Hello. Thank you for joining us for the OneWater Marine, Inc. Fiscal Third Quarter 2021 Earnings Conference Call. I will now turn it over to Jack Ezzell, Chief Financial Officer. Please proceed.

Good morning and welcome to OneWater Marine's fiscal third quarter 2021 earnings conference call. I am joined on the call today by Austin Singleton, Chief Executive Officer; and Anthony Aisquith, President and Chief Operating Officer. Before we begin, I'd like to remind you that certain statements made by management in this morning's conference call regarding OneWater Marine and its operations may be considered forward-looking statements under securities law and involve a number of risks and uncertainties. As a result, the company cautions you that there are a number of factors, many of which are beyond the company's control, which could cause actual results and events to differ materially from those described in the forward-looking statements. Factors that might affect future results are discussed in the company's earnings release, which can be found in the Investor Relations section on the company's website and in its filings with the SEC. The company disclaims any obligation or undertaking to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made, except as required by law. And with that, I'd like to turn the call over to Austin Singleton, who will begin with a few opening remarks.

Thanks, Jack, and thank you, everyone, for joining today's call. Overall, we delivered solid results for the third quarter of 2021. Despite industry-wide inventory challenges, which pressured the top line, we grew our operating margin to 60%, and we delivered record adjusted EBITDA of $66 million, an increase of 33% compared to the prior year. Sales for the third quarter of 2021 were up against an extremely difficult 44% same-store sales comp in the prior period. As a reminder, the prior period benefited significantly from business that shifted from March 2020 to April and May 2020 because of the COVID shutdown. This year, same-store sales for the third quarter were down 11%, all driven by significant inventory shortages across the industry, but partially offset by improvements in service parts and other sales. We believe we would have posted positive same-store sales if we had the inventory. It's noteworthy that same-store sales exclude new and acquired store sales until the end of the store's 13th month of operation under our ownership. Our Tom George Yacht Group and Walker Marine acquisitions were two of our largest and leveraged our global inventory to meet the red hot West Coast of Florida retail environment. We ended up sharing the same-store inventory and inventory planning tools with these acquisitions which ultimately pressured same-store sales but is exactly where we see the power of our network of dealers and show the interconnectivity of our organization. For comparative purposes, same-store sales for the third quarter and year-to-date 2021 when compared to the same periods in 2019 were 14% and 26% respectively. Importantly, we grew our higher-margin, less cyclical service parts and other revenue by 58% compared to the prior year, which mostly offset the shortfall from new and pre-owned boat sales. Sales activity remains robust. Door swings and lead generations continue to be strong, and as a result, our pre-sold inventory is up nearly 400%. I'm very proud of the team's focus on the controllable levers that continue to drive the business forward. Gross margin expanded by a whopping 822 basis points, driven primarily by the mix of boat models sold and was further bolstered by the sharp increase in service parts and other revenue. We continue to focus on executing our multi-facet growth strategy through strategic acquisitions and growing our higher-margin business segments to help us expand our market share and drive long-term shareholder value. As a reminder, we typically pay less than 4x EBITDA for a target and we expect to cut that purchase multiple in half within 24 months. Our strong cash generated from operations funds our acquisitions, and we generally enter into long-term leases on the dealership's real estate. Now let's take a minute to talk about two of our recent announced deals. The first is Naples Boat Mart, a third-generation family-owned and operated business that expands our presence on the West Coast of Florida and complements our recent acquisition of Walker Marine Group. Naples Boat Mart represents premium boating brands, including Grady White, Hurricane, and Key West, while offering factory-trained technicians to deliver quality service for its customers, including a full rigging shop and mobile service units. We expect this transaction to close in the fourth quarter of 2021. The second announcement we made was an agreement to acquire PartsVu, an online marketplace for OEM marine parts, electronics, and accessories. As I've said, part of our long-term growth strategy is expanding our parts and service offerings, which commands a significant margin and helps insulate the company from the cyclicality of boat sales. PartsVu generated approximately $25 million in sales over the past 12 months and has a history of organically doubling sales volume annually since its launch in 2016. We expect this acquisition to close in Q4 of 2021. Our significant margin expansion and earnings growth further underscore our superior execution and efficient operating model. Our strong partnership with our OEMs has proven invaluable, and our proprietary digital inventory and management tools allow our team to continue meeting the needs of our customers and pre-settlement inventory. At the same time, we continue advancing the other parts of our business that support further margin expansion and strengthen our relationship with customers. We feel very confident as we finish our year that we will be positioned well to drive long-term shareholder value. With that, I will turn it over to Anthony to discuss business operations.

