Full year 2025 gross profit decreased 2% to $427 million, as a result of market dynamics and the impact of select brands the company has exited during the year.
Speaker #4: Gross profit margin for fiscal year 2025 was 23%. Selling, general, and administrative expenses increased to $343 million, or 18% of revenue, from $333 million, or 19% of revenue in the prior year.
Speaker #4: The decrease in selling and general administrative expenses as a percentage of revenue was driven by higher revenues in addition to targeted cost actions, which supported the FG&A savings.
Speaker #4: We will continue to practice proactive expense management and have the flexibility to accelerate cost actions as necessary should the need arise. Net loss for fiscal year 2025 was $116 million, or $7.22 per diluted share, compared to a net loss of $6 million, or $0.39 per diluted share in the prior year.
Speaker #4: The business generated adjusted EBITDA of $70 million and adjusted earnings per diluted share of $0.44. Now turning to the balance sheet. Total liquidity was in excess of $67 million, including cash on hand and additional availability under our credit facilities.
Speaker #4: Total inventory as of September 30, 2025, decreased to $540 million, compared to $591 million in the prior year. This decline reflects our ongoing strategic inventory positioning and brand rationalizations throughout the was $412 million, and net of cash resulted in net leverage year.
Speaker #4: 12 months adjusted EBITDA. As we move forward, reducing leverage remains a priority in our capital allocation strategy. Looking ahead to 2026, we are cautiously Total long-term debt optimistic, and we expect demand to fluctuate with traditional seasonal cycles.
Speaker #4: Our outlook is anchored on industry commentary and an expectation that industry unit sales will be flat to this year. Our forecasted sales will be negatively impacted by the impact of brands we exited.
Speaker #4: However, we also expect to outperform a flat market. Accordingly, we expect these factors to offset resulting in flat same-store sales for the year. We anticipate total sales to be in a range of $1.83 billion to $1.93 billion.
Speaker #4: We expect adjusted EBITDA to be in the range of $65 million to $85 million and adjusted diluted earnings per share to be in the range of $25 to $75.
Speaker #4: Overall, we remain optimistic on 2026. There are a number of tailwinds, including improved industry inventory levels. Reduced discounting, and lower interest rates, which we expect to be tempered by market uncertainty.
Speaker #4: We will remain focused on maintaining our clean inventory position and disciplined approach to cost management, which we believe provides a clear advantage as market conditions evolve.
Speaker #4: While fiscal 2025 presented challenges across the strengthen our foundation and position industry, the actions we have taken OneWater to continue outperforming the industry as the environment stabilizes.
Speaker #4: This concludes our prepared remark. Operator, will you please open the line for
Speaker #4: questions? Thank you.
Speaker #1: At this time, I would like to remind everyone in order to ask a question, press star, then the number one on your telephone keypad.
Speaker #1: We'll pause for just a moment to compile the Q&A roster. Your first question comes from the line of Craig Aison, with Baird. Please go ahead.
Speaker #2: Hey, good morning. Thanks for taking my question. Jack, I wanted to follow up on your inventory comment. I didn't—I'm not sure if you quantified the change year over year in dollars.
Speaker #2: I think last quarter it was down 14%. If so, could you share that
Speaker #3: Yeah. We're down roughly 8.5%, $50 million year over year. We—when we had originally said our goal was down 10 to 15, and we had been tracking that throughout the year.
Speaker #3: However, with the timing of some model year 26 boats, that kind of—we started that build a little earlier this year because some of our stores were actually getting a little light on inventory.
Speaker #3: So again, we're really pleased with where the inventory is at.
Speaker #2: Thank you. And given your outlook for flat retail, what's the right assumption for inventory for fiscal 26?
Speaker #3: Yeah, I would expect it to be up modestly just with price increases and some things like that. I think just one thing to—it's important to note on that flat retail, right?
Speaker #3: We expect—we have a headwind of, let's call it around 5%, that from the exiting brands. And with our continuing so while we'll look to capture some of that right, kind of offset.
Speaker #3: So we think the business, if I pro forma brands, right, those two, out last year, the exiting brands, we think the business will be up mid-single digits.
Speaker #3: But when you kind of—the two will kind of net out to kind of get you to that flat.
Speaker #2: And then maybe, Jack, was my next question. That's really helpful. lastly, just on your interest rate expense That outlook, for 2026, just want to make sure we have a feel for that given the term note and interest rate changes.
Speaker #3: Yeah. I mean, I'm a little bit scarred from this past year because we had a lot of cuts in our model. I think I have another 50 basis points of cuts in the model going this year, but I'm kind of hesitant on that number.
Speaker #3: When we think about kind of year over year, I think floor plan interest will be—let's call it flattish to up slightly. And then our term interest will be—should be down some just as we continue to make amortization payments, etc., on that.
Speaker #3: But it's range. down in the 5 to 10 percent
Speaker #2: Great. Thank you both.
Speaker #3: Thank you, guys. Thank you, Craig.
Speaker #1: Thank you. The next question comes from Joe Altobello with Raymond James. Please go
Speaker #1: ahead. Thanks.
Speaker #2: Hey, guys. Good morning. First question on interest rates. So you mentioned rates coming down could be a tailwind to demand in fiscal 26. Have you started to see consumer rates come down in a meaningful way yet?
