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Onewater Marine (ONEW)

Participants
Jack Ezzell CFO
Austin Singleton CEO
Anthony Aisquith President & COO
Andrew Crum Stifel
Michael Swartz Truist Securities
Joseph Altobello Raymond James
Brett Andress KeyBanc Capital Markets
Call transcript
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Operator

Hello. Thank you for standing by and welcome to the OneWater Marine, Inc. Fiscal Third Quarter 2021 Earnings Conference Call. [Operator Instructions]. I would now like to hand the conference over to your speaker today, Jack Ezzell, Chief Financial Officer. ahead. go Please

Jack Ezzell

Aisquith, welcome earnings and call Marine's third and fiscal by Operating Good call. to I XXXX Anthony Officer; Executive conference Singleton, the and am quarter Chief Austin Officer. morning Chief OneWater President joined today on

begin, its remind you and I'd securities considered statements operations by may statements that regarding call law to morning's a under risks this be uncertainties. in conference like number and OneWater we certain made Before management Marine of involve and forward-looking

the forward-looking except a who many its I'd to website beyond that cause in can reflect Relations the the of turn the control, future As the to company are by there release, disclaims update in to statements. to occur made, forward-looking be earnings that you with and date with And Singleton, found law. on company's over could in any described events forward-looking required result, cautions affect in of results the Factors differ are a the number those might section like Investor undertaking Austin? which will materially after the opening the actual SEC. which the Austin statements begin company's statements a with or few call The events are or discussed company factors results as and filings are from which circumstances that, company's that remarks. to obligation

Austin Singleton

same-store Sales of XXXX comp an in XX% top prior of grew Overall, operating delivered $XX third extremely of prior inventory to and quarter we Thanks, against [XX%], pressured challenges, period. industry-wide Jack, everyone, the quarter of were delivered record the third line, for the our the million, difficult and XX% solid XXXX. results today's we an increase thank to joining the we sales you, for compared margin for Despite up EBITDA adjusted call. which year.

shifted we the sales period driven inventory because partially offset from business prior down COVID same-store and and positive sales all the were the by of benefited excludes that store if store's same-store shortages March XXXX posted We of quarter significantly sales the same-store inventory. the April that the our believe for improvements service May XXXX third from new had significant to across have and year, we industry, month It's other end would but ownership. of reminder, a by XX%, sales. As This until parts noteworthy shutdown. in XXth operation under sales the acquired

Marine environment. our sharing hot George Group of ended our acquisitions Walker of Coast Florida Our meet leveraged were We largest to Tom X and the up red Yacht and inventory retail global West the acquisitions same-store our the we these the of and inventory of inventory pressured show exactly ultimately dealers and power with which is see organization. planning where of but interconnectivity our sales same-store tools network

same-store the third the and purposes, compared year-to-date for in respectively. quarter and comparative sales For XX% were same when periods XX% XXXX XXXX to

in driven by service shortfall and the from of sold models mix result a by prior compared the strong, and basis and our boat proud pre-sold activity to levers continue very which Importantly, parts new we higher-margin remains drive less of sharp nearly Gross be robust. increase other inventory service up and grew XX% mostly and cyclical points, to revenue. XXX%. forward. continue Sales to lead XXX Door focus and further pre-owned primarily bolstered is as sales. business a the I'm the by the whopping parts year, by other controllable swings the expanded revenue team's that generations the on offset our was margin boat

and drive help on focus executing to us our through value. market higher-margin shareholder strategic strategy growth acquisitions to and long-term business growing share segments our continue We facet expand multi our

