ONEW Q1 Earnings Call: Guidance Cut Amid Flat Sales and Higher Industry Competition

May 15, 2025 at 09:26 AM EDT

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Boat and marine products retailer OneWater Marine (NASDAQ: ONEW) fell short of the market’s revenue expectations in Q1 CY2025, with sales flat year on year at $483.5 million. The company’s full-year revenue guidance of $1.75 billion at the midpoint came in 3.8% below analysts’ estimates. Its non-GAAP profit of $0.13 per share was 61.2% below analysts’ consensus estimates.

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OneWater (ONEW) Q1 CY2025 Highlights:

Revenue: $483.5 million vs analyst estimates of $497.5 million (flat year on year, 2.8% miss)
Adjusted EPS: $0.13 vs analyst expectations of $0.34 (61.2% miss)
Adjusted EBITDA: $17.86 million vs analyst estimates of $23.3 million (3.7% margin, 23.4% miss)
The company dropped its revenue guidance for the full year to $1.75 billion at the midpoint from $1.78 billion, a 1.4% decrease
Management lowered its full-year Adjusted EPS guidance to $1 at the midpoint, a 33.3% decrease
EBITDA guidance for the full year is $80 million at the midpoint, below analyst estimates of $88.97 million
Operating Margin: 3.4%, in line with the same quarter last year
Free Cash Flow Margin: 4.9%, up from 2.8% in the same quarter last year
Locations: 103 at quarter end, up from 98.5 in the same quarter last year
Same-Store Sales fell 2.1% year on year (-5% in the same quarter last year)
Market Capitalization: $248.6 million

StockStory’s Take

OneWater's first quarter results were shaped by persistent softness in new boat sales and continued margin pressure, which management attributed primarily to a promotional retail environment and lingering macroeconomic uncertainty. CEO Austin Singleton pointed to ongoing recovery challenges in the West Coast of Florida and highlighted that, while same-store sales declined 2%, the company continued to outperform broader industry trends, which saw double-digit declines in unit sales. Singleton emphasized OneWater's execution on inventory and brand rationalization, stating, "We reduced inventory by 12% year-over-year and 5% sequentially, outpacing the industry."

With tariff uncertainties and rising costs influencing the outlook, management took a more cautious approach to guidance. CFO Jack Ezzell noted that updated full-year expectations now include lower projected revenues and profits, reflecting both heightened macroeconomic risks and a more competitive market. Singleton added, "We are taking a more cautious view on the demand environment, and consequently, we are updating our outlook," signaling a focus on actions within the company's control such as inventory management and operational cost reductions.

Key Insights from Management’s Remarks

Margins and sales were pressured by industry-wide discounting, inflation, and a competitive environment. Management cited inventory reduction, brand rationalization, and support from manufacturing partners as key themes for the quarter.

Inventory and Brand Rationalization: The company accelerated efforts to reduce aged inventory and exited 15 brands, aiming to streamline its lineup and focus on higher-performing manufacturers. This strategy is expected to produce a 10–15% inventory reduction for the year.
Promotional Retail Environment: Gross margins remained under pressure as the industry continued aggressive discounting, especially to clear dated inventory. Management balanced promotional activity with efforts to protect pricing and brand value in current-year models.
Premium Segment Focus: OneWater continued to gain share in the premium boat market, where demand for larger and high-end models held up better than the value segment. CEO Austin Singleton attributed relative outperformance to this strategic focus.
Growth in Used and Pre-Owned Sales: Pre-owned boat sales were strong, supported by higher trade-in volumes and more customers trading up, which management described as a "tailwind" after several years of limited pre-owned inventory.
Parts, Service, and Financing Resilience: Parts and service revenue grew modestly, driven by dealership performance, while insurance and financing penetration increased slightly, underscoring the value of these recurring revenue streams despite headwinds in the distribution segment.

Drivers of Future Performance

Management expects continued volatility in the broader boat market, with strategy centered on inventory discipline, cost controls, and a focus on premium segments to mitigate demand uncertainty and margin risks.

Inventory Optimization Priority: The company aims to further rationalize its inventory and brand portfolio, expecting tighter lineups to support margin improvement as older models are cleared and new inventory arrives.
Macroeconomic and Tariff Headwinds: Management cited ongoing macro uncertainty and evolving tariff risks as major factors shaping the outlook, with expectations for a cautious demand environment and possible supply chain cost increases.
Operational Flexibility: Leadership stressed a flexible operating model, enabling rapid cost adjustments in response to retail trends, and indicated plans to accelerate cost actions, particularly in the distribution business, to maintain profitability.

Catalysts in Upcoming Quarters

Looking forward, the StockStory team will monitor (1) the pace and success of inventory and brand rationalization efforts, (2) the ability to improve gross margins as promotional pressures subside and more profitable models are sold, and (3) the impact of tariff developments and macroeconomic trends on both demand and supply chain costs. Progress in recurring revenue streams and execution on cost control will also be important indicators of future performance.

OneWater currently trades at a forward P/E ratio of 8.3×. Should you load up, cash out, or stay put? The answer lies in our free research report.

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