Earnings call transcript: Onewater Marine stock tumbles after Q2 2025 earnings miss

OneWater Marine (ONEW) reported its Q2 2025 earnings, revealing a significant miss on both earnings per share (EPS) and revenue compared to forecasts. The company posted an EPS of $0.13, falling short of the expected $0.36. Revenue came in at $484 million, below the anticipated $495.73 million. The market reacted negatively, with shares dropping 14.26% to $12.87 in premarket trading. According to InvestingPro data, the stock has declined over 31% in the past six months, with current trading levels near its 52-week low of $12.02. InvestingPro analysis indicates the stock is currently fairly valued based on its comprehensive Fair Value model.

Key Takeaways

• OneWater Marine’s Q2 2025 EPS and revenue missed analyst expectations.
• Stock fell over 14% in premarket trading following the earnings release.
• The company continues to focus on premium boat segments despite industry challenges.
• Inventory reduction and cost-saving initiatives are ongoing.
• Macroeconomic factors, including tariffs and interest rates, are impacting performance.

Company Performance

OneWater Marine’s performance in Q2 2025 reflects the challenging conditions in the marine industry, with total revenue declining by 1% year-over-year. The company has managed to outperform the industry average in some areas, but overall sales have been impacted by macroeconomic pressures and a competitive selling environment. The focus remains on premium boat segments and strategic brand management to navigate these challenges.

Financial Highlights

• Revenue: $484 million, down 1% year-over-year
• New boat sales: $310 million, down 5% year-over-year
• Pre-owned boat sales: $90 million, up 14% year-over-year
• Gross profit: $110 million, down 8.3% year-over-year
• Net loss: $375,000, or $0.02 per diluted share
• Adjusted EPS: $0.13, down from $0.67 in the previous year

Earnings vs. Forecast

OneWater Marine’s Q2 EPS of $0.13 was significantly below the forecasted $0.36, representing a miss of approximately 63.9%. Revenue also fell short of expectations by $11.73 million. This marks a notable deviation from previous quarters, where the company has either met or exceeded earnings expectations.

Market Reaction

The market responded swiftly to the earnings miss, with OneWater Marine’s stock plummeting by 14.26% in premarket trading to $12.87. This price movement positions the stock closer to its 52-week low of $12.02, indicating a steep decline in investor confidence. The broader market trends have been more stable, highlighting the specific challenges faced by the company.

Outlook & Guidance

Looking forward, OneWater Marine maintains a cautious outlook due to ongoing tariff and macroeconomic uncertainties. The company projects total sales for FY2025 to be between $1.7 billion and $1.8 billion, with same-store sales expected to remain flat or decline slightly. Adjusted EPS guidance is set between $0.75 and $1.25, reflecting the company’s efforts to manage costs and optimize its brand portfolio.

Executive Commentary

CEO Austin Singleton emphasized the company’s strategic focus: "We are focused on factors within our control including rationalizing our brand portfolio, streamlining operations and meeting the needs of our customers." He also expressed optimism about improving margins as inventory adjustments continue: "As the inventory continues to correct itself and that outdated stuff runs through, we should be in a pretty good spot."

Risks and Challenges

• Macroeconomic Pressures: High interest rates and tariff concerns could further impact consumer spending on luxury items like boats.
• Competitive Market: A challenging selling environment requires strategic pricing and brand management.
• Inventory Management: While progress is being made, achieving the targeted inventory reduction remains critical.
• Industry Trends: A decline in industry unit sales poses ongoing challenges.
• Cost Management: Continued focus on cost-saving initiatives is essential to maintain profitability.

Q&A

During the earnings call, analysts inquired about the company’s pricing strategies and inventory management. OneWater Marine responded by highlighting aggressive pricing on non-current inventory and positive momentum in trade-in activities. The management anticipates margin improvements as inventory levels are optimized.

Full transcript - Onewater Marine (ONEW) Q2 2025:

Conference Operator: Thank you. I would now like to turn the conference over to Jack Ezel, Chief Financial Officer. Please go ahead.

