OneWater Marine Inc. (ONEW) is a leading player in the highly fragmented U.S. marine retail market, operating a diversified platform of boat dealerships and distribution centers across the country. The company's strategic acquisitions, robust brand portfolio, and multi-faceted business model have positioned it to navigate the evolving dynamics of the boating industry.

Business Overview

Established in 2014 through the combination of Singleton Marine and Legendary Marine, OneWater Marine has grown significantly since its inception. The company was formed with an initial 19 dealerships and has since acquired 81 additional dealerships through 34 acquisitions, bringing its total to 100 dealerships. OneWater has also expanded its distribution network, now operating 12 distribution centers/warehouses across multiple states.

OneWater's portfolio includes a wide range of recognized brands at local, regional, and national levels. The company has positioned itself as one of the largest and fastest-growing marine retailers in the United States, based on the number of dealerships and total boats sold. This rapid growth has been achieved through a combination of strategic acquisitions and organic expansion.

In addition to its core business of selling new and pre-owned boats, OneWater offers a comprehensive suite of services to its customers. These include brokerage services, boat servicing, and the sale of marine parts and accessories. The company also provides slip and storage accommodations in certain locations, catering to boat owners' needs beyond the initial purchase.

OneWater has developed strong relationships with third-party lenders and insurance companies, allowing it to offer boat financing, insurance, and extended service contracts to its customers. This holistic approach to customer service has helped the company build long-term relationships with boat owners and enhance its revenue streams.

The company's journey has not been without challenges. During the recessionary period that began in 2007, OneWater faced significant headwinds that negatively impacted its operating results. In response, the company implemented a series of strategic measures, including reducing inventory purchases, closing underperforming dealerships, and cutting headcount. OneWater also increased its focus on pre-owned sales, parts and repair services, and finance & insurance services. These adaptive strategies proved successful, enabling the company to surpass its pre-recession sales levels in less than 24 months.

OneWater operates through two main reportable segments: Dealerships and Distribution. The Dealerships segment, which includes 96 dealerships across 17 states, represents approximately 93% of the company's total revenues. This 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 provides slip and storage accommodations in certain locations. In fiscal year 2024, the company sold over 9,500 new and pre-owned boats, many of which were to customers who had a trade-in or with whom the company had an established relationship.

The Distribution segment, which includes the activity of three fully-owned businesses (Central Assets Operations, LLC dba PartsVu, Ocean Bio-Chem and its subsidiaries, and T-H Marine and its subsidiaries), represents approximately 7% of the company's total revenues. This 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. The company offers 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.

Financial Performance

In the fiscal year 2024, OneWater reported total revenue of $1.77 billion, a decrease of 8.9% compared to the prior year. This decline was primarily attributed to softer demand for new and pre-owned boats, as well as supply chain disruptions impacting boat manufacturers. The company's net income for the year was a loss of $5.71 million, compared to a loss of $38.59 million in the previous year.

Despite the challenging industry conditions, OneWater's diverse business model and strategic focus on inventory management and cost optimization have helped to mitigate the impact. In the most recent quarter (Q1 2025), the company reported a 3.2% increase in revenue to $375.81 million, driven by a 3% increase in new boat sales, a 7% increase in pre-owned boat sales, and a 4% increase in same-store sales. However, the company reported a net loss of $11.97 million for the quarter, primarily due to lower gross profit margins, which were partially offset by lower selling, general and administrative expenses.

For the three months ended December 31, 2024, the Dealerships segment reported revenue of $347.67 million and income from operations of $3.02 million. The Distribution segment reported revenue of $28.19 million and income from operations of $4.98 million. The company's overall gross profit margin for the quarter was 22.4%, reflecting the impact of the company's efforts to exit certain underperforming boat brands. Adjusted EBITDA for the quarter was $1.91 million.

Liquidity and Solvency

As of December 31, 2024, OneWater had total assets of $1.59 billion and total liabilities of $1.20 billion, resulting in a debt-to-equity ratio of 1.82. The company's current ratio stood at 1.24, and its quick ratio was 0.25, indicating a healthy liquidity position. OneWater's operating cash flow for the fiscal year 2024 was $34.84 million, with free cash flow of $8.01 million.

The company's cash position as of December 31, 2024, was $22.71 million. Additionally, OneWater had $104.9 million available under its Inventory Financing Facility as of the same date, providing further liquidity support.

Risks and Challenges

The marine retail industry is subject to various risks, including economic conditions, consumer spending patterns, and weather-related disruptions. OneWater's significant geographic exposure to the Southeast and Gulf Coast regions makes it vulnerable to the impact of hurricanes and other severe storms. Additionally, the company's reliance on a limited number of key boat manufacturers and the highly competitive nature of the industry pose ongoing challenges.

The recreational marine industry has experienced moderate growth in recent years, with a compound annual growth rate (CAGR) of approximately 3-5% over the past decade. However, the industry faced some challenges in 2024 due to macroeconomic factors, leading to a decline in industry unit sales of approximately 14% in the categories OneWater participates in.

Outlook and Growth Strategies

Looking ahead, OneWater remains cautiously optimistic about its prospects, despite the continued uncertainty in the industry. The company is focused on executing its inventory management strategy, further enhancing its parts and services offerings, and selectively pursuing strategic acquisitions to bolster its market share and diversify its revenue streams.

OneWater is reaffirming its fiscal year 2025 guidance range, projecting total revenue to be in the range of $1.7 billion to $1.85 billion, with same-store sales expected to grow in the low single digits. The company also expects to generate adjusted EBITDA between $80 million and $110 million, and adjusted earnings per share of $1 to $2.

The company's performance in the first quarter of 2025 exceeded expectations, with a 3% increase in revenue and a 4% increase in same-store sales, despite the industry experiencing a 14% decline in unit sales. However, gross profit decreased 8% in Q1 2025 compared to Q1 2024, driven by lower margins on brands they are exiting and new/pre-owned boat pricing.

Conclusion

OneWater Marine's diversified business model, strong brand portfolio, and strategic focus on operational efficiency have enabled the company to navigate the challenging conditions in the marine retail industry. The company's significant scale, diverse inventory, access to premium boat brands, and meaningful brand equity enable it to provide a consistently professional experience, as reflected by the number of repeat customers and Dealership same-store sales growth.

While the company faces ongoing risks, its proven track record of growth through acquisitions and its commitment to enhancing its parts and services offerings position it well to capitalize on the long-term opportunities in the boating market. OneWater's diverse revenue streams, including boat sales, finance and insurance products, service and parts, and its Distribution segment, provide it with a balanced and resilient business model that should help it weather the current industry headwinds and emerge stronger as market conditions improve.