OneWater Marine Inc.

Hello, thank you for standing by and welcome to the One Water Marine Inc. Fiscal Third Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star one on your telephone. Please be advised that today's conference may be recorded. If you require any further assistance, please press star zero. I would now like to hand the conference over to your speaker today, Jackie Zell, Chief Financial Officer, please go ahead.

Good morning and welcome to One Water Marine's fiscal third quarter 2021 earnings conference call. I am joined on the call today by Austin Singleton, Chief Executive Officer, and Anthony Asquith, 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 One Water Marine and its operations may be considered forward-looking statements under 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 future results are discussed in the company's earnings release, which can be found in the investor relations section on the company's website and in its filings with the SEC. The company disclaims any obligation or undertaking to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made, except as required by law. And with that, I'd like to turn the call over to Austin Singleton, who will begin with a few opening remarks. Austin?

Thanks, Jack, and thank you, everyone, for joining today's call. Overall, we delivered solid results for the third quarter of 2021. Despite industry-wide inventory challenges, which pressured the top line, we grew our operating margin to 16%, and we delivered record-adjusted EBITDA of $66 million. an increase of 33% compared to the prior year. Sales for the third quarter of 2021 were up against an extremely difficult 44% same-store sales comp in the prior period. As a reminder, the prior period benefited significantly from business that shifted from March 2020 to April and May 2020 because of the COVID shutdown. This year, same-store sales for the third quarter were down 11%, all driven by significant inventory shortages across the industry, but partially offset by improvements in service parts and other sales. We believe we would have posted positive same-store sales if we had the inventory. It's noteworthy that same-store sales excludes new and acquired store sales until the end of the store's 13th month of operation under our ownership. Our Tom George Yacht Group and Walker Marine Acquisitions were two of our largest and leveraged our global inventory to meet the red hot west coast of Florida retail environment. We ended up sharing the same store inventory and inventory planning tools with these acquisitions, which ultimately pressured same store sales, but is exactly where we see the power of our network of dealers and show the interconnectivity of our organization. For comparative purposes, same store sales for the third quarter and year to date 2021 when compared to the same periods in 2019 were 14% and 26% respectively. Importantly, we grew our higher margin less cyclical service parts and other revenue by 58% compared to the prior year, which mostly offset the shortfall from new and pre-owned boat sales. Sales activity remains robust, door swings and lead generations continue to be strong, and as a result, our pre-sold inventory is up nearly 400%. I'm very proud of the team's focus on the controllable levers that continue to drive the business forward. Gross margin expanded by a whopping 822 basis points, driven primarily by the mix of boat models sold, and was further bolstered by the sharp increase in service parts and other revenue. We continue to focus on executing our multifaceted growth strategy through strategic acquisitions and growing our higher margin business segments to help us expand our market share and drive long-term shareholder value. As a reminder, we typically pay less than four times EBITDA for a target, and we expect to cut that purchase multiple in half within 24 months. Our strong cash generated from operations fund our acquisitions, and we generally enter into long-term leases on the dealership's real estate. Now let's take a minute to talk about two of our recent announced deals. The first is Naples Boat Mart, a third-generation family-owned and operated business that expands our presence on the west coast of Florida and complements our recent acquisition of Walker Marine Group. Naples Boat Mart represents... premium boating brands, including Grady-White, Hurricane and Key West, while offering factory trained technicians to deliver quality service for its customers, including a full rigging shop and mobile service units. We expect this transaction to close in the fourth quarter of 2021. The second announcement we made was an agreement to acquire PartsView, an online marketplace for OEM marine parts, electronics, and accessories. As I said, part of our long-term growth strategy is expanding our parts and service offerings, which commands a significant margin and helps insulate the company from the cyclicality of both sales. PartsView generated approximately $25 million in sales over the past 12 months and has a history of growing organically doubling sales volume annually since its launch in 2016. We expect this acquisition to close in Q4 of 2021. Our significant margin expansion and earnings growth further underscores our superior execution and efficient operating model. Our strong partnership with our OEMs has proven invaluable, and our proprietary digital inventory and management tools allow our team to continue meeting the needs of our customers and pre-sale and inventory. At the same time, we continue advancing the other parts of our business that support further margin expansion and strengthen our relationship with customers. We feel very confident as we finish our year that we will be positioned well to drive long-term shareholder value. With that, I will turn it over to Anthony to discuss business operations.