Speaker #4: Yeah. Yeah. What's meaningful? They've come down. I mean, they haven't dropped like a point, but they move with every rate cut, they start to move down.
Speaker #4: So yeah, we're starting to see that. And a little bit of that interest rate cut is probably what led into a good October and a good Fort Lauderdale boat
Speaker #4: show.
Speaker #2: Got it. Which is where I was going to.
Speaker #3: The go next. The optimism of the cuts, right? That we're going in the right direction and that while a 25 basis point doesn't make a difference on someone buying a million-dollar boat, but it certainly does a lot for their confidence and their projection of where they see things trending.
Speaker #2: Got it. Okay. And then also, you mentioned Fort Lauderdale. Could you kind of quantify how much your sales were up at
Speaker #2: the show? Yeah.
Speaker #4: I mean, we were almost up 20% for the show, slightly under that compared to last year, which is really good. But the most important thing, I think, was that we started to see that margin pressure go away, which is exciting.
Speaker #4: I mean, when you come out of this quarter, with the same store sales comp that we had for the quarter, a little bit of that was due to the hurricane last year.
Speaker #4: So going into October, it was a nice surprise to see that that held up. And October turned out really good. And then the Fort Lauderdale boat show continued in November's looking pretty decent right now.
Speaker #4: So we feel like last quarter, the end of the summer, was kind of at the bottom, and we started to turn. But it's probably going to be a slow creep up from here.
Speaker #4: But every little bit helps. Momentum seems to be pretty decent right?
Speaker #4: now. And
Speaker #2: And just last question. As
Speaker #3: As you know, right, that increase in Fort Lauderdale boat shows don't all hit in the December quarter, right? Those sales are spread out.
Speaker #2: Yep. Oh, yeah, for sure. Absolutely. Okay. Margin, it sounds like you guys are a little more optimistic on margin this year. Obviously, lapping last year and liquidating a lot of the smaller brands.
Speaker #2: But how do you see the promo environment playing out in fiscal 26?
Speaker #4: Well, I mean, I think the manufacturers are still kind of compressed from a manufacturing standpoint. I mean, they all want to kind of produce more boats.
Speaker #4: I mean, when you talk to Wells Fargo on the floor plan side, inventory levels for the industry are really low right now. So if you see any kind of bump in the spring, we're going to have to really work hard next year to manage.
Speaker #4: And that's one of the things we've got to do is manage inventory going up because the manufacturers can't just go in one day and increase production 20%.
Speaker #4: It's a slow grind for them to increase because the majority of that increase is probably going to be based in labor. And so you really got to work on managing your inventory.
Speaker #4: And it'll be a slow grind for the increase, but we're excited about that in a way because that helps with margin. So, I mean, I think the promotional environment is going to stay put until the manufacturers start feeling the industry. Dealers, like all of us, start getting where we're ordering more boats.
Speaker #4: And I don't know if that comes in January, if that comes in March, or that comes in June. So the same old story we've said many times, I think that as we get into the summer season and the back half of the year, you're going to start to see more green shoots take place.
Speaker #4: If the momentum we're seeing today
Speaker #2: Got it.
Speaker #2: Thank continues. you.
Speaker #3: Thanks, Joe.
Speaker #1: Thank you. Again, if you would like to ask a question, press star, then the number one on your telephone keypad. The next question comes from Noah Zetzinski.
Speaker #1: With keypad capital markets, please go
Speaker #1: With keypad capital markets, please go ahead. Hi.
Speaker #5: Thanks for taking my questions. I guess first, on the pre-owned side, obviously really strong results during the quarter. Have you continued to see kind of an increased trade-in dynamic?
Speaker #5: And how are you thinking about that playing out next year?
Speaker #5: Thanks.
Speaker #4: Yeah. I
Speaker #4: mean, that momentum's kind of continued on. I mean, part of the dynamic of why that drop during the middle of COVID and on the back end of COVID was just the lead time to get boats from manufacturers.
Speaker #4: So it gave the consumer a lot more free time or their own time to sell their boat. And so with inventory a little bit more on hand, the ordering cycle, because the manufacturers have compressed production right now, and so it doesn't take as long to get a boat, we are seeing more trades than we saw pre-COVID.
Speaker #4: I wouldn't say there's more trades or there's more used boats out there than there's been. It's just that they're not selling it on their own, and they're running it through the dealerships.
Speaker #5: Got Got it. That's helpful. And then maybe just kind of an update on the M&A side, what you're seeing out there and how you're thinking about that next year.
Speaker #4: Yeah. I mean, we're staying extremely disciplined on that. I mean, we're really focused on the debt right now. And one of the good things that we have that works for us is times on our side.
Speaker #4: So, there's not like the deals are going to somebody else, or they're leaving, or they're disappearing. So, we can be very methodical, very disciplined, and just take them. We need to be very picky as we move forward.
Speaker #4: But I think for the short term or at least till we get into boat season next year, as we run into the winter months, we'll probably be pretty disciplined and focused mainly on the
Speaker #4: debt.
Speaker #5: Thank
Speaker #5: you. Thanks,
Speaker #3: Joe.
Speaker #1: Thank