Jack Ezel, Chief Financial Officer, OneWater Marine: Good morning, and welcome to OneWaterine’s fiscal second quarter twenty twenty five earnings conference call. I’m joined on the call today by Austin Singleton, Chief Executive Officer and Anthony Aspleth, President and Chief Operating Officer. Before we begin, I’d like to remind you that certain statements made by management in this morning’s conference call regarding OneWater Marine and its operations may be considered forward looking statements under the securities law and involve a number of risks and uncertainties. As a result, the company cautions you that there are a number of factors, many of which are beyond the company’s control, which could cause actual results and events to differ materially from those described in the forward looking statements. Factors that might affect the future results are discussed in the company’s earnings release, which can be found in the Investor Relations section of the company’s website and in its filings with the SEC.

The company disclaims any obligation or undertaking to update the forward looking statements to reflect circumstances or events that occur after the date the forward looking statements are made, except as required by law. Please note that all comparisons of our second quarter twenty twenty five results are made against the second quarter twenty twenty four, unless otherwise noted. And with that, I would like to turn the call over to Austin Singleton, who will begin with a few opening remarks. Austin?

Austin Singleton, Chief Executive Officer, OneWater Marine: Thanks, Jack, and thank you everyone for joining today’s call. Our teams executed well despite considerable macroeconomic uncertainty and a challenging environment. Same store sales declined 2% for the quarter, driven primarily by softer sales on the West Coast Of Florida, which continues to recover from the impact of Hurricanes Helena and Milton. Performance from our impacted locations is improving over time with the results more in line with the rest of our dealerships when compared to the first quarter. Total unit sales for the industry were down in excess of 10% for the quarter with our results continuing to outperform the industry and take market share.

In face of these headwinds, our teams across the country continue to execute on our inventory and brand rationalization strategies, where we are seeing tangible benefits. Through strategic planning and a strong push to close sales, we reduced inventory by 12% year over year and 5% sequentially outpacing the industry. This not only improves working capital, but also strengthens our long term position. We continue to be focused on keeping a clean slate of inventory that includes our highest performing brands as we make our way through the selling season. Gross margins remain challenged largely due to the current promotional environment within the industry.

We are being thoughtful with our pricing, striking a balance between closing the deal and maintaining margin integrity and brand value. We are also continuing to execute on our cost savings initiatives. However, higher costs associated with boat shows and inflationary pressures on our fixed costs more than offset savings, leading to higher selling, general and administrative expenses as compared to the prior year period. Moving forward, we expect further benefits from our initiatives as we accelerate cost actions in our Distribution segment at the end of the quarter. We will continue to adjust our cost structure to align with retail activity given our flexible operating model.

Turning to the tariff landscape, we are keeping a close eye on the situation and monitoring developments. From where we stand today, we do not expect an impact to pricing on our current inventory. We are communicating with our manufacturing partners who are doing their best to mitigate tariff impacts and temper pricing increases for the upcoming model year. While the direct impacts to the supply chain are still being determined, we are taking a more cautious view on the demand environment and consequently we are updating our outlook. While April results are in line with the prior year, the macro environment remains uncertain.

We are focused on factors within our control including rationalizing our brand portfolio, streamlining operations and meeting the needs of our customers. These efforts are positioning us to not only weather the challenges of today, but to emerge stronger and more competitive over the long term. With that, I will turn it over to Anthony to discuss the business operations. Thanks,

Anthony Aspleth, President and Chief Operating Officer, OneWater Marine: Austin. I’ll take a few minutes to walk through our operational performance in the quarter, where we continue to see steady progress across key parts of the business. Our teams remain focused on cleaning aged inventory and those efforts are tracking ahead of schedule. The selling environment is competitive and we continue to receive support from our manufacturing partners helping to drive robust traffic at our dealership level. Wet traffic was up year over year which is positive given that March 2024 was one of our strongest months in our history.

The average unit price of new boats increased driven by continued strength in larger boats. Demand for premium models is holding up well, reflecting our ability to deliver on the performance features and design customers are looking for on the high end market. Pre owned boat sales were strong, where higher volumes were supported by an increase in trade ins and importantly trade ups. After several years of limited pre owned inventory, we’re seeing a healthy turnover of boats for upgraded models. Financing and insurance revenue continues to be a strength of our business model.

