OneWater(ONEW) - 2025 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Fiscal second quarter revenue decreased 1% to $484 million in 2025 from $488 million in 2024 [13] - New boat sales were down 5% to $310 million, while pre-owned boat sales increased 14% to $90 million [13] - Gross profit declined to $110 million in 2025 compared to $120 million in 2024 [14] - Net loss for the fiscal second quarter totaled $375,000 or $0.02 per diluted share compared to a net loss of $5 million or $0.27 per diluted share in the prior year [14][15] - Adjusted income per diluted share was $0.13 compared to $0.67 in the prior year [15] Business Line Data and Key Metrics Changes - Same store sales declined 2%, primarily due to a decrease in new boat sales [4][13] - Revenue from service parts and other sales increased 2% to $69 million, driven by growth in the dealership segment [13] - Parts and service business revenue was up 2%, partially offset by headwinds in the distribution segment [11] Market Data and Key Metrics Changes - Total unit sales for the industry were down in excess of 10% for the quarter, while the company continued to outperform the industry and gain market share [4] - The average unit price of new boats increased, driven by continued strength in larger boats [10] Company Strategy and Development Direction - The company is focused on inventory and brand rationalization strategies, reducing inventory by 12% year over year [5] - The company plans to exit 15 brands to streamline operations and focus on higher-performing brands [40][41] - The company is monitoring the tariff landscape and does not expect an impact on pricing for current inventory [7] Management Comments on Operating Environment and Future Outlook - Management noted considerable macroeconomic uncertainty and a challenging environment but expressed optimism about improving performance over time [4] - The company updated its fiscal 2025 guidance, anticipating total sales in the range of $1.7 billion to $1.8 billion, with same store sales expected to be flat to down low single digits [18] - Management emphasized a focus on factors within their control, including rationalizing the brand portfolio and streamlining operations [8] Other Important Information - Total liquidity as of March 31, 2025, was in excess of $74 million [16] - Total inventory decreased to $602 million from $687 million year over year, indicating a healthier mix and aging profile [16] Q&A Session Summary Question: What are you seeing in April from a demand standpoint post the tariff announcements? - Management indicated that April results were in line with the previous year, with positive signs of demand continuing into May [20][21] Question: Can you discuss the margins on used boats? - Management noted that margins were affected by model mix and aggressive pricing strategies to move inventory [22][23] Question: Where are you taking market share? - The company is primarily gaining share in the premium segment, outperforming the industry despite a decline in same store sales [29][30] Question: Are you having to discount heavily to move volume? - Management confirmed that while some discounting is necessary, they are strategically managing margins on current year models [31][32] Question: How do you see the industry shaking out after the slowdown? - Management anticipates potential consolidation in the industry due to higher carrying costs and competitive pressures [36][40]