0001140361-23-004426 | 10-Q | XBRL Viewer

Summary of Significant Accounting Policies (Tables)

3 Months Ended

Dec. 31, 2022

Summary of Significant Accounting Policies [Abstract]

Contract liabilities consist of deferred revenues from marina and storage operations and customer deposits and are classified in customer deposits in the Company’s unaudited condensed consolidated balance sheets. Deposits received from customers are recorded as a liability until the related sales orders have been fulfilled by us and control of the vessel or part/accessory is transferred to the customer. The activity in customer deposits for the three months ended December 31, 2022 is as follows:

($ in thousands)	Three Months Ended December 31, 2022
Beginning contract liability	$	65,460
Revenue recognized from contract liabilities included in the beginning balance		(42,496	)
Increases due to business combinations and cash received, net of amounts recognized in revenue during the period		37,120
Ending contract liability	$	60,084

Percentages on Timing of Revenue Recognition

The following tables set forth percentages on the timing of revenue recognition for the three months ended December 31, 2022 and 2021.

	Three Months Ended December 31, 2022			Three Months Ended December 31, 2021
Goods and services transferred at a point in time		92.8	%		93.2	%
Goods and services transferred over time		7.2	%		6.8	%
Total Revenue		100.0	%		100.0	%

Acquisitions (Tables)

3 Months Ended

Dec. 31, 2022

Acquisitions [Abstract]

Summary of Assets Acquired and Liabilities Assumed

The table below summarizes the preliminary fair values of the assets acquired and liabilities assumed at the acquisition date, including the goodwill recorded as a result of the transaction:

Summary of Assets Acquired and Liabilities Assumed ($ in thousands)	Total Acquisitions
Accounts receivable	$	188
Inventories		6,232
Prepaid expenses		73
Property and equipment		11,587
Operating lease right-of-use assets		2,952
Identifiable intangible assets		8,400
Goodwill		18,880
Accounts payable		(17	)
Accrued expenses		(354	)
Customer deposits		(1,000	)
Notes payable - floor plan		(2,228	)
Operating lease liabilities		(2,952	)
Aggregate acquisition date fair value	$	41,761

Consideration transferred	$	41,761

Unaudited Pro Forma Results of Operations

The following unaudited pro forma summary presents consolidated information as if all acquisitions in the three-month period ended December 31, 2022 and 2021 had occurred on October 1, 2021:

	Three Months Ended December 31, 2022		Three Months Ended December 31, 2021
	($ in thousands)
	(Unaudited)
Pro forma revenue	$	369,363	$	428,136
Pro forma net income	$	11,542	$	25,916

Goodwill and Other Identifiable Intangible Assets

3 Months Ended

Dec. 31, 2022

Goodwill and Other Identifiable Intangible Assets [Abstract]

Goodwill and Other Identifiable Intangible Assets

7.	Goodwill and Other Identifiable Intangible Assets

Our acquisitions have resulted in the recording of goodwill and other identifiable intangible assets. Goodwill is an asset representing operational synergies and future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized. Intangible assets consist of internally developed software, domain names and other identifiable intangible assets such as trade names, developed technologies, including design libraries, and customer relationships related to the acquisitions the Company has completed. The changes in goodwill and identifiable intangible assets are as follows:

($ in thousands)	Goodwill Unamortized		Trade Names Unamortized		Developed technologies Amortized			Customer Relationships Amortized			Domain Names Amortized			Internally Developed Software Amortized			Total Intangible Assets, net
($ in thousands)	Goodwill Unamortized		Trade Names Unamortized		Developed technologies Amortized			Customer Relationships Amortized			Domain Names Amortized			Internally Developed Software Amortized			Total Intangible Assets, net
Net balance as of September 30, 2022		378,588		186,779		14,274			101,230			1,970			2,218			306,471
Acquisitions during the three months ended December 31, 2022		18,880		8,400		-			-			-			-			8,400
Accumulated amortization for the three months ended December 31, 2022		-		-		(386	)		(2,687	)		(104	)		(115	)		(3,292	)
Net balance as of December 31, 2022	$	397,468	$	195,179	$	13,888		$	98,543		$	1,866		$	2,103		$	311,579

Amortization expense was $3.3 million for the three months ended December 31, 2022, and is recorded in depreciation and amortization expense in the unaudited condensed consolidated statements of operations. No amortization expense was recorded for the three months ended December 31, 2021.

The following table summarizes the expected amortization expense for fiscal years 2023 through 2027 and thereafter ($ in thousands):

2023 (excluding the three months ended December 31, 2022)	$	9,877
2024		13,170
2025		13,170
2026		13,170
2027		12,982
Thereafter		54,031
	$	116,400

As of December 31, 2022, the carrying value of goodwill totaled $397.5 million, of which $298.9 million was related to our Dealerships reporting segment and $98.6 million was related to our Distribution reporting segment. As of September 30, 2022, the carrying value of goodwill totaled approximately $378.6 million, of which $280.0 million was related to our Dealerships reporting segment and $98.6 million was related to our Distribution reporting segment.

Stockholders' and Members' Equity, Antidilutive Securities (Details) - shares shares in Thousands	3 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Antidilutive Securities [Abstract]
Antidilutive securities excluded from computation of diluted weighted average shares (in shares)	1,807	2,048
Restricted Stock Units [Member]
Antidilutive Securities [Abstract]
Antidilutive securities excluded from computation of diluted weighted average shares (in shares)	377	233
Common Class B [Member]
Antidilutive Securities [Abstract]
Antidilutive securities excluded from computation of diluted weighted average shares (in shares)	1,430	1,815

Accounts Receivable

3 Months Ended

Dec. 31, 2022

Accounts Receivable [Abstract]

Accounts Receivable

5.	Accounts Receivable

Accounts receivable primarily consists of trade accounts receivable, contracts in transit and manufacturer receivables. Trade receivables include amounts due from customers on the sale of boats, parts, service, and storage. Contracts in transit represent anticipated funding from the loan agreement customers execute at the dealership when they purchase their new or pre-owned boat. These finance contracts are typically funded within 30 days. Amounts due from manufacturers represent receivables for various manufacturer incentive programs and parts and service work performed pursuant to the manufacturers’ warranties.

The allowance for credit losses is estimated based on past collection experience, current conditions and reasonable and supportable forecasts. The activity for charges and subsequent recoveries is immaterial.

Accounts receivable consisted of the following:

($ in thousands)	December 31, 2022			September 30, 2022
Trade accounts receivable	$	43,143		$	37,359
Contracts in transit		15,044			14,543
Manufacturer receivable		6,365			7,224
Total accounts receivable		64,552			59,126
Less – allowance for credit losses		(939	)		(1,166	)
Total accounts receivable, net	$	63,613		$	57,960

Notes Payable - Floor Plan

3 Months Ended

Dec. 31, 2022

Notes Payable - Floor Plan [Abstract]

Notes Payable - Floor Plan

8.	Notes Payable — Floor Plan

The Company maintains an ongoing wholesale marine products inventory financing program with a syndicate of banks. The program is administered by Wells Fargo Commercial Distribution Finance, LLC (“Wells Fargo”). On December 29, 2021, the Company and certain of its subsidiaries entered into the Seventh Amended and Restated Inventory Financing Agreement (as amended, the “Inventory Financing Facility”) with Wells Fargo and the other financial institutions party thereto to increase the maximum borrowing amount available to $500.0 million. The Inventory Financing Facility expires on December 1, 2023. The outstanding balance of the facility was $425.4 million and $267.1 million, as of December 31, 2022 and September 30, 2022, respectively.

Interest on new boats and for rental units is calculated using the Adjusted 30-Day Average SOFR (as defined in the Inventory Financing Facility) (“SOFR”) plus an applicable margin of 2.75% to 5.00% depending on the age of the inventory. Interest on pre-owned boats in calculated at the new boat rate plus 0.25%. Wells Fargo will finance 100.0% of the vendor invoice price for new boats, engines, and trailers. As of December 31, 2022 the interest rate on the Inventory Financing Facility ranged from 6.93% to 9.18% for new inventory and 7.18% to 9.43% for pre-owned inventory. As of September 30, 2022 the interest rate on the Inventory Financing Facility ranged from 5.33% to 7.58% for new inventory and 5.58% to 7.83% for pre-owned inventory. Borrowing capacity available at December 31, 2022 and September 30, 2022 was $74.6 million and $232.9 million, respectively.

The Inventory Financing Facility has certain financial and non-financial covenants as specified in the agreement. The financial covenants include requirements to comply with a maximum funded debt to EBITDA ratio (as defined in the Inventory Financing Facility). In addition, certain non-financial covenants could restrict the Company’s ability to sell assets (excluding inventory in the normal course of business), engage in certain mergers and acquisitions, incur additional debt and pay cash dividends or distributions, among others. The Company was in compliance with all covenants at December 31, 2022.

The collateral for the Inventory Financing Facility consists primarily of our inventory that is financed through the Inventory Financing Facility and related assets, including accounts receivable, bank accounts and proceeds of the foregoing, and excludes the collateral that underlies the term note payable to Truist Bank.

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

+ References

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+ Details

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Dec. 31, 2022	Sep. 30, 2022
Stockholders' Equity:
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized (in shares)	1,000,000	1,000,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Class A Common Stock [Member]
Stockholders' Equity:
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	40,000,000	40,000,000
Common stock, shares issued (in shares)	14,297,607	14,211,621
Common stock, shares outstanding (in shares)	14,297,607	14,211,621
Class B Common Stock [Member]
Stockholders' Equity:
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	10,000,000	10,000,000
Common stock, shares issued (in shares)	1,429,940	1,429,940
Common stock, shares outstanding (in shares)	1,429,940	1,429,940

Summary of Significant Accounting Policies

3 Months Ended

Dec. 31, 2022

Summary of Significant Accounting Policies [Abstract]

Summary of Significant Accounting Policies

2.	Summary of Significant Accounting Policies

Cash

At times the amount of cash on deposit may exceed the federally insured limit of the bank. Deposit accounts at each of the institutions are insured up to $250,000 by the Federal Deposit Insurance Corporation (FDIC). At December 31, 2022 and September 30, 2022, the Company exceeded FDIC limits at various institutions. The Company has not experienced any losses in such accounts and believes there is little to no exposure to any significant credit risk.

Restricted Cash

Restricted cash relates to amounts collected for pre-owned sales, in certain states, which are held in escrow on behalf of the respective buyers and sellers for future purchases of boats. Total customer deposits are shown as a liability on the consolidated balance sheets. These liabilities may be more than the applicable restricted cash balances and fluctuate due to timing differences and because in certain states the deposits are not restricted from use.

Inventories

Inventories are stated at the lower of cost or net realizable value. The cost of the new and pre-owned boat inventory is determined using the specific identification method. In assessing lower of cost or net realizable value the Company considers the aging of the boats, historical sales of a brand and current market conditions. The cost of acquired, manufactured and assembled parts and accessories is determined using methods which vary by subsidiary and include both the average cost method and first-in, first-out (“FIFO”).

Goodwill and Other Identifiable Intangible Assets

Goodwill and intangible assets are accounted for in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 350, ‘‘Intangibles - Goodwill and Other’’ (‘‘ASC 350’’), which provides that the excess of cost over the fair value of the net assets of businesses acquired, including other identifiable intangible assets, is recorded as goodwill. Goodwill is an asset representing operational synergies and future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized. In accordance with ASC 350, Goodwill is tested for impairment at least annually, or more frequently when events or circumstances indicate that impairment might have occurred. ASC 350 also states that if an entity determines, based on an assessment of certain qualitative factors, that it is more likely than not that the fair value of a reporting unit is greater than its carrying amount, then a quantitative goodwill impairment test is unnecessary.

Identifiable intangible assets consist of trade names, developed technologies, including design libraries, and customer relationships related to the acquisitions the Company has completed. The Company has determined that trade names have an indefinite life, as there are no economic, contractual or other factors that limit their useful lives and they are expected to generate value as long as the trade name is utilized by the Company, and therefore, are not subject to amortization. Developed technologies and customer relationships are amortized over their estimated useful lives of ten years and are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. Financial statement risk exists to the extent identifiable intangibles become impaired due to the decrease in the fair value of the identifiable assets.

Sales Tax

The Company collects sales tax on all of the Company’s sales to nonexempt customers and remits the entire amount to the states that imposed the sales tax on and concurrent with specific sales transactions. The Company’s accounting policy is to exclude the tax collected and remitted to the states from revenues and cost of sales.