As a we in Xx typically within cut to purchase pay multiple a XX and reminder, half than EBITDA for expect we that months. target less

generated cash strong from dealership's and generally acquisitions, the our fund estate. Our long-term we real operations leases enter on into

to announced a about deals. X minute Now let's recent our of talk take

units. The Boat Mart operated the presence of recent a West, and quality customers, represents factory Mart, and business full Grady our mobile to family-owned White, Boat Key and rigging its Naples offering acquisition Walker technicians on Naples third-generation that deliver first premium shop boating is our including for of Hurricane brands, Group. including a service while and Marine complements Florida Coast trained expands service West

of expect We XXXX. quarter this the fourth in transaction close to

for to an acquire agreement The marketplace parts, second made we electronics online marine an PartsVu, OEM announcement was accessories. and

since of said, and offerings, from over XXXX. its margin sales. generated expanding company long-term significant strategy which the and $XX commands part parts the As growth service months has million a boat insulate PartsVu in of volume sales helps cyclicality sales XX annually the our is organically history launch approximately I've doubling in of past our and a

in QX XXXX. to acquisition close this of expect We

Our significant underscores further our model. execution and operating earnings efficient margin and superior expansion growth

and With business needs well digital further confident with and our customers. shareholder year to discuss partnership and our support very we strong management our positioned of invaluable, with proven We has Our to I team long-term turn to we margin customers our of operations. parts our business our as will pre-settlement At be that advancing feel inventory. to strengthen drive other Anthony it we allow inventory that, same over tools continue value. and time, the expansion the OEMs will proprietary that continue finish relationship meeting the our

Anthony Aisquith

down. sign Thanks, Austin. Customer demand remains levels no at slowing historically high with of

inventory on in including to have access or inventory pool. it. the store outstanding job team tools global with of our store, access our that sales broader teams dealerships, by an way Whether X sales acquisitions, able management intelligence and powerful one the are Aided inventory to full Every sell is has to state-of-the-art our to the provide its driving the our our environment. dynamic the sophisticated this team sales inventory. Our sales in done largest

is wanting shows They to waiting they we get longer don't year. XXX% the sales. in their and to see a over for adapted to to prior term today inventory time. compared We our are no up for As Customers to inventory are boat coming pre-sold next us boats order boat result, in quickly normalizing drive are they have and the because near ensure continue season.

approximately revenues focused In we'll control, related lines, addition, million levers growth including dropping within we of business areas out continue XX% $XX our higher-margin are the areas. parts tremendous on our bottom We to and surged these Service, line. these with the to non-boat businesses. and see XX% building with opportunities other expanding

allows our financials to do operating less, with model margin call remain Austin industry-leading more and of detail. operating turn stellar will more the talk reflected We in which on is I further now in efficient As us business. of the focused over mentioned, expansion about Jack, execution our to who our XX%. will

Jack Ezzell

Anthony. Thanks,

$XXX.X driven decreased Third service by decrease in supply $XXX.X revenue million in sales. the by chain same-store a to X% of by XX%. quarter other shortages million was from This fueled in parts improvements XXXX, and in offset industry-wide and primarily XXXX sales decline partially

sold. million million third decreased other compared to Finance XXXX, parts to the in shortfall year, shift boat sales $XX.X quarter $XXX.X profit on sales. sales increased in the $XXX sales mostly third million prior pre-owned XXXX prior insurance X% in X% million. pre-owned in million third quarter offsetting boat the period, mix $XX.X boats the boat compared decreased revenue and Gross margin quarter and million to size of $XX.X and in an and by to the sales in to new the the increase and XX% totaled fiscal decreased $XX.X in from New the driven model and to the revenue of X% the of service

to increase other in gross service contributed sales parts Additionally, profit. the significantly higher-margin and

As increased XXX compared a points margin to prior XX.X% percentage, our the to gross basis XX.X% year. in profit