Thanks, Austin. Customer demand remains at historically high levels with no sign of slowing down. Our sales team has done an outstanding job driving sales in this dynamic environment, aided by our sophisticated state-of-the-art inventory management tools that provide the sales team with powerful intelligence and access to our global inventory. Every one of our dealerships, including the two largest acquisitions, have full access to our broader inventory pool. Whether the inventory is in the store or on its way to the store, our sales teams are able to sell it. As a result, our pre-sold inventory is up over 400% compared to the prior year. Customers are coming to us today to order boats for next season. They are no longer waiting for boat shows because they want to ensure they get their boat in time. We don't see inventory normalizing in the near term and we have adapted quickly and continue to drive sales. In addition, we are focused on levers within our control, including building out the higher-margin areas of our businesses. Service, parts, and other revenues surged 58% to $30 million with approximately 50% dropping to the bottom line. We see tremendous growth opportunities with these non-boat-related business lines, and we'll continue expanding these areas. As Austin mentioned, our efficient operating model allows us to do more with less, which is reflected in our industry-leading operating margin of 16%. We remain focused on stellar execution and further expansion of our business. I will now turn the call over to Jack, who will talk about the financials in more detail.

Thanks, Anthony. Third quarter revenue decreased 1% to $404.2 million in 2021 from $408.3 million in 2020, fueled by a decline in same-store sales of 11%. This decrease was primarily driven by the industry-wide supply chain shortages and partially offset by improvements in service parts and other sales. New boat sales decreased 2% to $288.2 million in the fiscal third quarter of 2021, and pre-owned boat sales decreased 9% to $71.1 million. Finance insurance revenue decreased 8% to $15.2 million in the third quarter of 2021, and revenue from service parts and other sales increased 58% to $29.6 million compared to the prior period, mostly offsetting the shortfall in boat sales. Gross profit totaled $127 million in the third quarter compared to $94.7 million in the prior year, driven by an increase in the margin on new and pre-owned sales and the shift in the model mix and size of the boats sold. Additionally, higher-margin service parts and other sales contributed significantly to the increase in gross profit. As a percentage, our gross profit margin increased 822 basis points to 31.4% compared to 23.2% in the prior year. For the fiscal fourth quarter of 2021, we expect continued elevated margins due to the lack of inventory at higher than historical averages, but this is dependent on inventory and model mix. Selling general and administrative expenses increased to $60.5 million from $43.1 million. SG&A as a percentage of sales increased to 15% from 10.6% in the prior year. The increase in SG&A as a percentage of sales was primarily driven by the higher variable personnel costs, driven by the increased level of profitability compared to the prior year. Operating income rose to $64.9 million from $50.7 million in the prior year, driven by expanded gross profit, partially offset by higher SG&A, and as a result, adjusted EBITDA rose to $65.5 million compared to $49.3 million in the prior year. Net income totaled $51.6 million or $3.04 per diluted share in the fiscal third quarter of 2021, up from $40.6 million or $2.36 per diluted share in the prior year. As of June 30, 2021, our cash and cash equivalents balance was $113.2 million, an increase of $25.3 million compared to $88 million in the prior year. Total inventory as of June 30, 2021, was $116.9 million compared to $171.3 million in the prior year due to the industry-wide supply chain shortages. Inventory hasn't been this low since 2017. As Anthony mentioned, our pre-sold boats are up 400%, and while customer deposits are not a perfect indicator of presales and can be lumpy at times, as of June 30, 2021, they are up to $43.1 million, more than 3x the prior year amount. Total long-term debt currently stands at $115.7 million and when you subtract the cash and cash equivalents, adjusting for the pending dividend payment, yields a very low net debt to adjusted EBITDA ratio of 0.2x. From a capital allocation perspective, we are focused on reinvesting in the business to accelerate organic growth and strategic M&A opportunities as we have discussed. Looking ahead for the full fiscal year 2021, we are raising our outlook for adjusted EBITDA to be in the range of $150 million to $155 million and diluted earnings per share to be in the range of $6.6 to $6.8, excluding any additional acquisitions that may be completed during the year. However, based upon the continued broad-based inventory challenges in the industry near term, we now expect same-store sales to increase approximately 10% for the full fiscal year 2021. This outlook assumes OneWater's manufacturers can maintain production at the current pace, allowing us to deliver pre-sold units and build inventory in the face of the industry-wide supply chain constraints. This concludes our prepared remarks. Operator, will you please open the line for questions.