Revenue Recognition

Revenue is recognized from the sale of products and commissions earned on new and pre-owned boats (including used, brokerage, consignment and wholesale) when ownership is transferred to the customer, which is generally upon acceptance or delivery to the customer. At the time of acceptance or delivery, the customer is able to direct the use of, and obtain substantially all of the benefits at such time. We are the principal with respect to revenue from new, pre-owned and consignment sales and such revenue is recorded at the gross sales price. With respect to brokerage transactions, we are acting as an agent in the transaction, therefore the fee or commission is recorded on a net basis.

Revenue from parts and accessories sold directly to a customer (not on a repair order) is recognized when control of the item is transferred to the customer, which is typically upon shipment. Revenue from parts and service operations (boat maintenance and repairs) are recorded over time as services are performed. Satisfaction of this performance obligation creates an asset with no alternative use for which an enforceable right to payment for performance to date exists within our contractual agreements. Each boat maintenance and repair service is a single performance obligation that includes both the parts and labor associated with the service. Payment for boat maintenance and repairs is typically due upon the completion of the service, which is generally completed within a period of one year or less from contract inception. The Company recorded contract assets in prepaid expenses and other current assets of $3.7 million as of December 31, 2022 and September 30, 2022.

Certain parts and service transactions require the Company to perform shipping and handling activities after the transfer of control to the customer (e.g., when control transfers prior to delivery). They are considered fulfillment activities and are included in selling, general and administrative expenses.

Revenue from storage and marina operations is recognized on a straight-line basis over the term of the contract as services are completed. Revenue from arranging financing, insurance and extended warranty contracts to customers through various third-party financial institutions and insurance companies is recognized when the related boats are sold. We do not directly finance our customers’ boat, motor or trailer purchases. We are acting as an agent in the transaction, therefore the commission is recorded on a net basis. Subject to our agreements and in the event of early cancellation, prepayment or default of such loans or insurance contracts by the customer, we may be assessed a chargeback for a portion of the commission paid by the third-party financial institutions and insurance companies. We reserve for these chargebacks based on our historical experience with repayments or defaults. Chargebacks were not material to the unaudited condensed consolidated financial statements for the three months ended December 31, 2022 and December 31, 2021.

($ in thousands)	Three Months Ended December 31, 2022
Beginning contract liability	$	65,460
Revenue recognized from contract liabilities included in the beginning balance		(42,496	)
Increases due to business combinations and cash received, net of amounts recognized in revenue during the period		37,120
Ending contract liability	$	60,084

The following tables set forth percentages on the timing of revenue recognition for the three months ended December 31, 2022 and 2021.

	Three Months Ended December 31, 2022			Three Months Ended December 31, 2021
Goods and services transferred at a point in time		92.8	%		93.2	%
Goods and services transferred over time		7.2	%		6.8	%
Total Revenue		100.0	%		100.0	%

Income Taxes

OneWater Inc. is a corporation and as a result, is subject to U.S. federal, state and local income taxes. We account for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events included in the consolidated financial statements. Under this method, we determine deferred tax assets and liabilities on the basis of the differences between the book value and tax bases of assets and liabilities by using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period in which the enactment date occurs. We recognize deferred tax assets to the extent we believe these assets are more-likely-than-not to be realized. In making such a determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies and recent results of operations.

OneWater LLC is treated as a partnership for U.S. federal income tax purposes and therefore does not pay U.S. federal income tax on its taxable income. Instead, the OneWater LLC members are liable for U.S. federal income tax on their respective shares of the Company’s taxable income reported on the members’ U.S. federal income tax returns.

When there are situations with uncertainty as to the timing of the deduction, the amount of the deduction, or the validity of the deduction, the Company adjusts the financial statements to reflect only those tax positions that are more-likely-than-not to be sustained. Positions that meet this criterion are measured using the largest benefit that is more than 50% likely to be realized. Interest and penalties related to income taxes are included in the benefit (provision) for income taxes in the consolidated statements of operations.

Vendor Consideration Received

Consideration received from vendors is accounted for in accordance with FASB Accounting Standards Codification 330, ‘‘Inventory’’ (‘‘ASC 330’’). Pursuant to ASC 330, manufacturer incentives based upon cumulative volume of sales and purchases are recorded as a reduction of inventory cost and related cost of sales when the amounts are probable and reasonably estimable.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities as of the date of the financial statements, and the reported amounts of revenues and expenses during the periods presented. Actual results could differ materially from these estimates. Estimates and assumptions are reviewed periodically, and the effects of any revisions are reflected in the consolidated financial statements in the period they are determined to be necessary. Significant estimates made in the accompanying unaudited condensed consolidated financial statements include, but are not limited to, those relating to inventory mark downs, certain assumptions related to intangible and long-lived assets and valuation of contingent consideration.

Segment Information

Effective August 9, 2022, we completed the acquisition of Ocean Bio-Chem, Inc., and Star Brite Europe, Inc (collectively “Ocean Bio-Chem”), which changed management’s reporting structure and operating activities. We now report our operations through two reportable segments: Dealerships and Distribution. The Dealership segment engages in the sale of new and pre-owned boats, arranges financing and insurance products, performs repairs and maintenance services, offers marine related parts and accessories and offers slip and storage accommodations in certain locations. The Distribution segment engages in the manufacturing, assembly and distribution primarily of marine related products to distributors, big box retailers and online retailers through a network of warehouse and distribution centers. Each reporting segment has discrete financial information and is regularly reviewed by the Company’s chief operating decision maker (“CODM”) to assess performance and allocate resources. The Company has identified its Chief Executive Officer as its CODM. The change in reportable segments had no impact on the Company’s previously reported historical consolidated financial statements.

Contingencies and Commitments

3 Months Ended

Dec. 31, 2022

Contingencies and Commitments [Abstract]

Contingencies and Commitments

13.	Contingencies and Commitments

Employment Agreements

The Company is party to employment agreements with certain executives, which provide for compensation, other benefits and severance payments under certain circumstances. The Company also has consulting and noncompete agreements in place with previous owners of acquired companies.

Claims and Litigation

The Company is involved in various legal proceedings as either the defendant or plaintiff. Due to their nature, such legal proceedings involve inherent uncertainties including, but not limited to, court rulings, negotiations between the affected parties and other actions. Management assesses the probability of losses or gains for such contingencies and accrues a liability and/or discloses the relevant circumstances as appropriate. In the opinion of management, it is not reasonably probable that the pending litigation, disputes or claims against the Company, if decided adversely, will have a material adverse effect on its financial condition, results of operations or cash flows. Additionally, based on the Company’s review of the various types of claims currently known, there is no indication of a material reasonably possible loss in excess of amounts accrued. The Company currently does not anticipate that any known claim will materially adversely affect our financial condition, liquidity, or results of operations. However, the outcome of any matter cannot be predicted with certainty, and an unfavorable resolution of one or more matters presently known or arising in the future could have a material adverse effect on the Company’s financial condition, liquidity or results of operations.

Risk Management

The Company is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions and natural disasters for which the Company carries commercial insurance. There have been no significant reductions in coverage from the prior year and settlements have not exceeded coverage in the past years.

Accounts Receivable (Tables)

3 Months Ended

Dec. 31, 2022

Accounts Receivable [Abstract]

Accounts Receivable

Accounts receivable consisted of the following:

($ in thousands)	December 31, 2022			September 30, 2022
Trade accounts receivable	$	43,143		$	37,359
Contracts in transit		15,044			14,543
Manufacturer receivable		6,365			7,224
Total accounts receivable		64,552			59,126
Less – allowance for credit losses		(939	)		(1,166	)
Total accounts receivable, net	$	63,613		$	57,960

Acquisitions

3 Months Ended

Dec. 31, 2022

Acquisitions [Abstract]

Acquisitions

4.	Acquisitions

The results of operations of acquisitions are included in the accompanying unaudited condensed consolidated financial statements from the acquisition date. The purchase price of acquisitions is allocated to identifiable tangible assets and intangible assets acquired based on their estimated fair values at the acquisition date, with the excess being allocated to goodwill. Under the acquisition method of accounting, the purchase price is allocated to the tangible and intangible assets acquired and liabilities assumed based on information currently available. For the fiscal first quarter 2023 acquisitions, the valuation of tangible assets, assumed liabilities and identifiable intangible assets are preliminary as the acquisitions are subject to certain customary closing and post-closing adjustments and certain valuations are not complete. Any changes to the value of identifiable intangible assets will be reclassified from goodwill upon the completion of the valuations.

For the three months ended December 31, 2022, the Company completed the following transactions:

•

On October 1, 2022, Taylor Marine Centers with locations in Maryland and Delaware

•

On December 1, 2022, Harbor View Marine with locations in Alabama and Florida

Consideration paid for the acquisitions was $41.8 million with $28.6 million paid at closing, $10.6 million in non-cash financing and the remaining $2.6 million in estimated payments of contingent consideration. The estimated payments of contingent consideration are part of earnouts related to the achievement of certain post-acquisition increases in adjusted EBITDA of the acquired companies. The acquisition contingent consideration was developed using weighted average projections based on the Company’s historical experience and current forecasts for the industry. There are no minimum or maximum payouts on the acquisition contingent consideration.

The table below summarizes the preliminary fair values of the assets acquired and liabilities assumed at the acquisition date, including the goodwill recorded as a result of the transaction:

Summary of Assets Acquired and Liabilities Assumed ($ in thousands)	Total Acquisitions
Accounts receivable	$	188
Inventories		6,232
Prepaid expenses		73
Property and equipment		11,587
Operating lease right-of-use assets		2,952
Identifiable intangible assets		8,400
Goodwill		18,880
Accounts payable		(17	)
Accrued expenses		(354	)
Customer deposits		(1,000	)
Notes payable - floor plan		(2,228	)
Operating lease liabilities		(2,952	)
Aggregate acquisition date fair value	$	41,761

Consideration transferred	$	41,761

In connection with the acquisition of Harbor View Marine, an entity affiliated with the Company agreed to acquire the real estate for the two acquired locations, in effect providing non-cash financing. The Company has accounted for this transaction as a sale and leaseback of the properties in our unaudited condensed consolidated financial statements. There was no gain or loss recorded as part of the transaction. The leases for the two properties include an initial term of 15 years and two, five-year renewal options. The leases are accounted for as an operating leases and are included in the operating lease right-of-use assets and operating lease liabilities on the unaudited condensed consolidated balance sheet.

We expect substantially all of the goodwill related to acquisitions completed during the three months ended December 31, 2022 to be deductible for federal income tax purposes. The fair value of trade name intangible assets as of the acquisition date were determined using the relief from royalty model.

Included in our results for the three months ended December 31, 2022, the acquisitions contributed $8.7 million to our consolidated revenue and $0.5 to our income before income tax expense, respectively. Costs related to acquisitions are included in transaction costs and primarily relate to legal, accounting, valuation and other fees, which are charged directly to operations in the accompanying consolidated statements of operations as incurred in the amount of $0.8 for the three months ended December 31, 2022. Comparatively, we recorded $3.0 million in acquisition related transaction costs for the three months ended December 31, 2021.

The following unaudited pro forma summary presents consolidated information as if all acquisitions in the three-month period ended December 31, 2022 and 2021 had occurred on October 1, 2021:

	Three Months Ended December 31, 2022		Three Months Ended December 31, 2021
	($ in thousands)
	(Unaudited)
Pro forma revenue	$	369,363	$	428,136
Pro forma net income	$	11,542	$	25,916

The amounts have been calculated by applying our accounting policies and estimates. Pro forma net income has been tax affected based on the Company’s effective tax rate in the historical periods presented.

