OneWater(US:ONEW)2023-05-06 23:00Financial Data and Key Metrics Changes - Fiscal second quarter revenue increased by 19% to $524 million in 2023 from $442 million in the prior year quarter, driven by an 11% increase in same-store sales and revenue from acquisitions [38][50] - New boat sales rose by 23% to $355 million, while pre-owned boat sales remained flat at $75 million [38] - Gross margin for new boat sales decreased to 23%, down from 28% a year ago, but still ahead of the 17% range of 2019 [33][38] - Operating income decreased by 18% to $49 million compared to $59 million in the prior year, and adjusted EBITDA decreased to $52 million from $66 million [58] - Net income for the fiscal second quarter totaled $27 million or $1.56 per diluted share, down from $42 million or $2.54 per diluted share in the prior year [58] Business Line Data and Key Metrics Changes - Service parts and other sales climbed by 28% to $78 million, driven by contributions from recently acquired businesses and solid organic growth [57] - Finance and Insurance increased slightly by 3% [57] - Selling, general and administrative expenses increased to $90 million from $75 million, with SG&A as a percentage of sales remaining flat at 17% [39] Market Data and Key Metrics Changes - The demand environment remains healthy, with good boat show attendance and store traffic [32] - Inventory weeks on hand are lower than both industry averages and 2019 metrics, indicating effective inventory management [36] - The company is seeing a change in customer buying cadence as the industry returns to a normal seasonal cycle [53] Company Strategy and Development Direction - The company aims to maintain appropriate inventory levels as it prepares for the summer selling season, focusing on clean inventory as it transitions into the 2024 model year [66] - The acquisition pipeline remains robust, with the company remaining opportunistic yet disciplined in evaluating potential transactions [30][60] - The company is focused on maintaining a double-digit EBITDA margin and close to 30% gross margin, even if it means adjusting new boat margins [20][78] Management's Comments on Operating Environment and Future Outlook - Management expressed concerns about the macroeconomic environment but remains optimistic about the upcoming boating season [2][3] - The company anticipates that destocking at retailers will normalize over the summer selling season, positioning it to capitalize on returning demand [37] - Management noted that customer credit is still available, albeit at higher rates, and banks continue to be diligent in underwriting loans [54] Other Important Information - Total liquidity as of March 31, 2023, was in excess of $100 million, with total inventory at $593 million [59] - The company is actively assessing strategic targets for acquisitions while maintaining a balance between internal investments and share repurchases [60] Q&A Session All Questions and Answers Question: How did the same-store sales performance compare to industry data? - The company outperformed the industry due to strong execution and aggressive marketplace strategies, resulting in a same-store sales growth of 11% [42][43] Question: What are the expectations for April's performance? - April is expected to show flat to mid-single-digit same-store sales growth, with a decent start noted [62] Question: Can you provide more detail on the balance of unit growth versus price growth? - Unit growth was about half driven by units and half by price, indicating a balanced approach in sales [74] Question: How does the company view the current inventory levels in the industry? - The company believes that the industry is starting to normalize inventory levels, with a focus on being better positioned than competitors [79] Question: What is the outlook for the marine market compared to the RV market? - The marine industry appears stronger than the RV market, with elevated margins expected to continue [30]