Our first question comes from Drew Crum with Stifel.

Okay. I know you're not providing guidance for fiscal '22 yet, but you mentioned that you don't expect inventory levels to normalize anytime soon. So given that dynamic and some tough comps, at least over the next couple of quarters, how should we be thinking about same-store sales performance? And then separately, maybe for Jack, the gross margin performance, you cited boat mix and service and parts growth. It sounds like you're anticipating something similar in fiscal 4Q. Should we anticipate a similar gross margin lift beyond fiscal '21?

Jack, do you want to take that?

Yes. We are currently working on projections for same-store sales for 2022, so I am not ready to provide specific details on that yet. We are relying on our manufacturers to supply sufficient inventory, although they are facing significant supply chain issues. As we receive more information from them, we will be better equipped to project same-store sales. Looking back at the March quarter, we achieved a 57% same-store sales increase, which will be a challenging comparison for the future. There might be fluctuations throughout the year, but we believe there is ongoing demand that will positively impact same-store sales. We need to address the inventory challenges to move ahead. Regarding gross margins, as long as inventory remains constrained, we will take necessary actions that we believe will create a more favorable margin environment. While I wouldn't project an increase of 822 basis points, I do expect margins to be higher moving forward.

One other thing I'd like to add to that too, though is that we're going to continue to be aggressive on our acquisition platform and as we noticed in this quarter that when you take a dealership that we've acquired and you allow it to pull from the global inventory, that could have an impact on same-store sales, if that particular market is hotter and they're able to get additional inventory that in the past they hadn't. So with the Tom George and Walkers, those acquisitions, they had their inventory that they had ordered for the year. But now they had this global inventory that they could pick and choose from as needed and they were able to generate some sales. So as we continue to move forward and lay in Stone Harbor and Naples Boat Mart and some other acquisitions keeping that cadence that we spoke to, that will put a little pressure on same-store sales, while the inventory constrained is where it is today.

But I mean ultimately, that's just a good business, and it's going to drive additional EBITDA growth for the company. Got it. Okay. Thanks, guys.

Our next question comes from Mike Swartz with Truist Securities.

I don't think inventory constraints are all that surprising to anyone who covers this industry. But I think when we go back to late April your last conference call, I don't remember kind of the commentary being maybe as dire from the inventory situation, maybe it is today. So maybe give us a sense of what happened over the past few months, whether that was retail demand related or whether that was maybe OEM production related?

I don't believe it was retail demand since it has remained quite steady and strong. The primary concern seems to be the OEMs. If a shipment of boats is delayed by two weeks, it can affect an entire quarter. That delay then pushes the next shipment back by another two to three weeks, which causes further delays for subsequent shipments. It's like a chain reaction that continues to push everything out. After discussions with our manufacturers back in April, we felt confident that they were starting to overcome their challenges, but it seems they were not prepared for additional issues that arose unexpectedly. Anthony, would you like to add anything to that?

Yes. There has consistently been a shortage of Gelco and other materials needed for it. This issue began back in February during the storm in Texas, and I think we all underestimated how many products depend on Gelco.

The consumers have generally been quite understanding and patient. Toward the end of a month or a quarter, the final week can significantly influence outcomes. If the expected sales don't materialize, they simply get pushed into the following month or quarter. We're not losing sales; they are just being delayed. As mentioned earlier, we've really focused on the presold inventory we have coming in, which has increased significantly compared to this time last year.

Thanks for the color there and maybe just for Jack, maybe give us a sense on the new boat side particularly what units versus pricing look like during the quarter?

Yes, I would say it's mainly driven by price. Units in the quarter were down slightly, but it's the pricing we are able to command in this environment that is pushing us forward.

Our next question comes from Joe Altobello with Raymond James. Michael Swartz, Analyst, thanked for the insight and asked Jack to provide an overview of the new boat segment, specifically regarding units and pricing during the quarter. Jack Ezzell, Chief Financial Officer, responded that the performance was largely influenced by pricing, noting that unit sales were slightly lower for the quarter, but emphasized the strong pricing power they have been able to maintain in the current environment.