Leases (Details)	3 Months Ended
Leases (Details)	Dec. 31, 2022
Leases [Abstract]
Renewal term of lease	1 year
Extended renewal term of lease	10 years

Description of Company and Basis of Presentation (Policies)	3 Months Ended
	Dec. 31, 2022
Description of Company and Basis of Presentation [Abstract]
Description of the Business	Description of the Business OneWater Marine Inc. (“OneWater Inc.”) was incorporated in Delaware on April 3, 2019 and was a wholly-owned subsidiary of One Water Marine Holdings, LLC (“OneWater LLC”). Pursuant to a reorganization on February 11, 2020 into a holding company structure for the purpose of facilitating an initial public offering (the “IPO”) and related transactions in order to carry on the business of OneWater LLC and its subsidiaries (together with OneWater Inc., the “Company”), OneWater Inc. is the holding company and its sole material asset is the equity interest in OneWater LLC. OneWater LLC was organized as a limited liability company under the law of the State of Delaware in 2014 and is the parent company of One Water Assets & Operations (“OWAO”), and its wholly-owned and majority-owned subsidiaries. The Company is one of the largest recreational boat retailers in the United States. The Company engages primarily in the retail sale, brokerage, and service of new and pre-owned boats, motors, trailers, marine parts and accessories, and offers slip and storage accommodations in certain locations. The Company also arranges related boat financing, insurance, and extended service contracts for customers with third-party lenders and insurance companies. As of December 31, 2022, the Company operated a total of 100 retail locations, 12 distribution centers/warehouses and multiple online marketplaces in 20 states, several of which are in the top twenty states for marine retail expenditures. Operating results are generally subject to seasonal variations. Demand for products is generally highest during the third and fourth quarters of the fiscal year and, accordingly, revenues are generally expected to be higher during these periods. General economic conditions and consumer spending patterns can negatively impact the Company’s operating results. Unfavorable local, regional, national, or global economic developments, global public health concerns, including the COVID-19 pandemic, or uncertainties could reduce consumer spending and adversely affect the Company’s business. Consumer spending on discretionary goods may also decline as a result of lower consumer confidence levels, even if prevailing economic conditions are otherwise favorable. Economic conditions in areas in which the Company operates stores, particularly in the Southeast, can have a major impact on the Company’s overall results of operations. Local influences such as corporate downsizing, inclement weather such as hurricanes and other storms, environmental conditions, and other events could adversely affect the Company’s operations in certain markets and in certain periods. Any extended period of adverse economic conditions or low consumer confidence is likely to have a negative effect on the Company’s business. Sales of new boats from the Company’s top ten brands represent approximately 42.9% and 47.9% of total sales for the three months ended December 31, 2022 and 2021, respectively, making them major suppliers of the Company. Of this amount, Malibu Boats, Inc., including its brands Malibu, Axis, Cobalt, Pursuit, Maverick, Hewes, Cobia and Pathfinder accounted for 13.0% and 14.1% of consolidated revenue for the three months ended December 31, 2022 and 2021, respectively. As is typical in the industry, the Company contracts with most manufacturers under renewable annual dealer agreements, each of which provides the right to sell various makes and models of boats within a given geographic region. Any change or termination of these agreements, or the agreements discussed above, for any reason, or changes in competitive, regulatory, or marketing practices, including rebate or incentive programs, could adversely affect results of operations. Pre-owned boats are usually trade-ins from retail customers who are purchasing a boat from the Company.
Principles of Consolidation	Principles of Consolidation As the sole managing member of OneWater LLC, OneWater Inc. operates and controls all of the businesses and affairs of OneWater LLC. Through OneWater LLC and its wholly-owned subsidiaries, as well as majority-owned subsidiaries over which the Company exercises control, OneWater Inc. conducts its business. As a result, OneWater Inc. consolidates the financial results of OneWater LLC and its subsidiaries and reports non-controlling interests related to the portion of units of OneWater LLC (the “OneWater LLC Units”) not owned by OneWater Inc., which will reduce net income (loss) attributable to OneWater Inc.’s Class A stockholders. As of December 31, 2022, OneWater Inc. owned 90.9% of the economic interest of OneWater LLC. Commencing December 31, 2021, the Company owns 80% of the economic interest of Quality Assets and Operations, over which the Company exercises control and the minority interest in this subsidiary has been recorded accordingly. See note 4 for additional information regarding the acquisition.
Basis of Financial Statement Preparation	Basis of Financial Statement Preparation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial statements, which do not include all the information and notes required by such accounting principles for annual financial statements. The unaudited condensed consolidated financial statements should be read in conjunction with OneWater Inc.’s Annual Report on Form 10-K for the year ended September 30, 2022. All adjustments, consisting of only normal recurring adjustments considered necessary for fair presentation, have been reflected in these unaudited condensed consolidated financial statements. All intercompany transactions have been eliminated in consolidation. The Company operates on a fiscal year basis with the first day of the fiscal year being October 1, and the last day of the year ending on September 30.

Leases

3 Months Ended

Dec. 31, 2022

Leases [Abstract]

Leases

14.

Leases

The Company leases real estate and equipment under operating lease agreements. Leases with an initial term of 12 months or less are not recorded on the balance sheet. We recognize lease expense for these leases on a straight-line basis over the lease term. For leases with terms in excess of 12 months, we record a right-of-use (“ROU”) asset and lease liability based on the present value of lease payments over the lease term. We do not have any significant leases that have not yet commenced that create significant rights and obligations for us. The Company has elected the practical expedient not to separate lease and non-lease components for all leases that qualify.

Our real estate and equipment leases often require payment of maintenance, real estate taxes and insurance. These costs are generally variable and based on actual costs incurred by the lessor. These amounts are not included in the consideration of the contract when determining the ROU asset and lease liability but are reflected as variable lease payments.

Most leases include one or more options to renew, with renewal terms that can extend the lease from one to ten or more years. The exercise of the lease renewal option is typically at our sole discretion. If it is reasonably certain that we will exercise the option to renew, the period covered by the options are included in the lease term and are recognized as part of our ROU assets and lease liabilities. Certain leases include the option to purchase the leased property. The depreciable life of assets and leasehold improvements are limited by the expected lease term, which includes renewal options reasonably certain to be exercised.

Certain of our lease agreements include rental payments based on percentage of retail sales over contractual levels and others include rental payments adjusted periodically based on index rates. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.

Related Party Transactions (Details) - USD ($) $ in Millions	3 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Sep. 30, 2022
Related Party Transactions [Abstract]
Due to related parties			$ 2.0
Due from related parties	$ 3.2		$ 0.2
Maximum [Member]
Related Party Transactions [Abstract]
Due to related parties	0.1
Affiliated Entities [Member]
Related Party Transactions [Abstract]
Purchase of inventories	21.3	$ 33.3
Expenses incurred	0.5	0.7
Affiliated Entities and Individuals [Member]
Related Party Transactions [Abstract]
Fees received for goods and services	1.2	0.1
Payments and fees, related party	$ 0.0	$ 0.1

Fair Value Measurements (Tables)

3 Months Ended

Dec. 31, 2022

Fair Value Measurements [Abstract]

Financial Assets and Liabilities Measured at Fair Value

The following tables summarize the Company’s financial assets and liabilities measured at fair value in the accompanying unaudited condensed consolidated balance sheets as of December 31, 2022 and September 30, 2022

	December 31, 2022
	Level 1		Level 2		Level 3		Total
	($ in thousands)
Assets:
Investment in Equity Securities	$	512	$	-	$	-	$	512
Liabilities:
Contingent Consideration		-		-		32,817		32,817

	September 30, 2022
	Level 1		Level 2		Level 3		Total
	($ in thousands)
Assets:
Investment in Equity Securities	$	772	$	-	$	-	$	772
Liabilities:
Contingent Consideration		-		-		37,402		37,402

Unrealized Losses Recognized Related to Equity Securities

The portion of unrealized losses recognized related to equity securities still held as of December 31 consists of the following:

($ in thousands)	Three Months Ended December 31, 2022
Net losses recognized during the period on equity securities	$	260
Less net losses recognized during the period on equity securities sold during the period		-
Unrealized losses recognized during the reporting period on equity securities still held at the reporting date	$	260

Changes in Fair Value of Contingent Consideration

The following table sets forth the changes in fair value of our contingent consideration for the three months ended December 31, 2022:

($ in thousands)	Contingent Consideration
Balance as of September 30, 2022	$	37,402
Additions from acquisitions		2,550
Settlement of contingent consideration		(5,726	)
Change in fair value, including accretion		(1,409	)
Balance as of December 31, 2022	$	32,817

Inventories

3 Months Ended

Dec. 31, 2022

Inventories [Abstract]

Inventories

6.	Inventories

Inventories consisted of the following at:

($ in thousands)	December 31, 2022		September 30, 2022
New vessels	$	388,004	$	243,090
Pre-owned vessels		61,658		51,607
Work in process, parts and accessories		77,361		78,262
	$	527,023	$	372,959

New Accounting Pronouncements (Policies)	3 Months Ended
New Accounting Pronouncements (Policies)	Dec. 31, 2022
New Accounting Pronouncements [Abstract]
New Accounting Pronouncements	In October 2021, the FASB issued ASU 2021-08, “Business Combinations (Topic 805) – Accounting for Contract Assets and Contract Liabilities from Contracts with Customers”, which is intended to improve the accounting for acquired revenue contracts with customers in a business combination by addressing diversity in practice and inconsistency related to the recognition of an acquired contract liability and payment terms and their effect on subsequent revenue recognized by the acquirer. The pronouncement is effective for a public company’s annual reporting periods beginning after December 15, 2022, and interim periods within those annual periods. The Company is currently evaluating the impact that this standard will have on the consolidated financial statements. The Company plans to adopt the pronouncement in fiscal year 2024. Other than as noted above, there are no new accounting pronouncements that are expected to have a material effect on our consolidated financial statements.

Notes Payable - Floor Plan (Details) - Inventory Financing Facility [Member] - USD ($) $ in Millions	3 Months Ended
	Dec. 31, 2022	Sep. 30, 2022	Dec. 29, 2021
Line of Credit Facility [Abstract]
Maximum borrowing capacity			$ 500.0
Outstanding balance of facility	$ 425.4	$ 267.1
Credit facility, available borrowing capacity	$ 74.6	$ 232.9
New Inventory [Member] \| Minimum [Member]
Line of Credit Facility [Abstract]
Credit facility, interest rate	6.93%	5.33%
New Inventory [Member] \| Maximum [Member]
Line of Credit Facility [Abstract]
Credit facility, interest rate	9.18%	7.58%
Pre-owned Inventory [Member] \| Minimum [Member]
Line of Credit Facility [Abstract]
Credit facility, interest rate	7.18%	5.58%
Pre-owned Inventory [Member] \| Maximum [Member]
Line of Credit Facility [Abstract]
Credit facility, interest rate	9.43%	7.83%
SOFR [Member]
Line of Credit Facility [Abstract]
Debt instrument, term of variable rate	30 days
SOFR [Member] \| New Boats [Member] \| Minimum [Member]
Line of Credit Facility [Abstract]
Debt instrument, variable interest rate	2.75%
SOFR [Member] \| New Boats [Member] \| Maximum [Member]
Line of Credit Facility [Abstract]
Debt instrument, variable interest rate	5.00%
Boat Rate [Member] \| New Boats [Member]
Line of Credit Facility [Abstract]
Debt instrument, variable interest rate	0.25%
Wells Fargo [Member]
Line of Credit Facility [Abstract]
Percentage of finance provided of vendor invoice price	100.00%

Long-term Debt and Line of Credit (Details) - USD ($) $ in Thousands		3 Months Ended
	Aug. 09, 2022	Dec. 31, 2022	Sep. 30, 2022
Long-term Debt and Line of Credit [Abstract]
Long-term debt, gross		$ 472,768	$ 452,355
Less current portion (net of debt issuance costs)		(29,247)	(21,642)
Less unamortized portion of debt issuance costs		(8,851)	(9,551)
Long-term debt, net of current portion and unamortized debt issuance costs		$ 434,670	$ 421,162
A&R Term Loan [Member]
Long-term Debt and Line of Credit [Abstract]
Aggregate principal amount	$ 445,000
Term Note Payable to Truist Bank, Secured and Bearing Interest at 6.72% at December 31, 2022 and 5.31% at September 30, 2022. The Note Requires Quarterly Principal Payments Commencing on December 31, 2022 and Maturing with a Full Repayment on August 9, 2027 [Member]
Long-term Debt and Line of Credit [Abstract]
Interest rate		6.72%	5.31%
Maturity date		Aug. 09, 2027
Long-term debt, gross		$ 445,000	$ 445,000
Revolving Note Payable for an Amount up to $65.0 Million to Truist Bank, Secured and Bearing Interest at 6.72% at December 31, 2022. The Note Requires Full Repayment on August 9, 2027 [Member]
Long-term Debt and Line of Credit [Abstract]
Aggregate principal amount		$ 65,000
Interest rate		6.72%
Maturity date		Aug. 09, 2027
Long-term debt, gross		$ 20,000	0
Notes Payable to Commercial Vehicle Lenders Secured by the Value of the Vehicles Bearing Interest at Rates Ranging from 0.0% to 8.4% Per Annum. The Notes Require Monthly Installment Payments of Principal and Interest Ranging from $100 to $5,600 through July 2028 [Member]
Long-term Debt and Line of Credit [Abstract]
Maturity date		Jul. 31, 2028
Frequency of periodic payment		monthly
Long-term debt, gross		$ 4,586	4,173
Notes Payable to Commercial Vehicle Lenders Secured by the Value of the Vehicles Bearing Interest at Rates Ranging from 0.0% to 8.4% Per Annum. The Notes Require Monthly Installment Payments of Principal and Interest Ranging from $100 to $5,600 through July 2028 [Member] \| Minimum [Member]
Long-term Debt and Line of Credit [Abstract]
Interest rate		0.00%
Monthly installment payment amount		$ 100
Notes Payable to Commercial Vehicle Lenders Secured by the Value of the Vehicles Bearing Interest at Rates Ranging from 0.0% to 8.4% Per Annum. The Notes Require Monthly Installment Payments of Principal and Interest Ranging from $100 to $5,600 through July 2028 [Member] \| Maximum [Member]
Long-term Debt and Line of Credit [Abstract]
Interest rate		8.40%
Monthly installment payment amount		$ 5,600
Note Payable To Tom George Yacht Group, Unsecured and Bearing Interest At 5.5% Per Annum. The Note Requires Monthly Interest Payments, With a Balloon Payment of Principal Due On December 1, 2023 [Member]
Long-term Debt and Line of Credit [Abstract]
Interest rate		5.50%
Maturity date		Dec. 01, 2023
Long-term debt, gross		$ 2,056	2,056
Note Payable to Norfolk Marine Company, Unsecured and Bearing Interest at 4.0% Per Annum. The Note Requires Quarterly Interest Payments, with a Balloon Payment of Principal Due on December 1, 2024 [Member]
Long-term Debt and Line of Credit [Abstract]
Interest rate		4.00%
Maturity date		Dec. 01, 2024
Long-term debt, gross		$ 1,126	$ 1,126
A&R Credit Facility [Member]
Long-term Debt and Line of Credit [Abstract]
Aggregate principal amount	65,000
Increase in revolving commitment	$ 125,000
Maturity date	Aug. 09, 2027
A&R Credit Facility [Member] \| Letter of Credit [Member]
Long-term Debt and Line of Credit [Abstract]
Aggregate principal amount	$ 5,000
A&R Credit Facility [Member] \| Swingline Loans [Member]
Long-term Debt and Line of Credit [Abstract]
Aggregate principal amount	$ 5,000
A&R Credit Facility [Member] \| Term SOFR [Member] \| Minimum [Member]
Long-term Debt and Line of Credit [Abstract]
Debt instrument, variable interest rate	1.75%
A&R Credit Facility [Member] \| Term SOFR [Member] \| Maximum [Member]
Long-term Debt and Line of Credit [Abstract]
Debt instrument, variable interest rate	2.75%