The to gross profit, diluted or $X.XX million compared expanded year. from profitability third EBITDA per costs from continued prior elevated and the in Operating a of in fiscal the to from of increased administrative million $XX.X at fourth by of increased by rose increase year. year. or $XX.X percentage XXXX, in SG&A income offset by prior dependent as increased the adjusted as $XX.X higher XX% For compared the prior from million averages, per the share due diluted and $X.XX personnel on driven $XX.X model as fiscal driven SG&A the quarter totaled million driven than of margins was SG&A share rose by percentage million $XX.X general up variable to to and in million lack income $XX.X in $XX.X prior a to we level of primarily partially XX.X% million prior higher mix. year. Net year, to quarter million the higher inventory Selling sales sales XXXX, is expenses to of but the the the historical result, $XX.X inventory expect a in

As to cash the $XX was of as been hasn't million June Inventory supply prior June of XX, of chain low million, compared and in XX, XXXX, cash Total this was shortages. $XXX.X equivalents the to XXXX, million our an million year. prior increase XXXX. industry-wide inventory million $XX.X $XXX.X to the $XXX.X balance since compared year in due

adjusting cash XX, strategic EBITDA up prior can business focused debt in and $XX.X a As of organic the more customer a opportunities on X.Xx. you dividend cash and XXXX, at million to amount. year times Total our be not and we Xx and capital we when million, at are growth the up Anthony pending equivalents, are of perspective, XXX% the currently net lumpy are ratio discussed. pre-sold very allocation are debt and while to $XXX.X as a June for presales of subtract indicator perfect to low accelerate have mentioned, From stands than boats adjusted deposits yields payment, M&A they long-term reinvesting the as

share any our may $X.X, Looking $XXX fiscal the of EBITDA to be and diluted per range raising adjusted for additional $XXX that year. the to in outlook acquisitions million in we completed be are range of ahead for year to full million be excluding during $X.X earnings the to XXXX, the

term, inventory the will to near industry upon This the for increase you allowing Operator, XXXX. fiscal in the inventory approximately same-store and face based outlook build broad-based However, at OneWater's industry-wide our This to year us for prepared production can full expect units the the pre-sold continued XX% in maintain pace, deliver constraints. questions. sales the now please current line manufacturers supply open we remarks. the assumes chain concludes challenges of

Operator

[Operator Instructions].

from with question first Drew Our comes Stifel. Crum

Andrew Crum

not normalize but soon. that levels you're inventory 'XX anytime Okay. know to I expect guidance yet, you for don't providing fiscal you mentioned

be So in maybe separately, then dynamic for given of should the at least couple we over the thinking performance? about Jack, similar anticipate margin performance, mix how lift quarters, XQ. and that And parts gross sales comps, some boat service next Should and 'XX? tough similar and same-store It something we sounds cited fiscal gross margin like beyond anticipating fiscal growth. you you're a

Anthony Aisquith

you that? do Jack? Jack, take to want

Jack Ezzell

Yes.

we're a and On now. XXXX the sales in and around lot note, of work same-store projections doing right

So not really that. speak to prepared to

they're for chain supply think of lot I looking to we're constraints. inventory. our provide faced that with a adequate I manufacturers know

at like I mean, we do sales. think information look And interesting when I get easier we better up an more back so go quarter, it some mean, get will be more same-store them, the quarters, -- a going were out against. that's and feel comp same-store of the us to to there's you to as I XX% March projection be on we for and sales.

So there may variability be year. some the through

seeing there today that that a is there's same-store sales. from positive demand though, continue we're drive will what think, that to I demand

to got that through challenge forward. think and I this move inventory we work So

basis I I do, As what to far as we continues do inventory going constrained, that to mean, gross to them to so and expect think forward. a environment. wouldn't do be But margins, more up go modeling we're certainly XXX as things go we margin favorable I I that's elevated think going we about be have to long present points.

