Advertisement
Australia markets open in 6 hours 47 minutes

  • ALL ORDS

    8,082.30
    -67.80 (-0.83%)
     

  • AUD/USD

    0.6695
    +0.0015 (+0.22%)
     

  • ASX 200

    7,814.40
    -66.90 (-0.85%)
     

  • OIL

    80.00
    +0.77 (+0.97%)
     

  • GOLD

    2,419.80
    +34.30 (+1.44%)
     

  • Bitcoin AUD

    99,406.05
    -405.10 (-0.41%)
     

  • CMC Crypto 200

    1,359.74
    -14.10 (-1.03%)
     

OneWater Marine Inc (ONEW) Q2 2024 Earnings Call Transcript Highlights: Navigating Challenges ...

GuruFocus Research
·5-min read

  • Revenue: Decreased 7% to $488 million in Q2 2024 from $524 million in the prior year quarter.

  • Net Income: Net loss of $5 million in Q2 2024, compared to net income of $27 million in the prior year.

  • Earnings Per Share: Net loss per diluted share of $0.27 in Q2 2024; adjusted earnings per diluted share was $0.67.

  • Gross Margin: Continued normalization, contributing to an 18% decrease in gross profit to $120 million.

  • Same-Store Sales: Down 5.1% in Q2 2024, reflecting normalized demand and seasonality.

  • Inventory Levels: Total inventory was $687 million at the end of March 2024, down from $707 million at the end of December 2023.

  • Adjusted EBITDA: $28 million in Q2 2024, down from $54 million in the prior year period.

  • SG&A Expenses: Decreased to $87 million from $90 million; SG&A as a percentage of sales was 78.7%, up 50 basis points.

  • Operating Income: Decreased to $14 million from $49 million in the prior year period.

  • Guidance: Maintaining fiscal 2024 guidance with same-store sales expected to be up low to mid single digits and adjusted EBITDA between $130 million to $155 million.

Release Date: May 02, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • OneWater Marine Inc (NASDAQ:ONEW) outperformed the industry with a smaller decline in same-store sales compared to the broader market.

  • The company successfully closed the acquisition of Garden State Yacht Sales, enhancing its presence in the mid-Atlantic U.S.

  • Despite a decrease in new boat sales, pre-owned boat sales increased by 4%, showing strength in this segment.

  • OneWater Marine Inc (NASDAQ:ONEW) maintained solid finance and insurance penetration, with rates still tracking above their target of 60% for new boat customers.

  • The company has maintained its fiscal 2024 guidance, reflecting management's confidence in the business's stability and ongoing strategies.

Negative Points

  • Same-store sales were down 5.1%, reflecting a more normalized demand environment and the return of seasonality.

  • Revenue for the fiscal second quarter decreased by 7% year-over-year, with new boat sales down 8%.

  • Gross profit decreased by 18% in the second quarter compared to the previous year, driven by normalization of gross margins.

  • The distribution segment continues to face challenges due to reduced production from boat manufacturers, which is expected to pressure results for the remainder of the year.

  • Net loss for the fiscal second quarter totaled $5 million, a significant drop from net income of $27 million in the prior year quarter.

Q & A Highlights

Q: Can you comment on your expectations for gross margin? The 24.6% reported in the quarter was only down 50 bps versus 1Q. Should we anticipate this leveling out further in the second half and, if so, what would be the drivers? A: (Jack Ezzell, CFO) Yes, we expect new boat margins to stabilize, as they were slightly less than last quarter. Pre-owned fluctuated a bit with the mix between brokerage, consignment, and trades, which largely drives our margins. Moving forward, we anticipate margins to remain in the mid-20% range.

ADVERTISEMENT

Q: Following the close of the Garden State Yacht Sales acquisition, what are your updated thoughts concerning M&A for the company? What are you seeing in terms of valuations, and what is your appetite to do more deals in this environment? A: (Philip Austin Singleton, CEO) We're ready to resume active deal-making. We've been cautious due to margin stabilization and inventory concerns. Now, with margins stabilizing and inventory challenges being addressed by manufacturers, we're prepared to push on the M&A front. We expect to return to a deal-making cadence similar to pre-COVID levels.

Q: How has the inventory been managed, especially with the challenges from the past quarters? A: (Jack Ezzell, CFO) Our total inventory at the end of March was $687 million, down from $707 million at the end of December. We are comfortable with our inventory position and plan to continue reducing inventory levels throughout the remainder of the fiscal year.

Q: Could you provide more details on the financial results for the fiscal second quarter? A: (Jack Ezzell, CFO) Fiscal second quarter revenue decreased 7% to $488 million. New boat sales were down 8%, while pre-owned boat sales increased 4%. Gross profit decreased 18% to $120 million, and operating income decreased to $14 million from $49 million in the prior year, impacted by restructuring and impairment charges.

Q: What are the expectations for the company's performance in the upcoming quarters? A: (Jack Ezzell, CFO) We are maintaining our fiscal 2024 guidance, expecting same-store sales to be up low to mid-single digits and adjusted EBITDA to be in the range of $130 million to $155 million. We anticipate adjusted earnings per diluted share to be between $3.25 and $3.75.

Q: How is the company handling cost management and operational efficiency? A: (Jack Ezzell, CFO) We've taken actions to reduce costs, including headcount reductions, closing certain retail locations, discontinuing sales of certain brands, and abandoning non-strategic IT projects. These measures are part of our ongoing focus on improving operating leverage and aligning our expenses with market demand.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.