Goodwill and Other Identifiable Intangible Assets (Tables)

3 Months Ended

Dec. 31, 2022

Goodwill and Other Identifiable Intangible Assets [Abstract]

Changes in Goodwill and Identifiable Intangible Assets

The changes in goodwill and identifiable intangible assets are as follows:

($ in thousands)	Goodwill Unamortized		Trade Names Unamortized		Developed technologies Amortized			Customer Relationships Amortized			Domain Names Amortized			Internally Developed Software Amortized			Total Intangible Assets, net
($ in thousands)	Goodwill Unamortized		Trade Names Unamortized		Developed technologies Amortized			Customer Relationships Amortized			Domain Names Amortized			Internally Developed Software Amortized			Total Intangible Assets, net
Net balance as of September 30, 2022		378,588		186,779		14,274			101,230			1,970			2,218			306,471
Acquisitions during the three months ended December 31, 2022		18,880		8,400		-			-			-			-			8,400
Accumulated amortization for the three months ended December 31, 2022		-		-		(386	)		(2,687	)		(104	)		(115	)		(3,292	)
Net balance as of December 31, 2022	$	397,468	$	195,179	$	13,888		$	98,543		$	1,866		$	2,103		$	311,579

Expected Amortization Expense

The following table summarizes the expected amortization expense for fiscal years 2023 through 2027 and thereafter ($ in thousands):

2023 (excluding the three months ended December 31, 2022)	$	9,877
2024		13,170
2025		13,170
2026		13,170
2027		12,982
Thereafter		54,031
	$	116,400

Segment Information (Details) $ in Thousands	3 Months Ended
Segment Information (Details) $ in Thousands	Dec. 31, 2022 USD ($) Segment	Dec. 31, 2021 USD ($)	Sep. 30, 2022 USD ($)
Segment Information [Abstract]
Number of reportable segments \| Segment	2
Revenue	$ 366,659	$ 336,272
Income (loss) from operations	26,536	31,329
Depreciation and amortization	5,693	1,749
Transaction costs	1,330	3,045
Change in fair value of contingent consideration	(1,409)	$ 5,746
Total assets	1,672,093		$ 1,497,428
Operating Segments [Member] \| Dealerships [Member]
Segment Information [Abstract]
Revenue	326,773
Income (loss) from operations	29,853
Depreciation and amortization	1,886
Transaction costs	1,182
Change in fair value of contingent consideration	(1,543)
Total assets	1,283,821
Operating Segments [Member] \| Distribution [Member]
Segment Information [Abstract]
Revenue	39,886
Income (loss) from operations	(3,317)
Depreciation and amortization	3,807
Transaction costs	148
Change in fair value of contingent consideration	134
Total assets	$ 388,272

Summary of Significant Accounting Policies, Revenue Recognition (Details) - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Sep. 30, 2022
Contract Asset [Abstract]
Contract asset	$ 3,700		$ 3,700
Contract Liability [Abstract]
Beginning contract liability	65,460
Revenue recognized from contract liabilities included in the beginning balance	(42,496)
Increases due to business combinations and cash received, net of amounts recognized in revenue during the period	37,120
Ending contract liability	$ 60,084
Timing of Revenue [Abstract]
Percentage on timing of revenue recognition	100.00%	100.00%
Goods and Services Transferred at a Point in Time [Member]
Timing of Revenue [Abstract]
Percentage on timing of revenue recognition	92.80%	93.20%
Goods and Services Transferred Over Time [Member]
Timing of Revenue [Abstract]
Percentage on timing of revenue recognition	7.20%	6.80%

Segment Information

3 Months Ended

Dec. 31, 2022

Segment Information [Abstract]

Segment Information

16.	Segment Information

As of December 31, 2022, we had two reportable segments: (1) Dealerships and (2) Distribution. See Note 2 for more information about our segments.

Reportable segment financial information as of and for the three months ended December 31, 2022 are as follows:

	As of and for the Three Months Ended December 31, 2022
($ in thousands)	Dealerships			Distribution			Total
Revenue	$	326,773		$	39,886		$	366,659
Income (loss) from operations		29,853			(3,317	)		26,536

Depreciation and amortization		1,886			3,807			5,693
Transaction costs		1,182			148			1,330
Change in fair value of contingent consideration		(1,543	)		134			(1,409	)

Total assets		1,283,821			388,272			1,672,093

The Company identified the change in reportable segments as of August 9, 2022 and as such no financial information is presented as of and for the three months ended December 31, 2021.

- Definition

The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 31
-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8924-108599

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 34
-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8981-108599

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 21
-Subparagraph (a)
-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8721-108599

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 40
-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e9031-108599

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 32
-Subparagraph (f)
-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8933-108599

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 32
-Subparagraph (e)
-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8933-108599

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 26
-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8844-108599

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
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-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e9038-108599

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 32
-Subparagraph (d)
-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8933-108599

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 22
-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8736-108599

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
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-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e9054-108599

Reference 12: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8657-108599

Reference 13: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
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-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8721-108599

Reference 14: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-URI https://asc.fasb.org/topic&trid=2134510

+ Details

Fair Value Measurements (Details) - USD ($) $ in Thousands	3 Months Ended
Fair Value Measurements (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021	Sep. 30, 2022
Unrealized Losses Recognized Related to Equity Securities [Abstract]
Net losses recognized during the period on equity securities	$ 260	$ 0
Less: net losses recognized during the period on equity securities sold during the period	0
Unrealized losses recognized during the reporting period on equity securities still held at the reporting date	260
Other Assets [Member]
Assets [Abstract]
Investment in Equity Securities	500
Fair Value [Member]
Assets [Abstract]
Investment in Equity Securities	512		$ 772
Liabilities [Abstract]
Contingent Consideration	32,817		37,402
Fair Value [Member] \| Level 1 [Member]
Assets [Abstract]
Investment in Equity Securities	512		772
Liabilities [Abstract]
Contingent Consideration	0		0
Fair Value [Member] \| Level 2 [Member]
Assets [Abstract]
Investment in Equity Securities	0		0
Liabilities [Abstract]
Contingent Consideration	0		0
Fair Value [Member] \| Level 3 [Member]
Assets [Abstract]
Investment in Equity Securities	0		0
Liabilities [Abstract]
Contingent Consideration	32,817		$ 37,402
Contingent Consideration [Member]
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Beginning balance	37,402
Additions from acquisitions	2,550
Settlement of contingent consideration	(5,726)
Change in fair value, including accretion	(1,409)
Ending balance	$ 32,817

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME [Abstract]
Net income	$ 11,428	$ 23,486
Other comprehensive income:
Foreign currency translation adjustment	11	0
Comprehensive income	11,439	23,486
Less: Net income attributable to non-controlling interests	(1,365)	0
Less: Net income attributable to non-controlling interests of One Water Marine Holdings, LLC	(1,163)	(3,467)
Foreign currency translation adjustment attributable to non-controlling interest of One Water Marine Holdings, LLC	(1)	0
Comprehensive income attributable to One Water Marine Holdings, Inc.	$ 8,910	$ 20,019

- Definition

Amount after tax of increase (decrease) in equity from transactions and other events and circumstances from net income and other comprehensive income. Excludes changes in equity resulting from investments by owners and distributions to owners.

+ References + Details

- Definition

The consolidated profit or loss for the period, net of income taxes, including the portion attributable to the noncontrolling interest.

+ References

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+ Details

Goodwill and Other Identifiable Intangible Assets (Details) - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Goodwill [Abstract]
Net balance - beginning of period	$ 378,588
Acquisitions during the three months ended December 31, 2022	18,880
Net balance - end of period	397,468
Intangible Assets [Abstract]
Net balance - beginning of period	306,471
Acquisitions during the three months ended December 31, 2022	8,400
Accumulated amortization for the three months ended December 31, 2022	(3,292)	$ 0
Net balance - end of period	311,579
Expected Amortization Expense [Abstract]
2023 (excluding the three months ended December 31, 2022)	9,877
2024	13,170
2025	13,170
2026	13,170
2027	12,982
Thereafter	54,031
Finite-Lived Intangible Assets, Net	116,400
Dealerships [Member]
Goodwill [Abstract]
Net balance - beginning of period	280,000
Net balance - end of period	298,900
Distribution [Member]
Goodwill [Abstract]
Net balance - beginning of period	98,600
Net balance - end of period	98,600
Developed Technologies [Member]
Intangible Assets [Abstract]
Net balance - beginning of period	14,274
Acquisitions during the three months ended December 31, 2022	0
Accumulated amortization for the three months ended December 31, 2022	(386)
Net balance - end of period	13,888
Customer Relationships [Member]
Intangible Assets [Abstract]
Net balance - beginning of period	101,230
Acquisitions during the three months ended December 31, 2022	0
Accumulated amortization for the three months ended December 31, 2022	(2,687)
Net balance - end of period	98,543
Domain Names [Member]
Intangible Assets [Abstract]
Net balance - beginning of period	1,970
Acquisitions during the three months ended December 31, 2022	0
Accumulated amortization for the three months ended December 31, 2022	(104)
Net balance - end of period	1,866
Internally Developed Software [Member]
Intangible Assets [Abstract]
Net balance - beginning of period	2,218
Acquisitions during the three months ended December 31, 2022	0
Accumulated amortization for the three months ended December 31, 2022	(115)
Net balance - end of period	2,103
Trade Names [Member]
Intangible Assets [Abstract]
Net balance - beginning of period	186,779
Acquisitions during the three months ended December 31, 2022	8,400
Net balance - end of period	$ 195,179

Summary of Significant Accounting Policies, Cash (Details) - USD ($)	Dec. 31, 2022	Sep. 30, 2022
Cash [Abstract]
Cash deposit	$ 250,000	$ 250,000

Description of Company and Basis of Presentation, Principles of Consolidation (Details)	Dec. 31, 2022	Dec. 31, 2021
Principles of Consolidation [Abstract]
Economic interest of quality assets and operations		80.00%
OneWater LLC [Member]
Principles of Consolidation [Abstract]
Ownership interest in subsidiaries	90.90%

Fair Value Measurements

3 Months Ended

Dec. 31, 2022

Fair Value Measurements [Abstract]

Fair Value Measurements

11.	Fair Value Measurements

In determining fair value, the Company uses various valuation approaches including market, income and/or cost approaches. FASB standard ‘‘Fair Value Measurements’’ (Topic 820) establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability developed based on market data obtained from independent sources. Unobservable inputs are those that reflect the Company’s expectation of the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The hierarchy is broken down into three levels based on the reliability of inputs as follows:

Level 1 – Valuations based on quoted prices in active markets for identical assets or liabilities that the Company has the ability to access. Assets utilizing Level 1 inputs include marketable securities that are actively traded.

Level 2 – Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.