Anthony Aisquith

additional global have could when impact our you -- get add we that to market particular to we've this pull in is and past I'd acquired same-store on One inventory that we're in it acquisition hadn't. and that too, though as aggressive be other from allow thing to take that on quarter inventory, a the the that going like continue dealership and be you noticed hotter platform to to they're to sales, they an that is if able that

year. George But Tom they had had had choose acquisitions, the this they Walkers, they could needed the ordered they some with those pick from that inventory they and So as that inventory were for their able and generate sales. now to and global

on Boat Naples the move that pressure a will is and where put keeping constrained Mart and sales, is to Harbor that while Stone we we inventory in to, forward as little continue lay So it some and spoke same-store other cadence that today. acquisitions

Andrew Crum

just the But that's to drive I business, mean company. EBITDA going good it. ultimately, Got and additional it's a growth for

Okay. Thanks guys.

Operator

with comes next Mike question Truist from Our Securities. Swartz

Michael Swartz

I all that is to industry. think to don't from inventory situation, remember commentary when who think dire inventory your April I late last constraints the the But we maybe being I surprising this conference are call, anyone go of as it covers kind maybe back today. don't

So maybe demand was give related over a related? happened that whether was few sense what maybe production past us OEM the retail that or of whether months,

Jack Ezzell

retail remained consistent I I mean, demand. Well, think strong. it don't demand has mean, was I -- retail pretty and

X quarter. that's the of the a that X is push weeks pushed in OEMs, it's X I weeks, or -- bigger gets load can kind and boats you load think that But weeks. weeks, X like the load getting next weeks, that X pushes of pushes load if which the hinder a have next coming issue

want So a started it's like in they keeps kind was of April kind the domino feel but it were to do after it's manufacturers to sneak of other that and it out realize we confident our you Anthony, I that? I that were and to over them. didn't with back to pushing talking think that buy were -- had effect hump, think more they add they up things that going that

Anthony Aisquith

shortage in started and Yes. in all Gelco. of. -- were back didn't has really Gelco storm in been foam in goes February built It that has that It many I between else a a Texas that them how just guess constant out and we of everything things realize

Jack Ezzell

consumers I pretty patient. been though too thing themselves is, the Another and mean have understanding

if pushes last into make a So or that really when an next the don't the suspecting days next to quarter, or can month you're you the because get end end quarter. get of it you what to a month of the X impact get,

And not comments, opening the it so I got we into and the And It's this we -- kind that spoke really that north inventory sales. losing coming mean, of presold year. where like we've in was in we're getting is just XXX% dug it's of time of last that delayed. of

Michael Swartz

Thanks what the there the versus maybe quarter? pricing for new a for maybe sense look on just the boat side Jack, particularly during color and give units us like

Jack Ezzell

by Yes. were pricing environment, But price. I quarter it's able perspective that down would in slightly. say those it's the largely pushing. we're driven in what Units -- were to, this the command we're from

Operator

[Operator Instructions].

from comes question next Our with Altobello Raymond James. Joe

Joseph Altobello

a question us recent at EPS, from EBITDA acquisitions? that first So that does is The item. any guidance and the housekeeping all you…? contribution this morning for you include gave Or

Jack Ezzell

it get year-end, when acquisitions able were think X so those rolling don't to we're the X will move close to if close. Those us the before With or here we Yes. being much. year-end. close needle I to

Joseph Altobello

Okay. it. Got

in terms there new pretty downward 'XX, guys terms in model potentially year? numbers about and the any to of big seeing consumer year? down terms pricing of passing the model What some are you that on next In pressure price Is could put both for year hearing margins of concern we're increases.

Anthony Aisquith

don't think X% increases I had manufacturers do of that to a the pre-COVID every with I are Joe. year, we X% had mean good that so, doing. and content to part always price

and boating it the on. to used continues pretty are consumers the think I So demand for

an I So think that's be going issue. don't to

Jack Ezzell

has the that price. ownership the boating more Joe, towards purchase I'd the cost really out, to the the or purchase thing the the to seems cost this especially One of spoke in it versus of -- point consumer, moved once, thing like one I've and spaces,

pre-owned our with this consumer of of today, to the driven So we And started boats. years. to preowned kind what you associates sales on the or pushing work up really X, to working cost when for just nonexistent price is X going market boat is it's it's the to have this X really have really

than talking customer going pull boat looking at a hard looking and million trigger. normal kind at $X.XX start get So the of or it's cost out at a when the Suburban basis, customer X is it figure hours and to that to using they not years, buying to to boat you -- to on to for ski X monthly Chevrolet less a own that's going them a

