OneWater Marine’s Q4 2025 Earnings Call: Contradictions Emerge on Inventory Management, Consumer Rates, and Sales Outlook

Date of Call: November 13, 2025

Financials Results

• Revenue: $460.0M in Q4, up 22% YOY (vs $378M prior year); FY2025 revenue $1.9B, up 6% YOY
• EPS: Q4 GAAP net loss $6.90 per diluted share (loss of $113M) vs $0.63 loss prior year; adjusted diluted EPS < $0.01 vs adjusted loss $0.36 prior year; FY2025 adjusted diluted EPS $0.44
• Gross Margin: Q4 gross profit $104M vs $91M prior year; FY2025 gross margin 23% (FY gross profit down 2% YOY)

Guidance:

• Total sales for 2026 expected $1.83B to $1.93B.
• Adjusted EBITDA guidance $65M to $85M.
• Adjusted diluted EPS guidance $0.25 to $0.75.
• Expect flat same-store sales in 2026 (exiting brands create ~5% headwind; pro forma continuation brands mid-single-digit growth).
• Management cites improving industry inventories, reduced discounting and lower rates as tailwinds but remains cautious on market uncertainty.

Business Commentary:

• Strong Financial Performance Amid Market Challenges:
• OneWater Marine reported revenue of $460 million for Q4 2025, up 22% year-on-year.

• Despite challenging industry conditions, the company outperformed with 6% same-store sales growth for the year due to strategic priorities and cost actions.

• Inventory Management and Positioning:

• Total inventory decreased to $540 million by the end of 2025, a 8.5% decline year-over-year.

• This decline reflects disciplined execution in rightsizing inventory and brand rationalizations, positioning the company for a competitive 2026.

• Pre-Owned Sales and Trade-In Activity:

• Pre-owned sales increased by 25% to $91 million in Q4 2025, contributing to solid full-year results.

• This growth was driven by effective leveraging of a rebound in trade-in activity, which benefited from improved manufacturing lead times and inventory levels.

• Impact of Strategic Brand Exits:

• The strategic exit from discontinued brands created short-term margin pain but laid the groundwork for long-term margin improvement.

• This move allowed OneWater Marine to focus on its core portfolio with high-performing brands, enhancing overall profitability.

• Inventory and Market Dynamics:

• The company anticipates total sales in 2026 to range between $1.83 billion and $1.93 billion, with flat same-store sales despite the exit of certain brands.
• This outlook is anchored on improved industry inventory levels, reduced discounting, and lower interest rates, supported by flexible operating models and strong customer relationships.

Sentiment Analysis:

Overall Tone: Neutral

• Management emphasized progress and optimism—"We finished 2025 with solid results" and "We remain optimistic on 2026"—but reported a large Q4 GAAP loss driven by $146M of noncash goodwill/intangible impairments and stressed caution given market uncertainty; guidance is conservative with flat same-store sales but positive adjusted EBITDA and EPS ranges.

Q&A:

• Question from Craig Kennison (Robert W. Baird & Co. Incorporated, Research Division): Can you quantify the change in inventory year-over-year in dollars?
  Response: Inventory down roughly 8.5% YOY (~$50M); original goal was down 10–15% and management is pleased with current levels despite earlier-than-normal model-year build.

• Question from Craig Kennison (Robert W. Baird & Co. Incorporated, Research Division): Given your outlook for flat retail, what's the right assumption for inventory for fiscal '26?
  Response: Expect inventory to be up modestly (partly from price increases); exiting brands create ~5% sales headwind while continuing brands pro forma mid-single-digit growth, netting to flat same-store sales.

• Question from Craig Kennison (Robert W. Baird & Co. Incorporated, Research Division): What is your interest rate expense outlook for 2026 given the term note and rate changes?
  Response: Floorplan interest expected flattish to slightly up; term interest expected down ~5–10% as amortization continues; modest net decline in total interest expense possible but uncertain.

• Question from Joseph Altobello (Raymond James & Associates, Inc., Research Division): Have you started to see consumer rates come down in a meaningful way yet?
  Response: Yes—rates have begun to decline modestly following cuts, aiding customer confidence and contributing to stronger October and Fort Lauderdale show results.

• Question from Joseph Altobello (Raymond James & Associates, Inc., Research Division): Can you quantify how much sales were up at the Fort Lauderdale Boat Show?
  Response: Fort Lauderdale sales were up nearly 20% year-over-year and management noted margin pressure easing at the show.

• Question from Joseph Altobello (Raymond James & Associates, Inc., Research Division): How do you see the promotional environment playing out in fiscal '26?
  Response: Promotional pressure likely persists until OEM production ramps slowly; as industry inventory improves and production increases over time, margins should improve.