Level 3 – Valuations based on inputs that are unobservable and significant to the overall fair value measurement. Asset and liability measurements utilizing Level 3 inputs include those used in estimating fair value of non-financial assets and non-financial liabilities in purchase acquisitions, those used in assessing impairment of property, plant and equipment and other intangibles, those used in the reporting unit valuation in the annual goodwill impairment evaluation and those used in the valuation of contingent consideration.

The availability of observable inputs can vary and is affected by a wide variety of factors. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment required in determining fair value is greatest for assets and liabilities categorized in Level 3. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement is disclosed is determined based on the lowest level input that is significant to the fair value measurement. Fair value measurements can be volatile based on various factors that may or may not be within the Company’s control.

	December 31, 2022
	Level 1		Level 2		Level 3		Total
	($ in thousands)
Assets:
Investment in Equity Securities	$	512	$	-	$	-	$	512
Liabilities:
Contingent Consideration		-		-		32,817		32,817

	September 30, 2022
	Level 1		Level 2		Level 3		Total
	($ in thousands)
Assets:
Investment in Equity Securities	$	772	$	-	$	-	$	772
Liabilities:
Contingent Consideration		-		-		37,402		37,402

There were no transfers between the valuation hierarchy Levels 1, 2, and 3 for the three months ended December 31, 2022.

We measure all equity investments that do not result in consolidation and are not accounted for under the equity method at fair value with the change in fair value included in other expense (income), net, in the unaudited condensed consolidated statements of operations. The fair value of equity investments is measured using quoted prices in its active markets. The investment in equity securities balance is recorded in other assets in the unaudited condensed consolidated balance sheets and consists of a $0.5 million investment in Forza X1, Inc.

The portion of unrealized losses recognized related to equity securities still held as of December 31 consists of the following:

($ in thousands)	Three Months Ended December 31, 2022
Net losses recognized during the period on equity securities	$	260
Less net losses recognized during the period on equity securities sold during the period		-
Unrealized losses recognized during the reporting period on equity securities still held at the reporting date	$	260

There were no unrealized gains or losses recognized for the three months ended December 31, 2021 related to equity securities.

We estimate the fair value of contingent consideration using a probability-weighted discounted cash flow model based on forecasted future earnings or forecasted probabilities of producing acquisition leads. The acquisition contingent consideration liability has been accounted for based on inputs that are unobservable and significant to the overall fair value measurement (Level 3). The contingent consideration balance is recorded in other payables and accrued expenses and other long-term liabilities in the unaudited condensed consolidated balance sheets. Changes in fair value and net present value of contingent consideration are included in change in fair value of contingent consideration in the unaudited condensed consolidated statements of operations. The fair value of contingent consideration is reassessed on a quarterly basis.

The following table sets forth the changes in fair value of our contingent consideration for the three months ended December 31, 2022:

($ in thousands)	Contingent Consideration
Balance as of September 30, 2022	$	37,402
Additions from acquisitions		2,550
Settlement of contingent consideration		(5,726	)
Change in fair value, including accretion		(1,409	)
Balance as of December 31, 2022	$	32,817

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Stockholders' and Members' Equity, Equity-Based Compensation (Details) $ / shares in Units, $ in Millions			3 Months Ended
	Oct. 02, 2023 shares	Oct. 01, 2023 Intallment shares	Dec. 31, 2022 USD ($) $ / shares shares	Dec. 31, 2021 USD ($)	Feb. 11, 2020 shares
Equity-Based Compensation [Abstract]
Percentage of expected performance targets to be achieved target award			100.00%
Class A Common Stock [Member]
Equity-Based Compensation [Abstract]
Total number of shares reserved for issuance (in shares)					1,572,755
Restricted Stock Units (RSUs) [Member]
Equity-Based Compensation [Abstract]
Compensation expense \| $			$ 2.3	$ 2.1
Number of Shares [Abstract]
Beginning balance (in shares)			559,793
Awarded (in shares)			214,149
Vested (in shares)			(111,075)
Forfeited (in shares)			(1,000)
Ending balance (in shares)			661,867
Weighted Average Grant Date Fair Value [Abstract]
Beginning balance (in dollars per share) \| $ / shares			$ 28.01
Awarded (in dollars per share) \| $ / shares			30.11
Vested (in dollars per share) \| $ / shares			24.62
Forfeited (in dollars per share) \| $ / shares			40.21
Ending balance (in dollars per share) \| $ / shares			$ 29.24
Unrecognized compensation expense \| $			$ 10.3
Weighted-average period of recognition			1 year 3 months 18 days
Time-Based Restricted Stock Units [Member]
Number of Shares [Abstract]
Awarded (in shares)			131,113
Time-Based Restricted Stock Units [Member] \| Plan [Member]
Equity-Based Compensation [Abstract]
Number of equal annual installments for vesting \| Intallment		3
Number of Shares [Abstract]
Awarded (in shares)	19,928	111,185
Performance Share Unit [Member]
Equity-Based Compensation [Abstract]
Percentage of target award granted			100.00%
Number of shares of common stock consisted in each unit (in shares)			1
Compensation expense \| $			$ 1.1	$ 1.0
Number of Shares [Abstract]
Awarded (in shares)			83,036
Performance Share Unit [Member] \| Plan [Member]
Equity-Based Compensation [Abstract]
Number of equal annual installments for vesting \| Intallment		3
Number of Shares [Abstract]
Awarded (in shares)	69,748	13,288

Stockholders' and Members' Equity, Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Mar. 30, 2022
Numerator [Abstract]
Net income attributable to OneWater Inc.	$ 8,900	$ 20,019
Effect of dilutive securities [Abstract]
Share repurchase program authorized amount			$ 50,000
Remaining amount available for future purchase	$ 49,600
Common Class A [Member]
Denominator [Abstract]
Weighted-average number of unrestricted outstanding common shares used to calculate basic net income per share (in shares)	14,297	13,380
Effect of dilutive securities [Abstract]
Restricted stock units (in shares)	284	381
Diluted weighted-average shares of Class A common stock outstanding used to calculate diluted earnings per share (in shares)	14,587	13,761
Earnings per share of Class A common stock - basic (in dollars per share)	$ 0.62	$ 1.5
Earnings per share of Class A common stock - diluted (in dollars per share)	$ 0.61	$ 1.45
Number of shares repurchased and retired (in shares)	10,134
Shares repurchased and retired	$ 400
Common Class A [Member] \| Employee Stock Purchase Plan [Member]
Effect of dilutive securities [Abstract]
Restricted stock units (in shares)	6	0

Income Taxes (Details) - USD ($) $ in Millions	3 Months Ended
Income Taxes (Details) - USD ($) $ in Millions	Dec. 31, 2022	Dec. 31, 2021	Sep. 30, 2022
Effective Income Tax Rate Reconciliation [Abstract]
Effective tax rate	22.80%	17.20%
Tax receivable agreement liability	$ 46.4		$ 46.4
Percentage of net cash savings	85.00%

Stockholders' and Members' Equity (Tables)

3 Months Ended

Dec. 31, 2022

Stockholders' and Members' Equity [Abstract]

Summary of Restricted Stock Units Activity

The following table further summarizes activity related to restricted stock units for the three months ended December 31, 2022:

	Restricted Stock Unit Awards
	Number of Shares			Weighted Average Grant Date Fair Value ($)
Unvested at September 30, 2022		559,793		$	28.01
Awarded		214,149			30.11
Vested		(111,075	)		24.62
Forfeited		(1,000	)		40.21
Unvested at December 31, 2022		661,867		$	29.24

Calculation of Earnings per share

The following table sets forth the calculation of earnings per share for the three months ended December 31, 2022 and 2021 (in thousands, except per share data):

Earnings per share:	Three Months Ended December 31, 2022		Three Months Ended December 31, 2021
Numerator:
Net income attributable to OneWater Inc.	$	8,900	$	20,019

Denominator:
Weighted-average number of unrestricted outstanding common shares used to calculate basic net income per share		14,297		13,380
Effect of dilutive securities:
Restricted stock units		284		381
Employee Stock Purchase Plan		6		-
Diluted weighted-average shares of Class A common stock outstanding used to calculate diluted earnings per share		14,587		13,761

Earnings per share of Class A common stock – basic	$	0.62	$	1.50
Earnings per share of Class A common stock – diluted	$	0.61	$	1.45

Antidilutive Securities Excluded From Calculation

The following number of weighted-average potentially dilutive shares were excluded from the calculation of diluted earnings per share because the effect of including such potentially dilutive shares would have been antidilutive upon conversion (in thousands):

	Three Months Ended December 31, 2022		Three Months Ended December 31, 2021
Class B common stock		1,430		1,815
Restricted Stock Units		377		233
		1,807		2,048

Weighted Average Assumptions

The following are the weighted-average assumptions used for the period ended December 31, 2022:


	2022
Dividend yield		0.0	%
Risk-free interest rate		2.5	%
Volatility		57.4	%
Expected life	Six months

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Dec. 31, 2022	Sep. 30, 2022
Current assets:
Cash	$ 43,535	$ 42,071
Restricted cash	14,673	18,876
Accounts receivable, net	63,613	57,960
Inventories, net	527,023	372,959
Prepaid expenses and other current assets	61,548	75,024
Total current assets	710,392	566,890
Property and equipment, net	114,802	109,713
Operating lease right-of-use assets	126,760	123,955
Other assets:
Other assets	3,844	3,378
Deferred tax assets, net	7,248	8,433
Intangible assets, net	311,579	306,471
Goodwill	397,468	378,588
Total other assets	720,139	696,870
Total assets	1,672,093	1,497,428
Current liabilities:
Accounts payable	25,859	27,306
Other payables and accrued expenses	44,835	55,237
Customer deposits	60,084	65,460
Notes payable - floor plan	425,368	267,108
Current portion of operating lease liabilities	13,410	12,981
Current portion of long-term debt, net	29,247	21,642
Current portion of tax receivable agreement liability	2,363	2,363
Total current liabilities	601,166	452,097
Long-term Liabilities:
Other long-term liabilities	19,850	23,174
Tax receivable agreement liability	43,991	43,991
Noncurrent operating lease liabilities	114,601	112,127
Long-term debt, net	434,670	421,162
Total liabilities	1,214,278	1,052,551
Stockholders' Equity:
Preferred stock, $0.01 par value, 1,000,000 shares authorized, none issued and outstanding as of December 31, 2022 and September 30, 2022	0	0
Additional paid-in capital	182,113	180,296
Retained earnings	213,770	204,880
Accumulated other comprehensive income (loss)	3	(7)
Total stockholders' equity attributable to OneWater Marine Inc.	396,043	385,325
Equity attributable to non-controlling interests	61,772	59,552
Total stockholders' equity	457,815	444,877
Total liabilities and stockholders' equity	1,672,093	1,497,428
Class A Common Stock [Member]
Stockholders' Equity:
Common stock	143	142
Class B Common Stock [Member]
Stockholders' Equity:
Common stock	$ 14	$ 14

Summary of Significant Accounting Policies, Segment Information (Details)	3 Months Ended
	Dec. 31, 2022 Segment
Segment Information [Abstract]
Number of operating segments	2

Summary of Significant Accounting Policies, Goodwill and Other Identifiable Intangible Assets (Details)	3 Months Ended
	Dec. 31, 2022
Goodwill and Other Identifiable Intangible Assets [Abstract]
Estimated useful lives of assets	10 years

Description of Company and Basis of Presentation, Description of the Business (Details)	3 Months Ended
	Dec. 31, 2022 Location Center State Brand	Dec. 31, 2021
Description of the Business [Abstract]
Number of retail locations \| Location	100
Number of distribution centers \| Center	12
Number of states in which business operating \| State	20
Number of top brands \| Brand	10
Sales Revenue [Member] \| Product Concentration Risk [Member] \| Top Ten Brands [Member]
Description of the Business [Abstract]
Concentration risk percentage	42.90%	47.90%
Sales Revenue [Member] \| Product Concentration Risk [Member] \| Malibu Boats, Inc [Member]
Description of the Business [Abstract]
Concentration risk percentage	13.00%	14.10%

Segment Information (Tables)

3 Months Ended

Dec. 31, 2022

Segment Information [Abstract]

Reportable Segment Financial Information

Reportable segment financial information as of and for the three months ended December 31, 2022 are as follows:

	As of and for the Three Months Ended December 31, 2022
($ in thousands)	Dealerships			Distribution			Total
Revenue	$	326,773		$	39,886		$	366,659
Income (loss) from operations		29,853			(3,317	)		26,536

Depreciation and amortization		1,886			3,807			5,693
Transaction costs		1,182			148			1,330
Change in fair value of contingent consideration		(1,543	)		134			(1,409	)

Total assets		1,283,821			388,272			1,672,093

Description of Company and Basis of Presentation

3 Months Ended

Dec. 31, 2022

Description of Company and Basis of Presentation [Abstract]

Description of Company and Basis of Presentation

1.	Description of Company and Basis of Presentation

Description of the Business

OneWater Marine Inc. (“OneWater Inc.”) was incorporated in Delaware on April 3, 2019 and was a wholly-owned subsidiary of One Water Marine Holdings, LLC (“OneWater LLC”). Pursuant to a reorganization on February 11, 2020 into a holding company structure for the purpose of facilitating an initial public offering (the “IPO”) and related transactions in order to carry on the business of OneWater LLC and its subsidiaries (together with OneWater Inc., the “Company”), OneWater Inc. is the holding company and its sole material asset is the equity interest in OneWater LLC. OneWater LLC was organized as a limited liability company under the law of the State of Delaware in 2014 and is the parent company of One Water Assets & Operations (“OWAO”), and its wholly-owned and majority-owned subsidiaries.

