OneWater Marine Inc. Q3 FY2025 earnings call

• OneWater delivered solid results with total revenue up 2% to $553 million and same-store sales up 2% despite industry declines.
• Gross margins under pressure due to promotional activity, brand exits, and model mix shifts.
• Inventory down 14% year-to-date, on track to end the fiscal year down 10%-15% with brand rationalization strategy progressing.
• Focus on 3 key areas: healthy inventory of high-performing brands and brand rationalization, disciplined cost management, and outperforming broader industry trends.
• Dealership traffic steady; new boat unit sales down but average selling price up; pre-owned boat sales up for third consecutive quarter; F&I revenue in line; parts and service revenue down 2% due to lower product levels from boat manufacturers.

Total revenue for the third quarter was $553 million, a 2% increase from the third quarter of 2024. New boat sales decreased 2% to $326 million. Pre-owned boat sales increased 18% to $126 million. Revenue from service parts and other sales decreased 2% to $83 million. Revenue contribution: New boat sales accounted for approximately 59% of total revenue ($326 million / $553 million), pre-owned boat sales made up about 23% ($126 million / $553 million), and service parts and other sales were around 15% ($83 million / $553 million).

• Raised total revenue outlook for fiscal year 2025 to $1.8 billion to $1.85 billion.
• Anticipates same-store sales to be up in the low single digits despite industry double-digit declines.
• Adjusted EBITDA outlook revised to $65 million to $80 million.
• Adjusted earnings per diluted share outlook revised to $0.50 to $0.75.
• Outlook considers macroeconomic uncertainty, competitive selling pressuring margins, but progress on inventory management and tariff clarity.

• Macro-economic uncertainty and competitive selling environment continuing to pressure margins.
• Tariff uncertainty during the quarter, though post-quarter there was less concern about tariff impacts but still some impact on consumer confidence.

Q: To double-click on the tariff noise and the market correction, just some of the macro factors that hit in the quarter. Have you seen any change in behavior as maybe there's clarity on tax policy, clarity on tariff policy to some extent and the market back?

A: During the quarter, there was more confusion and noise around tariffs. Subsequent to the quarter, there's been less concern about tariff impacts. We're relieved about new model year price increases being in the low mid-single digits. July results were positive but we need to see if it continues.

Q: If I could ask on used. I mean, 18% growth is surprisingly strong. Is that a function of better access to supply? Or is there a trade-down effect that I'm missing on?

A: It's not a trade-down effect. It's more people trading in and upgrading. Trade-ins are higher today, and there's an adequate amount of field inventory, so consumers don't have huge lead times. Most people are upgrading to larger boats in the premium space, with a trickle-down effect in pre-owned sales.