I of going never pass to forward. because been so been consumer And to an that worry ton the being a mine go confident issue it's it's entire am don't on very industry. that see much my but Boat whole every pretty prices in year, a this I just just and hard life up

Joseph Altobello

Got Okay. it.

announced, acquisitions XX one million we it so if the year? looks next X about that the about over is from just combined could. should or $XX acquisitions Just months. The those past EBITDA you one, last contributions revenue I the think like and revenue How

Jack Ezzell

Yes.

the I those couple entity of worth a A think in of EBITDA mode. significant there. different little number that PartsVu you right bring revenue company. is million bit is hit of typical acquisition a growth the to dollars size will

additional to So there's reinvestment a lot spending that. of and grow

So gross margin growth. EBITDA be push rapid less than -- at good we as that have continue rapid optimal its margins, one it's -- but will will to

Operator

from Our Capital. comes next Andress KeyBanc question with Brett

Brett Andress

A question.

X up trajectory Any were up in I of I don't any or you July? in frame terms and here have way change that then Is the been I pace there? year-over-year. mentioned those pre-sales that how of, to months think, is know, Jack guess of kind X, XXX% X, of sales cadence there presales in

Jack Ezzell

for tough We're grow. at can. them and are in that season -- next But turned as really delivered. when -- they're as starting we're late this pushing lot behind customer saying, it the maybe to soon to absolutely chomping need -- as even as let's we like a manufacturers order around come We say a of bit is want put to and the get the on fall go from a hey, quickly customer we to a to the would season, ahead as who at a -- in coming hear Yes. pace where boat the to in No, end continuing it's customers are the a get of they'll for boat there's normally this and details to order. the to maybe continuing to season typically is they're It's in. we show get things boat customers

know -- next for So we be it's it's here to season. sure going

So grow built working continue for boat manufacturers with prepared those helping to and to that customers. to that's get the we're backlog slotted, and

Brett Andress

Got it.

just then an And or Okay. it of I that a advantage But acquisition mean -- here. give fill of the you in a kind on I just is I'm and scarcity all fits we, Is interesting there curious that of was an there PartsVu, your have out PS&O business? think need does just sudden, now there. that how broader them? parts a picture

Jack Ezzell

No, all. I don't parts at of there's think a scarcity

we've does what a I it in so us mean looking to his its is set I The and think Philip it us really One are for has gives own. differently. kind on PartsVu we up solid to of great growing been it it leave platform really platform already it. his about wheelhouse grow been can team that passionate and

some bring we power. think I buying

to to been can into subscription we get order by keeping the it that our a some bolster bottom I I've loyalty our but the up only fold give where program, line us bringing into it top does in fold. that to that we line, can but get things meaningful seeking the help platform P&A model, just us accelerate that think in customers not there's really

piece about passionate help puzzle, a it me us very super been to excited going anything think he's that to it, thing super that's I explode. is with is of we're guy excites it. And And the and more run about than so the it's important make incentivized what and really

Brett Andress

PartsVu And rapidly. business, I one growing mean then it's is it's a just on -- the but last smaller that

that is versus PS&O current your business? the profile of margin where Just

Jack Ezzell

little from parts reinvestment Yes. as right a I'd not margin what in expect it's it's bit. it's far margin, an as lagging a its EBITDA similar. say the It's It's it's profitable, XXs. would But low at you gross level growth. now, because but the margins that of -- in

Operator

This conference participating. at I'm Thank showing further you call. questions not today's time. any Thank this concludes you for and

You may disconnect. now