The Company is one of the largest recreational boat retailers in the United States. The Company engages primarily in the retail sale, brokerage, and service of new and pre-owned boats, motors, trailers, marine parts and accessories, and offers slip and storage accommodations in certain locations. The Company also arranges related boat financing, insurance, and extended service contracts for customers with third-party lenders and insurance companies. As of December 31, 2022, the Company operated a total of 100 retail locations, 12 distribution centers/warehouses and multiple online marketplaces in 20 states, several of which are in the top twenty states for marine retail expenditures.

Operating results are generally subject to seasonal variations. Demand for products is generally highest during the third and fourth quarters of the fiscal year and, accordingly, revenues are generally expected to be higher during these periods. General economic conditions and consumer spending patterns can negatively impact the Company’s operating results. Unfavorable local, regional, national, or global economic developments, global public health concerns, including the COVID-19 pandemic, or uncertainties could reduce consumer spending and adversely affect the Company’s business. Consumer spending on discretionary goods may also decline as a result of lower consumer confidence levels, even if prevailing economic conditions are otherwise favorable. Economic conditions in areas in which the Company operates stores, particularly in the Southeast, can have a major impact on the Company’s overall results of operations. Local influences such as corporate downsizing, inclement weather such as hurricanes and other storms, environmental conditions, and other events could adversely affect the Company’s operations in certain markets and in certain periods. Any extended period of adverse economic conditions or low consumer confidence is likely to have a negative effect on the Company’s business.

Sales of new boats from the Company’s top ten brands represent approximately 42.9% and 47.9% of total sales for the three months ended December 31, 2022 and 2021, respectively, making them major suppliers of the Company. Of this amount, Malibu Boats, Inc., including its brands Malibu, Axis, Cobalt, Pursuit, Maverick, Hewes, Cobia and Pathfinder accounted for 13.0% and 14.1% of consolidated revenue for the three months ended December 31, 2022 and 2021, respectively. As is typical in the industry, the Company contracts with most manufacturers under renewable annual dealer agreements, each of which provides the right to sell various makes and models of boats within a given geographic region. Any change or termination of these agreements, or the agreements discussed above, for any reason, or changes in competitive, regulatory, or marketing practices, including rebate or incentive programs, could adversely affect results of operations. Pre-owned boats are usually trade-ins from retail customers who are purchasing a boat from the Company.

Principles of Consolidation

As the sole managing member of OneWater LLC, OneWater Inc. operates and controls all of the businesses and affairs of OneWater LLC. Through OneWater LLC and its wholly-owned subsidiaries, as well as majority-owned subsidiaries over which the Company exercises control, OneWater Inc. conducts its business. As a result, OneWater Inc. consolidates the financial results of OneWater LLC and its subsidiaries and reports non-controlling interests related to the portion of units of OneWater LLC (the “OneWater LLC Units”) not owned by OneWater Inc., which will reduce net income (loss) attributable to OneWater Inc.’s Class A stockholders. As of December 31, 2022, OneWater Inc. owned 90.9% of the economic interest of OneWater LLC.

Commencing December 31, 2021, the Company owns 80% of the economic interest of Quality Assets and Operations, over which the Company exercises control and the minority interest in this subsidiary has been recorded accordingly. See note 4 for additional information regarding the acquisition.

Basis of Financial Statement Preparation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial statements, which do not include all the information and notes required by such accounting principles for annual financial statements. The unaudited condensed consolidated financial statements should be read in conjunction with OneWater Inc.’s Annual Report on Form 10-K for the year ended September 30, 2022. All adjustments, consisting of only normal recurring adjustments considered necessary for fair presentation, have been reflected in these unaudited condensed consolidated financial statements.

All intercompany transactions have been eliminated in consolidation. The Company operates on a fiscal year basis with the first day of the fiscal year being October 1, and the last day of the year ending on September 30.

COVID-19 Pandemic

The duration and related impact on the Company’s consolidated financial statements is currently uncertain, and it is possible that the pandemic, including the resurgence of COVID-19 in certain geographic areas or the emergence of variant strains of the virus, may negatively impact the Company’s future results of operations. The impact of COVID-19 on our suppliers and the increase in demand for marine retail products has led to industry-wide supply chain constraints and although there are indications that the supply chain constraints are easing, it is unclear when the issue will be fully resolved. The Company is monitoring and assessing the situation and preparing for implications to the business, including the ability to safely operate its locations, access to inventory and customer demand.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Revenues:
Revenues	$ 366,659	$ 336,272
Cost of sales (exclusive of depreciation and amortization shown separately below)
Cost of sales	256,671	235,307
Selling, general and administrative expenses	77,838	59,096
Depreciation and amortization	5,693	1,749
Transaction costs	1,330	3,045
Change in fair value of contingent consideration	(1,409)	5,746
Income from operations	26,536	31,329
Other expense (income)
Interest expense - floor plan	4,779	877
Interest expense - other	7,584	1,529
Other (income) expense, net	(639)	548
Total other expense, net	11,724	2,954
Income before income tax expense	14,812	28,375
Income tax expense	3,384	4,889
Net income	11,428	23,486
Less: Net income attributable to non-controlling interests	(1,365)	0
Less: Net income attributable to non-controlling interests of One Water Marine Holdings, LLC	(1,163)	(3,467)
Net income attributable to OneWater Marine Inc.	8,900	20,019
New Boat [Member]
Revenues:
Revenues	232,405	236,198
Cost of sales (exclusive of depreciation and amortization shown separately below)
Cost of sales	175,258	175,896
Pre-Owned Boat [Member]
Revenues:
Revenues	55,778	53,449
Cost of sales (exclusive of depreciation and amortization shown separately below)
Cost of sales	40,304	39,370
Finance & Insurance [Member]
Revenues:
Revenues	8,934	9,307
Service, Parts & Other [Member]
Revenues:
Revenues	69,542	37,318
Cost of sales (exclusive of depreciation and amortization shown separately below)
Cost of sales	$ 41,109	$ 20,041
Class A Common Stock [Member]
Other expense (income)
Earnings per share, Basic (in dollars per share)	$ 0.62	$ 1.5
Earnings per share, Diluted (in dollars per share)	$ 0.61	$ 1.45
Basic weighted-average shares outstanding (in shares)	14,297	13,380
Diluted weighted-average shares outstanding (in shares)	14,587	13,761

New Accounting Pronouncements

3 Months Ended

Dec. 31, 2022

New Accounting Pronouncements [Abstract]

New Accounting Pronouncements

3.	New Accounting Pronouncements

In October 2021, the FASB issued ASU 2021-08, “Business Combinations (Topic 805) – Accounting for Contract Assets and Contract Liabilities from Contracts with Customers”, which is intended to improve the accounting for acquired revenue contracts with customers in a business combination by addressing diversity in practice and inconsistency related to the recognition of an acquired contract liability and payment terms and their effect on subsequent revenue recognized by the acquirer. The pronouncement is effective for a public company’s annual reporting periods beginning after December 15, 2022, and interim periods within those annual periods. The Company is currently evaluating the impact that this standard will have on the consolidated financial statements. The Company plans to adopt the pronouncement in fiscal year 2024.

Other than as noted above, there are no new accounting pronouncements that are expected to have a material effect on our consolidated financial statements.

- Definition

The entire disclosure for change in accounting principle. Includes, but is not limited to, nature, reason, and method of adopting amendment to accounting standards or other change in accounting principle.

+ References

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+ Details

Related Party Transactions

3 Months Ended

Dec. 31, 2022

Related Party Transactions

15.	Related Party Transactions

In accordance with agreements approved by the Board, we purchased inventory, in conjunction with our retail sale of the products, from certain entities affiliated with the Company. Total purchases incurred under these arrangements were $21.3 million and $33.3 million for the three months ended December 31, 2022 and 2021, respectively.

In accordance with agreements approved by the Board, certain entities affiliated with the Company receive fees for rent of commercial property. Total expenses incurred under these arrangements were $0.5 million and $0.7 million for the three months ended December 31, 2022 and 2021, respectively. Additionally, see Note 4 for information regarding a sale and leaseback transaction with an entity affiliated with the Company in connection with an acquisition by the Company.

In accordance with agreements approved by the Board, the Company received fees from certain entities and individuals affiliated with the Company for goods and services. Total fees recorded under these arrangements were $1.2 million and $0.1 million for the three months ended December 31, 2022 and 2021, respectively.

In accordance with agreements approved by the Board, the Company made payments to certain entities and individuals affiliated with the Company for goods and services. Total payments recorded under these arrangements were $0.1 million for the three months ended December 31, 2021. No payments were recorded under these arrangements for the three months ended December 31, 2022.

In connection with transactions noted above, the Company owed less than $0.1 million and $2.0 million as recorded within accounts payable as of December 31, 2022 and September 30, 2022, respectively. Additionally, the Company was due $3.2 million and $0.2 million as recorded within accounts receivable as of December 31, 2022 and September 30, 2022, respectively.

Stockholders' and Members' Equity, Employee Stock Purchase Plan (Details) - USD ($) $ in Thousands		3 Months Ended
	Feb. 23, 2021	Dec. 31, 2022	Dec. 31, 2021
Employee Stock Purchase Plan [Abstract]
Equity-based compensation		$ 2,572	$ 2,100
Weighted Average Assumptions [Abstract]
Dividend yield		0.00%
Risk-free interest rate		2.50%
Volatility		57.40%
Expected life		6 months
Employee Stock Purchase Plan [Member]
Employee Stock Purchase Plan [Abstract]
Equity-based compensation		$ 200
Shares purchased under employee stock purchase plan		0
Stock to be purchased under ESPP		$ 1,100
Common Class A [Member]
Employee Stock Purchase Plan [Abstract]
Percentage of outstanding shares, ESPP issuance	1.00%
Common Class A [Member] \| Maximum [Member]
Employee Stock Purchase Plan [Abstract]
ESPP shares issuance (in shares)	449,257

Document and Entity Information - shares	3 Months Ended
Document and Entity Information - shares	Dec. 31, 2022	Jan. 27, 2023
Document Type	10-Q
Amendment Flag	false
Document Quarterly Report	true
Document Period End Date	Dec. 31, 2022
Current Fiscal Year End Date	--09-30
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q1
Document Transition Report	false
Entity File Number	001-39213
Entity Registrant Name	OneWater Marine Inc.
Entity Central Index Key	0001772921
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	83-4330138
Entity Address, Address Line One	6275 Lanier Islands Parkway
Entity Address, City or Town	Buford
Entity Address, State or Province	GA
Entity Address, Postal Zip Code	30518
City Area Code	678
Local Phone Number	541-6300
Title of 12(b) Security	Class A common stock, par value $0.01 per share
Trading Symbol	ONEW
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Common Class A [Member]
Entity Common Stock, Shares Outstanding		14,336,986
Common Class B [Member]
Entity Common Stock, Shares Outstanding		1,429,940

Long-term Debt and Line of Credit

3 Months Ended

Dec. 31, 2022

Long-term Debt and Line of Credit [Abstract]

Long-term Debt and Line of Credit

9.	Long-term Debt and Line of Credit

On August 9, 2022, the Company and certain of its subsidiaries entered into the Amended and Restated Credit Agreement (the “A&R Credit Facility”) with Truist Bank. The A&R Credit Facility provides for a $65.0 million revolving credit facility (the “A&R Revolving Facility”) that may be used for revolving credit loans (including up to $5.0 million in swingline loans and up to $5.0 million in letters of credit) and a $445.0 million term loan (the “A&R Term Loan”). Subject to certain conditions, the available amount under the revolving credit facility and term loans may be increased by $125.0 million in the aggregate. The A&R Credit Facility bears interest at a rate that is equal to Term SOFR plus an applicable margin ranging from 1.75% to 2.75% based on certain consolidated leverage ratio measures. The A&R Revolving Facility matures on August 9, 2027. The A&R Term Loan is repayable in installments beginning December 31, 2022, with the remainder due on August 9, 2027.