• Question from Noah Zatzkin (KeyBanc Capital Markets Inc., Research Division): Have you continued to see increased trade-in activity on the pre-owned side and how will that play out next year?
  Response: Trade-in momentum has continued; more used boats are being routed through dealerships than sold privately, sustaining pre-owned strength.

• Question from Noah Zatzkin (KeyBanc Capital Markets Inc., Research Division): What's your view on M&A activity and strategy next year?
  Response: M&A will remain highly disciplined and limited near term as management focuses on debt reduction and can be selective while market timing is favorable.

Contradiction Point 1

Inventory Levels and Management

It reflects differing perspectives on inventory management strategy and the company's ability to adjust its inventory levels to align with market demands, which is crucial for financial performance and investor confidence.

Jack, can you quantify the year-over-year change in inventory dollars, which was down 14% last quarter? - Craig Kennison(Robert W. Baird & Co. Incorporated, Research Division)

2025Q4: We are down roughly 8.5%, $50 million year-over-year. Initially, our goal was a decrease of 10% to 15%. However, our inventory levels are in a healthier position now, and we're pleased with the progress made. - Jack Ezzell(CFO)

Did you achieve the 10%-15% inventory reduction target this fiscal year, and if so, how much did inventories decrease? Additionally, is the current level considered optimal, or do you plan to reduce further? - Robert Willoughby(Fox-Pitt Kelton)

2025Q3: Our inventory levels were down approximately 14% as of September 30. The decline in our inventory was driven by last year's exit of certain underperforming brands, as we have targeted a decrease of 10% to 15% in our inventory levels for fiscal year '25. - Jack Ezzell(CFO)

Contradiction Point 2

Consumer Interest Rates and Market Conditions

It highlights differing views on the impact of consumer interest rates and market conditions on consumer behavior and purchasing decisions, which are critical to the company's sales performance.

Have consumer rates meaningfully declined yet? - Joseph Altobello(Raymond James & Associates, Inc., Research Division)

2025Q4: We are seeing interest rates come down gradually with each rate cut. This has started to impact consumer confidence positively, contributing to a good October and Fort Lauderdale Boat Show. - Philip Singleton(Founder & Executive Chairman of the Board)

Have you observed any behavioral changes or market response due to clarity in tax and tariff policies? - Craig R. Kennison(Robert W. Baird & Co. Incorporated, Research Division)

2025Q3: I would say that our large-box stores and land locations saw very good results in the quarter, while our waterfront locations were down slightly on a year-over-year basis. Most of this is either difficult to quantify or explain, but we believe that the Delta, tax and the tariff uncertainty and inflation all had a negative effect. - Philip Singleton(Founder, CEO & Director)

Contradiction Point 3

Inventory and Sales Outlook

It involves differing expectations for sales and inventory levels, which are critical for forecasting and operational planning.

What inventory assumption is appropriate for fiscal 2026 given flat retail outlook? - Craig Kennison(Robert W. Baird & Co. Incorporated, Research Division)

2025Q4: We expect inventory to be up modestly due to price increases and other factors. However, we anticipate a 5% headwind from exiting brands, which we aim to offset with growth in our continuing brands, resulting in a flat same-store sales outlook. - Jack Ezzell(CFO)

What are you seeing in April regarding demand post-tariff announcements? - Joseph Altobello(Raymond James)

2025Q2: April was in line with last year, with units and dollars slightly up compared to the previous year. The beginning of May also looks to be ahead of where we were at the beginning of May last year. - Philip Singleton(CEO)

Contradiction Point 4

Promotional Environment and Pricing Strategy

It highlights a potential shift in pricing strategy and promotional environment, which directly impacts revenue and profitability.

How will the promotional environment develop in fiscal 2026? - Joseph Altobello(Raymond James & Associates, Inc., Research Division)

2025Q4: The promotional environment should remain stable until manufacturers feel the need to increase production, which we expect to happen gradually over time. - Philip Singleton(CEO)

Are heavy discounts being used to increase volume and market share? Is this a strategic move? - Michael Albanese(Benchmark)

2025Q2: Yes, there is some discounting, especially in noncurrent inventory, to stay competitive. - Philip Singleton(CEO)

Contradiction Point 5

Inventory Reductions and Goals

This contradiction relates to the company's progress and goals regarding inventory reductions, which directly impact financial performance and operational efficiency.

Jack, could you quantify the year-over-year change in inventory in dollars, as last quarter it was down 14%? - Craig Kennison(Robert W. Baird & Co. Incorporated)

2025Q4: We are down roughly 8.5%, $50 million year-over-year. Initially, our goal was a decrease of 10% to 15%. However, our inventory levels are in a healthier position now, and we're pleased with the progress made. - Jack Ezzell(CFO)

What inventory target do you have for new boats in fiscal year? - Michael Swartz(Truist Securities)

2025Q1: Goal is to be down year-over-year by 10% or more by September '25. - Jack Ezzell(CFO)