OneWater Marine Inc. (ONEW) Earnings

Management highlights

• Strategic Execution & Financial Position: The company delivered solid Q3 results through continued execution of core strategic priorities despite a challenging mixed retail environment. Management made difficult decisions to streamline operations, which have positioned the business for stronger long-term performance. The company reduced long-term debt and hit its year-end net leverage target of under 4.0x trailing 12-month adjusted EBITDA ahead of schedule, reaching 3.7x, down from 5.8x YoY, demonstrating disciplined capital management. Ending Q3 with $69 million in cash and healthy inventory levels, the business maintains strong financial flexibility, and management is actively exploring debt refinancing options to be updated later this year. • Inventory Management: Disciplined inventory optimization is a core competitive strength for the firm. Total inventory declined to $486 million, reflecting consistent inventory discipline and the Ocean Biochem divestiture. The quality and age profile of both new and pre-owned inventory is well positioned to meet customer demand while protecting margins across the dealership network. • Profitability Improvement: Gross margin expanded 70 basis points to 24% driven by favorable product mix, exit of low-margin exited brands, and strategic pricing initiatives. Selling, general and administrative expenses declined 5% YoY to $87 million from prior cost reduction actions and ongoing expense discipline. Net income rose to $12 million (69 cents per diluted share) from $11 million (65 cents per diluted share) YoY, driven by higher operating income and lower interest expense. Adjusted EBITDA increased to $38 million from $33 million YoY. • Demand & Segment Resilience: Underlying customer engagement and demand for the boating lifestyle remains healthy, particularly for the company's premium boat brand. The parts and service business demonstrated inherent resilience, with core underlying operations growing despite the divestiture impact.

Guidance

- Management revised full fiscal year guidance lower to reflect current industry trends, now expecting the overall marine industry to see a high single-digit YoY revenue decline, and projects One Water Marine will continue outperforming the broader industry. - Full year dealership same-store sales are now expected to be down low to mid-single digits (from prior broader guidance). - Full year total revenue is guided to $1.75 to $1.8 billion, which accounts for lost revenue from exited non-strategic brands and the Ocean Biochem divestiture. - Full year adjusted EBITDA is guided to $68 to $78 million, with an expected $2 million headwind to Q4 adjusted EBITDA from the Ocean Biochem sale compared to the prior year. - Full year adjusted diluted earnings per share is guided to 35 to 55 cents.

Segment performance

Total company revenue for Q3 2026 was $531 million, a 4% year-over-year (YoY) decline. 1. New Boat Segment: Revenue decreased 2% YoY. The decline was driven by strategic brand exits completed in the prior year, which was partially offset by higher average selling prices from disciplined pricing and favorable product mix. New boat revenue contributed approximately 52% of total company revenue (after proportional calculation based on disclosed segment changes). 2. Pre-owned Boat Segment: Revenue declined 4% YoY, facing a difficult comparison to the prior year period when the segment grew 18%. Underlying demand remained stable, and the segment contributed approximately 29% of total revenue. 3. Service, Parts and Other Segment: Revenue declined 13% YoY, which is entirely attributable to the divestiture of Ocean Biochem. Excluding the impact of the sale, the underlying parts and distribution business delivered YoY revenue growth. This segment contributed approximately 19% of total revenue. Gross profit for the quarter totaled $127 million, with gross margin expanding 70 basis points YoY to 24% across all segments.

Risks & headwinds

- The overall retail marine operating environment remains challenging, particularly during the typical peak selling season, with industry demand still in negative territory, creating top line pressure for the company. - Forward-looking statements involve inherent risks and uncertainties, with many factors impacting future performance outside of the company's control that could cause actual results to differ materially from guidance and management projections. - It is still too early to confirm whether the recent slower decline in industry demand signals an imminent market turnaround, creating near-term demand uncertainty.

Analyst Q&A

• Q: What factors are offsetting the muted top-line outlook, what is driving segment-level gross margin expansion, and how much do pricing, promotion and product mix contribute to this expansion? /

  A: Gross margin expansion is primarily driven by favorable product mix and strategic pricing. An additional key tailwind is the exit of low-margin non-strategic brands completed in the prior year, which has lifted overall segment margins. Disciplined inventory management that ensures the right inventory is available at retail locations also supports stronger pricing and margins. Industry-wide inventory levels, particularly in the premium segment where One Water competes, have normalized, reducing pressure from competitor panic discounting and supporting industry margin stability going forward.

• Q: You previously noted that ~$16-17 million in Palm Beach boat show sales shifted from Q2 to Q3 this year — did this shift materialize, and what are your July trend observations? /

  A: The shifted sales arrived in Q3 as expected, and July is currently trending at flattish to slightly positive YoY, meaning the market is stabilizing but has not yet turned positive. Recent industry SSI data shows the industry decline has narrowed to low single digits, which is an improvement from earlier larger declines, but it is still too early to confirm if this indicates the market is starting to turn around. Management remains cautiously optimistic about the trend.