The A&R Credit Facility is collateralized by certain real and personal property (including certain capital stock) of the Company and its subsidiaries. The collateral does not include inventory and certain other assets of the Company’s subsidiaries financed under the Inventory Financing Facility. The A&R Credit Facility is subject to certain financial covenants related to the maintenance of a minimum fixed charge coverage ratio and a maximum consolidated leverage ratio. The A&R Credit Facility also contains non-financial covenants and restrictive provisions that, among other things, limit the ability of the Company to incur additional debt, transfer or dispose of all of its assets, make certain investments, loans or payments and engage in certain transactions with affiliates. The Company was in compliance with all covenants at December 31, 2022.

Long-term debt consisted of the following at:

($ in thousands)	December 31, 2022			September 30, 2022
Term note payable to Truist Bank, secured and bearing interest at 6.72% at December 31, 2022 and 5.31% at September 30, 2022. The note requires quarterly principal payments commencing on December 31, 2022 and maturing with a full repayment on August 9, 2027	$	445,000		$	445,000
Revolving note payable for an amount up to $65.0 million to Truist Bank, secured and bearing interest at 6.72% at December 31, 2022. The note requires full repayment on August 9, 2027		20,000			-
Notes payable to commercial vehicle lenders secured by the value of the vehicles bearing interest at rates ranging from 0.0% to 8.4% per annum. The notes require monthly installment payments of principal and interest ranging from $100 to $5,600 through July 2028		4,586			4,173
Note payable to Tom George Yacht Group, unsecured and bearing interest at 5.5% per annum. The note requires monthly interest payments, with a balloon payment of principal due on December 1, 2023		2,056			2,056
Note payable to Norfolk Marine Company, unsecured and bearing interest at 4.0% per annum. The note requires quarterly interest payments, with a balloon payment of principal due on December 1, 2024		1,126			1,126
Total debt outstanding		472,768			452,355
Less current portion (net of debt issuance costs)		(29,247	)		(21,642	)
Less unamortized portion of debt issuance costs		(8,851	)		(9,551	)
Long-term debt, net of current portion and unamortized debt issuance costs	$	434,670		$	421,162

Summary of Significant Accounting Policies (Policies)

3 Months Ended

Dec. 31, 2022

Summary of Significant Accounting Policies [Abstract]

Cash

Restricted Cash

Inventories

Goodwill and Other Identifiable Intangible Assets

Sales Tax

Revenue Recognition

($ in thousands)	Three Months Ended December 31, 2022
Beginning contract liability	$	65,460
Revenue recognized from contract liabilities included in the beginning balance		(42,496	)
Increases due to business combinations and cash received, net of amounts recognized in revenue during the period		37,120
Ending contract liability	$	60,084

The following tables set forth percentages on the timing of revenue recognition for the three months ended December 31, 2022 and 2021.

	Three Months Ended December 31, 2022			Three Months Ended December 31, 2021
Goods and services transferred at a point in time		92.8	%		93.2	%
Goods and services transferred over time		7.2	%		6.8	%
Total Revenue		100.0	%		100.0	%

Income Taxes

Vendor Consideration Received

Use of Estimates

Segment Information

Long-term Debt and Line of Credit (Tables)

3 Months Ended

Dec. 31, 2022

Long-term Debt and Line of Credit [Abstract]

Long-term Debt and Line of Credit

Long-term debt consisted of the following at:

($ in thousands)	December 31, 2022			September 30, 2022
Term note payable to Truist Bank, secured and bearing interest at 6.72% at December 31, 2022 and 5.31% at September 30, 2022. The note requires quarterly principal payments commencing on December 31, 2022 and maturing with a full repayment on August 9, 2027	$	445,000		$	445,000
Revolving note payable for an amount up to $65.0 million to Truist Bank, secured and bearing interest at 6.72% at December 31, 2022. The note requires full repayment on August 9, 2027		20,000			-
Notes payable to commercial vehicle lenders secured by the value of the vehicles bearing interest at rates ranging from 0.0% to 8.4% per annum. The notes require monthly installment payments of principal and interest ranging from $100 to $5,600 through July 2028		4,586			4,173
Note payable to Tom George Yacht Group, unsecured and bearing interest at 5.5% per annum. The note requires monthly interest payments, with a balloon payment of principal due on December 1, 2023		2,056			2,056
Note payable to Norfolk Marine Company, unsecured and bearing interest at 4.0% per annum. The note requires quarterly interest payments, with a balloon payment of principal due on December 1, 2024		1,126			1,126
Total debt outstanding		472,768			452,355
Less current portion (net of debt issuance costs)		(29,247	)		(21,642	)
Less unamortized portion of debt issuance costs		(8,851	)		(9,551	)
Long-term debt, net of current portion and unamortized debt issuance costs	$	434,670		$	421,162

- Definition

Tabular disclosure of long-debt instruments or arrangements, including identification, terms, features, collateral requirements and other information necessary to a fair presentation. These are debt arrangements that originally required repayment more than twelve months after issuance or greater than the normal operating cycle of the entity, if longer.

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+ Details

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Cash flows from operating activities
Net income	$ 11,428	$ 23,486
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization	6,182	1,749
Equity-based awards	2,572	2,100
Loss (gain) on asset disposals	171	(37)
Non-cash interest expense	2,217	200
Deferred income tax provision	1,185	1,659
Change in fair value of contingent consideration	(1,409)	5,746
Loss on equity investment	260	0
(Increase) decrease in assets:
Accounts receivable	(5,466)	240
Inventories	(147,832)	(71,660)
Prepaid expenses and other current assets	13,648	2,137
Other assets	(729)	(14)
Increase (decrease) in liabilities:
Accounts payable	(1,464)	13,911
Other payables and accrued expenses	(12,437)	(6,414)
Tax receivable agreement liability	0	313
Customer deposits	(6,376)	3,759
Net cash used in operating activities	(138,050)	(22,825)
Cash flows from investing activities
Purchases of property and equipment and construction in progress	(6,416)	(3,428)
Proceeds from disposal of property and equipment	47	6
Cash used in acquisitions, net of cash acquired	(28,611)	(278,798)
Net cash used in investing activities	(34,980)	(282,220)
Cash flows from financing activities
Net borrowings from floor plan	156,032	81,403
Proceeds from long-term debt	20,000	240,000
Payments on long-term debt	(379)	(5,507)
Payments of debt issuance costs	0	(3,979)
Payments of contingent consideration	(4,300)	0
Payments of tax withholdings for equity-based awards	(754)	(468)
Distributions to members	(319)	(5,584)
Net cash provided by financing activities	170,280	305,865
Effect of exchange rate changes on cash and restricted cash	11	0
Net change in cash	(2,739)	820
Cash and restricted cash at beginning of period	60,947	73,949
Cash and restricted cash at end of period	58,208	74,769
Supplemental cash flow disclosures
Cash paid for interest	10,146	2,206
Cash paid for income taxes	2,897	702
Noncash items
Acquisition purchase price funded by seller notes payable	0	1,126
Acquisition purchase price funded by contingent consideration	2,550	9,967
Accrued purchase consideration	0	5,353
Acquisition purchase price funded by issuance of Class A common stock	0	6,834
Purchase of property and equipment funded by long-term debt	792	231
Right-of-use assets obtained in exchange for new operating lease liabilities	6,314	31,529
Acquisition purchase price funded by affiliate financing	10,600	0
Settlement of affiliate financing with proceeds from sale and leaseback	$ 10,600	$ 0

Income Taxes

3 Months Ended

Dec. 31, 2022

Income Taxes [Abstract]

Income Taxes

12.	Income Taxes

The Company is a corporation and, as a result is subject to U.S. federal, state and local income taxes. OneWater LLC is treated as a pass-through entity for U.S. federal tax purposes and in most state and local jurisdictions. As such, OneWater LLC’s members, including the Company, are liable for federal and state income taxes on their respective shares of OneWater LLC’s taxable income.

Our effective tax rates of 22.8% and 17.2% for the three months ending December 31, 2022 and 2021, respectively, differ from statutory rates primarily due to earnings allocated to non-controlling interests.

The Company recognizes deferred tax assets to the extent it believes these assets are more-likely-than-not to be realized. In making such a determination, the Company considers all available positive and negative evidence, including future reversals of existing temporary differences, projected future taxable income, tax planning strategies and recent results of operations. Based on our cumulative earnings history and forecasted future sources of taxable income, we believe that we will fully realize our deferred tax asset in the future. The Company has not recorded a valuation allowance.

As of December 31, 2022 and September 30, 2022, the Company has not recognized any uncertain tax positions, penalties, or interest as management has concluded that no such positions exist. The Company is subject to examination in the US Federal and certain state tax jurisdictions for the tax years beginning with the year ended September 30, 2020. In November 2022, the Company received notification that the IRS intends to commence an audit of the federal income tax return of OneWater LLC’s partnership for the tax year ended December 31, 2020. Audit outcomes and the timing of settlements of asserted income tax liabilities, if any, are subject to significant uncertainty.

Tax Receivable Agreement

In connection with the IPO, the Company entered into a tax receivable agreement (the “Tax Receivable Agreement”) with certain of the owners of OneWater LLC. As of December 31, 2022 and September 30, 2022, our liability under the Tax Receivable Agreement was $46.4 million, representing 85% of the calculated net cash savings in U.S. federal, state and local income tax and franchise tax that OneWater Inc. anticipates realizing in future years from the result of certain increases in tax basis and certain tax benefits attributable to imputed interest as a result of OneWater Inc.’s acquisition of OneWater LLC Units pursuant to an exercise of the Redemption Right or the Call Right (each as defined in the amended and restated limited liability company agreement of OneWater LLC (the “OneWater LLC Agreement”)).

The projection of future taxable income involves significant judgment. Actual taxable income may differ from our estimates, which could significantly impact our ability to make payments under the Tax Receivable Agreement. We have determined it is more-likely-than-not that we will be able to utilize all of our deferred tax assets subject to the Tax Receivable Agreement; therefore, we have recorded a liability under the Tax Receivable Agreement related to the tax savings we may realize from certain increases in tax basis and certain tax benefits attributable to imputed interest as a result of OneWater Inc.’s acquisition of OneWater LLC Units pursuant to an exercise of the Redemption Right or Call Right (each as defined in the OneWater LLC Agreement). If we determine the utilization of these deferred tax assets is not more-likely-than-not in the future, our estimate of amounts to be paid under the Tax Receivable Agreement would be reduced. In this scenario, the reduction of the liability under the Tax Receivable Agreement would result in a benefit to our consolidated statements of operations.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

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+ Details

Accounts Receivable (Details) - USD ($) $ in Thousands	3 Months Ended
Accounts Receivable (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Sep. 30, 2022
Accounts Receivable [Abstract]
Finance contracts maximum funding period	30 days
Total accounts receivable	$ 64,552	$ 59,126
Less - allowance for credit losses	(939)	(1,166)
Total accounts receivable, net	63,613	57,960
Trade Accounts Receivable [Member]
Accounts Receivable [Abstract]
Total accounts receivable	43,143	37,359
Contracts in Transit [Member]
Accounts Receivable [Abstract]
Total accounts receivable	15,044	14,543
Manufacturer Receivable [Member]
Accounts Receivable [Abstract]
Total accounts receivable	$ 6,365	$ 7,224

Stockholders' and Members' Equity

3 Months Ended

Dec. 31, 2022

Stockholders' and Members' Equity [Abstract]

Stockholders' and Members' Equity

10.	Stockholders’ and Members’ Equity

Equity-Based Compensation

We maintain the OneWater Marine Inc. Omnibus Incentive Plan (the “LTIP”) to incentivize individuals providing services to OneWater Inc. and its subsidiaries and affiliates. The LTIP provides for the grant, from time to time, at the discretion of the board of directors of OneWater Marine Inc. (the “Board”) or a committee thereof, of (1) stock options, (2) stock appreciation rights, (3) restricted stock, (4) restricted stock units, (5) stock awards, (6) dividend equivalents, (7) other stock-based awards, (8) cash awards, (9) substitute awards and (10) performance awards. The total number of shares reserved for issuance under the LTIP that may be issued pursuant to incentive stock options (which generally are stock options that meet the requirements of Section 422 of the Code) is 1,572,755. The LTIP is and will continue to be administered by the Board, except to the extent the Board elects a committee of directors to administer the LTIP. Class A common stock subject to an award that expires or is cancelled, forfeited, exchanged, settled in cash or otherwise terminated without delivery of shares (including forfeiture of restricted stock awards) and shares withheld to pay the exercise price of, or to satisfy the withholding obligations with respect to, an award will again be available for delivery pursuant to other awards under the LTIP.