Penetration was up slightly both in terms of dollars and a percentage of total sales and speaks to the quality of our in store financing programs and ability to deploy them across the portfolio. In our parts and service business, revenue was up 2%, a modest increase driven by solid performance from our dealership segment, partially offset by the distribution segment that continues to see headwinds stemming from the reduced boat manufacturing production schedules and now tariff concerns. We continue to view the business as a valuable source of reoccurring revenue and customer engagement. On inventory, we remain thoughtful about our order intake. Brand rationalization efforts have been accelerated with additional brands added to our plan.

We expect to clear this inventory as part of our broader strategy over the balance of the selling season and we are well on track to exceed our initial full year goal of a 10% reduction in inventory. We now expect to end the year with inventory down 10% to 15%, which will leave us better positioned with tighter and more productive lineups of brands. And with that, I’ll turn the call over to Jack to go over the financials in more detail.

Jack Ezel, Chief Financial Officer, OneWater Marine: Thanks, Anthony. Fiscal second quarter revenue decreased one percent to $484,000,000 in 2025 from $488,000,000 in 2024. New boat sales were down 5% to $310,000,000 in the second quarter, while pre owned boat sales increased 14% to $90,000,000 Overall, same store sales were down 2%, driven by a decrease in new boat sales. It’s important to note that according to SFI industry data, unit sales were down in excess of 10% during the quarter. Revenue from service parts and other sales for the quarter increased 2% to $69,000,000 The increase was driven by growth in our dealership segment, which more than offset the impact of lower production from manufacturers, which continued to weigh on the sales of our distribution segment.

Finance and insurance revenue increased 10 basis points as a percentage of sales as customers continue to finance a portion of their purchase through our programs. Gross profit declined to $110,000,000 in 2025 compared to $120,000,000 in 2024. This was driven by lower gross margins on the brands we are exiting and the current model mix and pricing environment on Duvote. Second quarter twenty twenty five selling, general and administrative expenses increased 1% to $88,000,000 SG and A as a percentage of sales was 18%, up 50 basis points as a percentage of revenue as the benefits from previous cost reduction actions were more than offset by inflationary increases in selling expenses, primarily boat shows, as well as increase in other fixed and administrative expenses. Operating income increased to $16,000,000 and adjusted EBITDA was 18,000,000 Net loss for the fiscal second quarter totaled $375,000 or $02 per diluted share compared to a net loss of $5,000,000 or $0.27 per diluted share in the prior year.

Adjusted income per diluted share was $0.13 compared to adjusted income per diluted share of $0.67 in the prior year. I would like to note at the end of the quarter, the remaining Class B shares outstanding were converted into Class A shares. As a result, we will no longer be allocating a portion of our income to non controlling interest and our Class A share count will increase. Since the income allocated to the controlling interest and A share count will increase proportionally, it should not have an impact on our earnings per share. At 03/31/2025, total Class A shares outstanding were 16,300,000.0.

Now turning to the balance sheet. On 03/31/2025, total liquidity was in excess of $74,000,000 including cash on hand and additional availability under our credit facilities. Total inventory on 03/31/2025, was six zero two million dollars compared to $687,000,000 March 30 1, 20 20 4. Our inventory position continues to strengthen with a healthier mix and aging profile, and we still anticipate some incremental benefits from further inventory reductions as we complete our brand rationalizations throughout the year. Total long term debt as of 03/31/2025 was $427,000,000 and net of cash resulted in a net leverage of 5.4 times trailing twelve months adjusted EBITDA.

We remain focused on reducing leverage in the latter half of 2025 as part

Joe Altobello, Analyst, Raymond James: of our capital allocation strategy.

Jack Ezel, Chief Financial Officer, OneWater Marine: Given the impact of heightened macroeconomic uncertainty on consumer demand due to the tariff environment and results year to date, we are updating our previously issued fiscal twenty twenty five guidance. We anticipate total sales to be in the range of 1,700,000,000 to $1,800,000,000 same store sales to be flat to down low single digits against an industry backdrop that we now expect to be down as much as 10% to 15%. We now forecast adjusted EBITDA to be in the range of $65,000,000 to $95,000,000 and adjusted earnings per diluted share to be in the range of $0.75 to $1.25 This guidance encompasses our current expectations of the impacts that tariffs and increased costs will have on the business. While this situation remains fluid, we are focused on aspects of the business that we can control. We are closely monitoring the macroeconomic environment, and our flexible operating model enables us to respond quickly to any changes.

This concludes our prepared remarks. Operator, will you please open the line for questions?