So first question is a housekeeping item. The guidance that you gave us this morning for EBITDA and EPS, does that include any contribution at all from the recent acquisitions? Or you…?

Yes. Those were rolling when those acquisitions close. With us being so close to the year-end, if we're able to close one or two here before we get to year-end. I don't think it will move the needle much.

Okay. Got it. In terms of model year '22, we're hearing some pretty big numbers in terms of price increases. What are you guys seeing in terms of pricing for the new model year? Is there any concern about passing down to the consumer and could that put potentially downward pressure on both margins next year?

I don't think so, Joe. I mean every year, pre-COVID we always had 3% to 5% price increases and a good part of that had to do with content that the manufacturers are doing. So I think the consumers are pretty used to it and the demand for boating continues on. So I don't think that's going to be an issue.

One thing I'd like to point out is that the consumer, particularly in the boating sector, seems to be focusing more on the total cost of ownership rather than just the purchase price. We have begun working closely with our sales associates to emphasize to consumers what it will cost them to own a boat over the next two, three, or four years. With the pre-owned market nearly nonexistent right now, the prices of pre-owned boats have increased significantly. When discussing a customer considering a $250,000 ski boat, if they calculate that owning it for two to three years will cost them less than a monthly payment for a Chevrolet Suburban, it becomes easier for them to make the purchase. I've always been concerned about the rising boat prices each year, but it's never been difficult to pass those costs on to consumers, and I don't anticipate that being an issue in the future.

Okay. Got it. Just one last one, if I could. The three acquisitions that you just announced, it looks like the combined revenue is about $90 million or so over the past 12 months. How should we think about the revenue and EBITDA contributions from those acquisitions next year?

Yes. I think you hit the revenue number right there. A typical acquisition of those size will bring a couple of million dollars worth of EBITDA to the company. PartsVu is a little bit different that entity is in significant growth mode. So there's a lot of reinvestment and additional spending to grow that. So that one will have good gross margins, but its EBITDA margin will be less than optimal as we continue to push its rapid growth.

Our next question comes from Brett Andress with KeyBanc Capital.

A question. I think, Jack you mentioned presales were up 300% year-over-year. Is there any way to kind of frame that up in terms of, I don't know, is that 1, 2, 3 months of sales and then I guess how have the pace of those pre-sales been here in July? Any change in cadence or trajectory there?

Yes, the pace is continuing to grow. It's challenging to determine exactly when they'll be delivered. We usually need to receive the boats from the manufacturers as soon as they are available. Our customers are eager, and we are pushing to expedite the process as much as we can. Recently, we've started hearing customers express interest in ordering boats for next season even though we’re late in the current season. They're coming in now wanting to place orders. This reassures us that these orders will be fulfilled for the next season, which is contributing to the growth of our backlog. We're collaborating with manufacturers to ensure those boats are scheduled, constructed, and ready for our customers.

Got it. Okay. And then just on PartsVu, I think that was an interesting acquisition there. But does that fill a need or give you an advantage in your PS&O business? Is there a scarcity of parts out there and now we suddenly have them? I'm just kind of curious how that fits the broader picture here.

No, I don't think there's a scarcity of parts at all. I think what it does is it gives us a platform that we've been looking for to really set us up differently. I mean, One PartsVu already has been growing great on its own. The platform is solid, Philip and his team are really passionate about it and so we can kind of leave it in his wheelhouse to grow it. I think we bring some buying power. I think that there's some things just by us bringing it into fold that we can help accelerate not only the top line but the bottom line, but it does give us that platform that I've been seeking in order to really bolster up our P&A to get to where we can get into a meaningful loyalty program, subscription model, keeping the customers in our fold. And so it's a very important piece of the puzzle, and we're super excited about it. And I think what excites me more than anything is the guy that's going to run with it is super passionate about it, and he's been incentivized to really help us make that thing explode.

And then just the last one on PartsVu is that it's a smaller business, but it's growing rapidly. Just what is the margin profile of that compared to your current PS&O business?

Yes. I'd say at the gross margin level it's similar. It's parts margins in the low 30s. However, in terms of EBITDA margin, it's lagging a little bit. It's profitable, but it's not at the expected level due to the reinvestment in its growth.

Thank you and I'm not showing any further questions at this time. This concludes today's conference call. Thank you for participating. You may now disconnect.