During the three months ended December 31, 2022, the Board approved the grant of 83,036 performance-based restricted stock units, which represents 100% of the target award. Performance-based restricted stock units provide an opportunity for the recipient to receive a number of shares of our common stock based on our performance goals. A performance-based restricted stock unit equals one share of common stock of the Company. Of this amount, 13,288 performance-based restricted stock units fully vest on October 1, 2023 and the remaining 69,748 restricted stock units vest in three equal annual installments commencing on October 1, 2023. As of December 31, 2022, the Company estimated achievement of the performance targets at 100%.

During the three months ended December 31, 2022, the Board approved the grant of 131,113 time-based restricted stock units. Of this amount, 19,928 restricted stock units fully vest on October 1, 2023 and the remaining 111,185 restricted stock units vest in three equal annual installments commencing on October 1, 2023.

Compensation cost for time-based restricted stock units is based on the closing price of our common stock on the date immediately preceding the grant and is recognized on a graded basis over the applicable vesting periods. Compensation cost for performance-based restricted stock units is based on the closing price of our common stock on the date immediately preceding the grant and the ultimate performance level achieved and is recognized on a graded basis over the applicable vesting period. The Company recognized $2.3 million and $2.1 million of compensation expense for the three months ended December 31, 2022 and 2021, respectively, which includes $1.1 million and $1.0 million of compensation expense for the three months ended December 31, 2022 and 2021, respectively, for performance-based restricted stock units.

The following table further summarizes activity related to restricted stock units for the three months ended December 31, 2022:

	Restricted Stock Unit Awards
	Number of Shares			Weighted Average Grant Date Fair Value ($)
Unvested at September 30, 2022		559,793		$	28.01
Awarded		214,149			30.11
Vested		(111,075	)		24.62
Forfeited		(1,000	)		40.21
Unvested at December 31, 2022		661,867		$	29.24

As of December 31, 2022, the total unrecognized compensation expense related to outstanding equity awards was $10.3 million, which the Company expects to recognize over a weighted-average period of 1.3 years.

We issue shares of our Class A common stock upon the vesting of performance-based restricted stock units and time-based restricted stock units. These shares are issued from our authorized and not outstanding common stock. In addition, in connection with the vesting of restricted stock units, we repurchase a portion of shares issued equal to the amount of employee income tax withholding.

Earnings Per Share

Basic and diluted earnings per share of Class A common stock is computed by dividing net income attributable to OneWater Inc. by the weighted-average number of Class A common stock outstanding during the period. Diluted earnings per share is computed by giving effect to all potentially dilutive shares.

The following table sets forth the calculation of earnings per share for the three months ended December 31, 2022 and 2021 (in thousands, except per share data):

Earnings per share:	Three Months Ended December 31, 2022		Three Months Ended December 31, 2021
Numerator:
Net income attributable to OneWater Inc.	$	8,900	$	20,019

Denominator:
Weighted-average number of unrestricted outstanding common shares used to calculate basic net income per share		14,297		13,380
Effect of dilutive securities:
Restricted stock units		284		381
Employee Stock Purchase Plan		6		-
Diluted weighted-average shares of Class A common stock outstanding used to calculate diluted earnings per share		14,587		13,761

Earnings per share of Class A common stock – basic	$	0.62	$	1.50
Earnings per share of Class A common stock – diluted	$	0.61	$	1.45

On March 30, 2022, the Board approved an up to $50 million share repurchase program. As of December 31, 2022 the Company has repurchased and retired 10,134 shares of Class A common stock under the repurchase program for a purchase price of approximately $0.4 million. As of December 31, 2022, approximately $49.6 million remained available for future purchase under the repurchase program. The repurchase program does not have a predetermined expiration date.

Shares of Class B common stock and unvested restricted stock units do not share in the income (losses) of the Company and are therefore not participating securities. As such, separate presentation of basic and diluted earnings per share under the two-class method has not been presented.

	Three Months Ended December 31, 2022		Three Months Ended December 31, 2021
Class B common stock		1,430		1,815
Restricted Stock Units		377		233
		1,807		2,048

Employee Stock Purchase Plan

At the Company’s 2021 Annual Meeting of Stockholders (the “Annual Meeting”), held on February 23, 2021, the Company’s stockholders approved the OneWater Marine Inc. 2021 Employee Stock Purchase Plan (the “ESPP”), which was approved and adopted by the Board as of January 13, 2021 (the “Adoption Date”), subject to stockholder approval at the Annual Meeting. The effective date of the ESPP is February 23, 2021, and, unless earlier terminated, the ESPP will expire on the twentieth anniversary of the Adoption Date. The ESPP will be administered by the Board or by one or more committees to which the Board delegates such administration.

The ESPP enables eligible employees to purchase shares of the Company’s Class A common stock at a discount through participation in discrete offering periods. The ESPP is intended to qualify as an employee stock purchase plan under section 423 of the Internal Revenue Code of 1986, as amended. Up to a maximum of 449,257 shares of the Company’s Class A common stock may be issued under the ESPP as of December 31, 2022, subject to certain adjustments as set forth in the ESPP. On the first day of each fiscal year during the term of the ESPP, beginning on October 1, and ending on (and including) September 30, the number of shares of Class A common stock that may be issued under the ESPP will increase by a number of shares equal to the least of (i) 1% of the outstanding shares on the Adoption Date, or (ii) such lesser number of shares (including zero) that the administrator determines for purposes of the annual increase for that fiscal year. The number of shares of Class A common stock that may be granted to any single participant in any single option period will be subject to certain limitations set forth in the plan.

The first offering period began on July 1, 2022 and the Company recorded equity-based compensation of $0.2 million during the three months ended December 31, 2022. As of December 31, 2022, we had current liabilities of $1.1 million for future purchases of shares under the ESPP. No purchases have been made under the ESPP as of December 31, 2022.

We used a Black-Scholes model to estimate the fair value of the options granted to purchase shares issued pursuant to the ESPP. Volatility is based on the historical volatility in our common stock. The risk-free rate for periods within the contractual term of the options is based on the U.S. Treasury yield curve in effect at the time of grant.

The following are the weighted-average assumptions used for the period ended December 31, 2022:


	2022
Dividend yield		0.0	%
Risk-free interest rate		2.5	%
Volatility		57.4	%
Expected life	Six months

Distributions

During the three months ended December 31, 2022, the Company made distributions to OneWater Unit Holders for certain permitted tax payments.

- Definition

The entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-URI https://asc.fasb.org/topic&trid=2208762

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 13
-Subparagraph (b)
-URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496158-112644

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 13
-URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496158-112644

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 14
-Subparagraph (c)
-URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496171-112644

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 14
-Subparagraph (b)
-URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496171-112644

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.3-04)
-URI https://asc.fasb.org/extlink&oid=120397183&loc=d3e187085-122770

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 18
-Subparagraph (d)
-URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496189-112644

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 13
-Subparagraph (g)
-URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496158-112644

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 18
-Subparagraph (a)
-URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496189-112644

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 13
-Subparagraph (h)
-URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496158-112644

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 14
-Subparagraph (a)
-URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496171-112644

Reference 12: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 18
-Subparagraph (b)
-URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496189-112644

Reference 13: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 16
-Subparagraph (b)
-URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496180-112644

Reference 14: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 13
-Subparagraph (i)
-URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496158-112644

Reference 15: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(e)(1))
-URI https://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690

Reference 16: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 40
-Section 50
-Paragraph 6
-Subparagraph (a)
-URI https://asc.fasb.org/extlink&oid=126731327&loc=SL126733271-114008

+ Details

Acquisitions (Details) $ in Thousands	3 Months Ended
Acquisitions (Details) $ in Thousands	Dec. 31, 2022 USD ($) Location Renewaloption	Dec. 31, 2021 USD ($)	Sep. 30, 2022 USD ($)
Acquisition [Abstract]
Cash paid for acquisition	$ 28,611	$ 278,798
Payment of contingent consideration	2,600
Acquisition purchase price funded by affiliate financing	10,600	0
Minimum payout due of contingent consideration	0
Maximum payout due of contingent consideration	$ 0
Number of retail locations \| Location	100
Number of lease renewal options \| Renewaloption	2
Summary of Assets Acquired and Liabilities Assumed [Abstract]
Goodwill	$ 397,468		$ 378,588
Consideration transferred	41,800
Revenue	366,659	336,272
Income before income tax expense	14,812	28,375
Costs related to acquisition	800	3,000
Unaudited Pro Forma Results of Operations [Abstract]
Pro forma revenue	369,363	428,136
Pro forma net income	11,542	$ 25,916
Total Acquisitions [Member]
Summary of Assets Acquired and Liabilities Assumed [Abstract]
Accounts receivable	188
Inventories	6,232
Prepaid expenses	73
Property and equipment	11,587
Operating lease right-of-use assets	2,952
Identifiable intangible assets	8,400
Goodwill	18,880
Accounts payable	(17)
Accrued expenses	(354)
Customer deposits	(1,000)
Operating lease liabilities	(2,952)
Notes payable - floor plan	(2,228)
Aggregate acquisition date fair value	41,761
Consideration transferred	41,761
Revenue	8,700
Income before income tax expense	$ 500
Harbor View Marine Acquisition [Member]
Acquisition [Abstract]
Number of retail locations \| Location	2
Gain (loss) on sale and leaseback transaction	$ 0
Initial lease contract term	15 years
Lease renewal option term	5 years

Inventories (Tables)

3 Months Ended

Dec. 31, 2022

Inventories [Abstract]

Inventories

Inventories consisted of the following at:

($ in thousands)	December 31, 2022		September 30, 2022
New vessels	$	388,004	$	243,090
Pre-owned vessels		61,658		51,607
Work in process, parts and accessories		77,361		78,262
	$	527,023	$	372,959

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) shares in Thousands, $ in Thousands	Common Stock [Member] Class A Common Stock [Member]	Common Stock [Member] Class B Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Non-controlling Interest [Member]	Accumulated Other Comprehensive Income (Loss) [Member]	Total
Beginning balance at Sep. 30, 2021	$ 133	$ 18	$ 150,825	$ 74,952	$ 28,905	$ 0	$ 254,833
Beginning balance (in shares) at Sep. 30, 2021	13,277	1,819
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	$ 0	$ 0	0	20,019	3,467	0	23,486
Distributions to members	0	0	0	(442)	(177)	0	(619)
Non-controlling interest in subsidiary	0	0	0	0	19,311	0	19,311
Exchange of B shares for A shares	$ 4	$ (4)	7,405	0	(7,405)	0	0
Exchange of B shares for A shares (in shares)	389	(389)
Establishment of liabilities under tax receivable agreement and related changes to deferred tax assets associated with increases in tax basis	$ 0	$ 0	(283)	0	0	0	(283)
Shares issued upon vesting of equity-based awards, net of tax withholding	$ 1	$ 0	(469)	0	0	0	(468)
Shares issued upon vesting of equity-based awards, net of tax withholding (in shares)	53	0
Shares issued in connection with a business combination	$ 1	$ 0	6,833	0	0	0	6,834
Shares issued in connection with a business combination (in shares)	133	0
Equity-based compensation	$ 0	$ 0	2,100	0	0	0	2,100
Currency translation adjustments							0
Ending balance at Dec. 31, 2021	$ 139	$ 14	166,411	94,529	44,101	0	305,194
Ending balance (in shares) at Dec. 31, 2021	13,852	1,430
Beginning balance at Sep. 30, 2022	$ 142	$ 14	180,296	204,880	59,552	(7)	444,877
Beginning balance (in shares) at Sep. 30, 2022	14,212	1,430
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	$ 0	$ 0	0	8,900	2,528	0	11,428
Distributions to members	0	0	0	(10)	(309)	0	(319)
Shares issued upon vesting of equity-based awards, net of tax withholding	$ 1	$ 0	(755)	0	0	0	(754)
Shares issued upon vesting of equity-based awards, net of tax withholding (in shares)	86	0
Equity-based compensation	$ 0	$ 0	2,572	0	0	0	2,572
Currency translation adjustments	0	0	0	0	1	10	11
Ending balance at Dec. 31, 2022	$ 143	$ 14	$ 182,113	$ 213,770	$ 61,772	$ 3	$ 457,815
Ending balance (in shares) at Dec. 31, 2022	14,298	1,430

Inventories (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Sep. 30, 2022
Component of Inventory [Abstract]
Inventories, net	$ 527,023	$ 372,959
New Vessels [Member]
Component of Inventory [Abstract]
Inventories, net	388,004	243,090
Pre-owned Vessels [Member]
Component of Inventory [Abstract]
Inventories, net	61,658	51,607
Work in Process, Parts and Accessories [Member]
Component of Inventory [Abstract]
Inventories, net	$ 77,361	$ 78,262