Conference Operator: Thank you. Your first question comes from the line of Joe Altobello from Raymond James. Please go ahead.

Joe Altobello, Analyst, Raymond James: Thanks. Hey guys, good morning. Austin, think you touched on this earlier, but I want to go back to it, what you’re seeing in April from a demand standpoint post the tariff announcements?

Austin Singleton, Chief Executive Officer, OneWater Marine: Yes, Joe. April was in line with kind of last year. I mean, we were up in units compared to last year and up in dollars slightly on both of those, which was a pretty positive sign. And as we roll into May, the May looks to be ahead of where we were at the May. So we’re a little bit encouraged that the momentum kind of keeps moving forward.

And I think the biggest thing that we got in front of us right now is not demand coming through the door, it’s how to start making money on that. And as the inventory continues to correct itself and that outdated stuff runs through, we should be in a pretty good spot to go into the bulk of the season here in May and June and July and hopefully be able to pick up some margin dollars and continue to get our inventory leaner.

Joe Altobello, Analyst, Raymond James: Got it. Okay. And just to follow-up on that, the margins on used were a little bit softer than I was modeling. And I think your softest used margin since since COVID really. So maybe talk about what what drove that margin down, if you could.

Austin Singleton, Chief Executive Officer, OneWater Marine: Yeah. I think I think I’ll probably let Jack or Anthony jump in on this. I would just you know, a little bit of it’s probably gonna be the model mix between, what exactly was pre owned versus brokerage and consignment. That can skew the skew those numbers a little bit. And then it’s also I think we’re being a little bit more aggressive because we’re getting more trades.

We’re just trying to keep everything turning and moving forward. Jackie, I I don’t know what the breakout is, but that’s that’s my gut right there.

Jack Ezel, Chief Financial Officer, OneWater Marine: Yeah. The model mix that the the mix between, trades, brokerage, and consignment definitely, weighed in on that margin profile.

Austin Singleton, Chief Executive Officer, OneWater Marine: It what what it’s to me, it’s a little bit of a positive, Joe, because, you know, like Anthony spoke of just a minute ago, you know, we’re taking more trades today than we have in the past, which is good. That means people are moving up, either moving into a different segment or they’re moving up in both sides. And so as that trade continues to come in, that’s a positive sign, something we’ve been waiting on for five or six years now to start being able to get more trades in. So that’s an exciting, really more of a tailwind than anything for us.

Joe Altobello, Analyst, Raymond James: Got it. Okay. Thank you.

Conference Operator: Thank you. And your next question comes from the line of Mike Albinese from Benchmark. Please go ahead.

Mike Albinese, Analyst, Benchmark: Yes. Hey, good morning, guys. Thanks for taking my question here. Morning. Just wanted to ask about kind of the share gains.

I think you alluded to the market being down about 10%. Obviously, on a same store basis, you guys are down 2%. Could you just add some color as to where you’re taking share, premium versus value segment, etcetera?

Austin Singleton, Chief Executive Officer, OneWater Marine: Well, I mean, the majority of it would be in premium because that’s really where we operate. So we we do have some value, but it’s really on the edges that we operate in that. So it’s definitely on the premium premium side of things. And when we we talk about premium, we’re not talking about in size. We’re just talking about in perception of the brand and where it holds its place in the in its particular segment.

And so freshwater is a little bit than salt. And then when you get into the big boats, it’s a little bit different also. But when you look at an industry that’s down 10% plus and we’re down somewhere around 2%, that’s pretty positive. And when we’re kind of, I wouldn’t say excited about being down two, but compared to where the industry is, it makes us feel pretty good. And it’s kind of in line with where we thought we’d be.

Jack Ezel, Chief Financial Officer, OneWater Marine: All right. And then maybe you

Mike Albinese, Analyst, Benchmark: could just kind of, as a follow-up to that, add some color to the promotional and discounting environment. I mean, I guess the question is, are you having to discount heavily to essentially move more volume and gain share? Is that I guess, a, is that what’s happening? And then and then that’s strategic.

Austin Singleton, Chief Executive Officer, OneWater Marine: Yeah. I mean, absolutely, that’s that’s a little bit of what’s happening. And, yes, it is strategic. I would say that there’s a couple of different pieces of that. When you look at noncurrents, and that would just be old 24s and older, that’s where the majority of the dated inventory So that is super competitive out there because those boats have curtailments.

They have high interest rates hitting them hard on interest expense. And so everybody is being super aggressive and competitive, and we have to stay competitive in order to get that going. Now when you get into the current year model, what I think, we’re actually making pretty decent margin on that. So as we continue to get the inventory clean, there should be some sort of modest gross margin increase on new boat sales. One thing I would point out is we took our exiting brands from 13 to 15, okay?

And we’re really I would say this is I’m bullish on where our inventory position is and what our inventory is more today than I have been in quite a while. Because when you look at the breakdown of the exiting brands, and we took it from 13 to 15, so we added two more brands to that to kind of get us to where we would be in the position to really push harder with our key manufacturers. But we’re talking about we got 3,000 plus boats in inventory, and we’re talking about having 50 to 60. I think I think the number exactly is 56 exiting brands left. 56 units out of 3,000.

So we are getting to the point where we won’t have those boats going out at zero or a negative margin once we can sell about 50 more boats. And that’s going to have an impact as we move forward into the selling season and as we prepare for 2026. So that’s definitely a green shoot that we have out in front of us.

Mike Albinese, Analyst, Benchmark: Great. That’s really helpful. Thank you.

Conference Operator: Thank you. And your next question comes from the line of Craig Kennison from Baird. Please go ahead.

Craig Kennison, Analyst, Baird: Hey, good morning. Thanks for taking my question. Austin, you mentioned exiting, I think, 15 brands. I’m curious, big picture, how you see the industry shaking out after we exit this slowdown period? Will will we see far fewer brands and therefore maybe a rational market?

Or do you think those brands are gonna come back and get the same dynamic going forward?

Austin Singleton, Chief Executive Officer, OneWater Marine: That’s a really, really, really good question and one that’s somewhat difficult to answer in a short time period because I can talk about this a lot. I would go back and point to 02/1929 and how resilient the manufacturers were during that period of time and how we really didn’t lose many manufacturers at all. And this is nothing like that. What I think is gonna be interesting and what I think, in my opinion, is gonna happen over the next three to ten years as we’ve come into this new norm of higher interest rates or higher carrying costs on floor plan. Supply chain did something to the industry that is something that we’ve never seen before, and it took a lot of the suppliers out.

So when you start looking at 10 brands, let’s say, take a segment. Let’s, you know, use runabouts. You know, ten, twelve, fifteen years ago, there was a gap between what was the highest premium and maybe the mid range of, you know, brands. So, I mean, you could take brand x and brand, you know, z, and there was $20,000 difference in true cost because brand z didn’t build it like brand x. Well, when those suppliers went out, now they’re all using the same supplier, so their costs are all about the same.

And so what I think is gonna happen over time is you’re gonna have brand the gap between brand x and brand z is really closed. So if you got higher interest rates or higher carrying costs to brand the lower brands dealer network, it’s gonna be harder for them to compete and make money. Okay? So then it’s gonna be harder for that manufacturer to make margin because they’re going to have to buy buy, basically, buy the sales. And so I think that this gap closing is going to make it where at some point in time, over time, you’re either going to have consolidation or you’re going to have manufacturers and dealers that struggle to make money.

And one day, they’re gonna wake up and go, why are we doing this? You know? And so that’s coming. I just don’t know how big it’ll be and what it’ll do. And that that’s one of the reasons we wanna stay positioned on the the premium higher inside of the business in all the segments.

And we want to consolidate what we’re doing more with our top brands. And that’s a little bit of why we reconfigured what we’re selling today and why we’re exiting 15 brands today, which we probably would have never thought of exiting brands five years ago.

Craig Kennison, Analyst, Baird: It’s really interesting. Maybe could you just tell us how many brands you started with and what you’ll have left when you’re completed with this project?

Austin Singleton, Chief Executive Officer, OneWater Marine: I I will mess those numbers up to to be exact, but I’ll throw that back to Jack because he probably knows it off the top of his head.

Jack Ezel, Chief Financial Officer, OneWater Marine: It’s it’s still a lot, Craig. We we probably have, 50 plus brands still.

Craig Kennison, Analyst, Baird: Got it. Great. Thank you.

Conference Operator: Thank you. There are no further questions at this time. This concludes today’s conference call. You may now disconnect.

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