What changed in this filing

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Item 1A. Risk Factors

2024-12-10 compared with 2023-12-14 · 102 added, 122 removed, 687 unchanged (25% of the section changed)

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Federal Reserve System has generally maintained policies producing a historically low-interest-rate environment.

Interest rates rose throughout 2022 and 2023 and may continue to rise, and there can be no assurance as to what actions the Federal Reserve System will take in the future.

Interest rates rose throughout 2022 and 2023 and may rise in the future, and there can be no assurance as to what actions the Federal Reserve System will take in the future.

Any change in interest rates or the market expectation of such change may result in significantly higher long-term interest rates.

Given that we sell products that are often financed, material increases in interest rates and adverse changes in fiscal policy or credit market conditions have, from time to time, negatively impacted our customers’ ability or desire to purchase our products and may continue to do so in the future.

In addition, such an increase or adverse change could reduce the availability or increase the costs of obtaining new debt and refinancing existing indebtedness or negatively impact the market price of our common stock.

Risks Related to Our Industry and Competition

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For example, the impact of seasonality could change if we acquire additional marine retailers that operate in colder regions of the United States, or if we acquire additional distribution businesses.

Additionally, due to pandemic or other external factors, our seasonal trends may also change as a result of, among other things, dealership closures, disruptions to the supply chain and inventory availability, manufacturer delays, or cancellation of boat shows.

Additionally, due to a global health crisis or other external factors, our seasonal trends may also change as a result of, among other things, dealership closures, disruptions to the supply chain and inventory availability, manufacturer delays, or cancellation of boat shows.

The failure to receive rebates and other manufacturer incentives on inventory purchases or retail sales could substantially reduce our margins.

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Other recreational activities, poor industry perception, real or perceived human health or safety risks, changing consumer attitudes and environmental conditions can adversely affect the levels of boat purchases.

Demand for our products can be adversely affected by competition from other activities that occupy consumers’ time, including other forms of recreation as well as religious, cultural and community activities.

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Our inability to participate in boat shows in our existing or targeted markets, including due to cancellations of boat shows, could have a material adverse effect on our business, financial condition and results of operations.

We compete primarily with local marine retailers who own three or fewer stores, as well as with a limited number of larger operators, including MarineMax and Bass Pro Shops.

We compete primarily with local marine retailers who own three or fewer stores, as well as with a limited number of larger operators.

Additionally, with respect to sales of marine parts, accessories, and equipment, we also compete with national specialty marine parts and accessory stores, online catalog retailers, sporting goods stores, and mass merchants.

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Unforeseen expenses, difficulties and delays frequently encountered in connection with expansion through acquisitions could inhibit our growth and negatively impact our profitability.

Our growth strategy of acquiring additional marine retailers involves significant risks.

Our growth strategy of acquiring additional marine businesses involves significant risks.

This strategy entails reviewing and potentially reorganizing acquired business operations, corporate infrastructure and systems, and financial controls.

We continue to integrate acquired marine retailers, including T-H Marine and Ocean Bio-Chem, and these activities may require management to devote significant attention and resources to integrating acquired businesses with our business.

We continue to integrate acquired marine businesses and these activities may require management to devote significant attention and resources to integrating acquired businesses with our business.

Unforeseen expenses (including potential environmental legacy liabilities due to spills or other releases of regulated substances on or under real properties or resulting from a failure to comply with laws and regulations), difficulties and delays frequently encountered in connection with rapid expansion through acquisitions could inhibit our growth and negatively impact our profitability.

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Even if we are able to integrate acquired business operations successfully, there can be no assurance that the integration will result in the realization of the full benefit of synergies, cost savings, margin growth, insulation from cyclicality or operation effectiveness that we may expect or that any such benefits may be achieved within an anticipated time frame.

Increased competition for acquisition candidates or increased asking prices by acquisition candidates may increase purchase prices for acquisitions to levels beyond our financial capability or to levels that would not result in expected returns required by our acquisition criteria to be in the best interest of stockholders or bondholders.

Acquisitions also may become more difficult or less attractive in the future as we acquire more of the most attractive marine retailers that best align with our culture and focus on customer service.

In addition, we may encounter difficulties in integrating the operations of acquired marine retailers with our own operations, in retaining employees, in retaining and maintaining relationships with customers, suppliers or other business contacts, and in managing acquired marine retailers profitably without substantial costs, delays or other operational or financial problems.

Acquisitions also may become more difficult or less attractive in the future as we acquire more of the most attractive marine businesses that best align with our culture and focus on customer service.

In addition, we may encounter difficulties in integrating the operations of acquired marine businesses with our own operations, in retaining employees, in retaining and maintaining relationships with customers, suppliers or other business contacts, and in managing acquired marine businesses profitably without substantial costs, delays or other operational or financial problems.

As part of our growth strategy, we generally retain existing key staff, including senior management, when we complete an acquisition.

There can be no assurance that we will be able to retain marine retailers’ key staff, including senior management, when we complete an acquisition in the future and failure to do so could adversely affect our businesses.

We may issue common or preferred stock, or membership interests in OneWater LLC, and incur substantial indebtedness in making future acquisitions.

There can be no assurance that we will be able to retain marine businesses’ key staff, including senior management, when we complete an acquisition in the future and failure to do so could adversely affect our businesses.

The size, timing, and integration of any future acquisitions may cause substantial fluctuations in operating results from quarter to quarter.

Consequently, operating results for any quarter may not be indicative of the results that may be achieved for any subsequent quarter or for a full fiscal year.

These fluctuations could adversely affect the market price of our common stock.

Our ability to continue to grow through the acquisition of additional marine retailers will depend upon various factors, including the following:

These fluctuations could adversely affect the market price of our Class A common stock.

Our ability to continue to grow through the acquisition of additional marine businesses will depend upon various factors, including the following:

• the availability of suitable acquisition candidates at attractive purchase prices;

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• the absence of one or more manufacturers attempting to impose unsatisfactory restrictions on us in connection with their approval of acquisitions.

As a part of our acquisition strategy, we frequently engage in discussions with various marine retail groups regarding their potential acquisition by us.

As a part of our acquisition strategy, we frequently engage in discussions with various marine businesses regarding their potential acquisition by us.

In connection with these discussions, we and each potential acquisition candidate exchange confidential operational and financial information, conduct due diligence inquiries and consider the structure, terms, and conditions of the potential acquisition.

In certain cases, the prospective acquisition candidate agrees not to discuss a potential acquisition with any other party for a specific period of time, grants us an option to purchase the prospective marine retailers for a designated price during a specific time period, and agrees to take other actions designed to enhance the possibility of the acquisition, such as preparing audited financial information and converting its accounting system to the system specified by us.

In certain cases, the prospective acquisition candidate agrees not to discuss a potential acquisition with any other party for a specific period of time, grants us an option to purchase the prospective marine businesses for a designated price during a specific time period, and agrees to take other actions designed to enhance the possibility of the acquisition, such as preparing audited financial information and converting its accounting system to the system specified by us.

Potential acquisition discussions frequently take place over a long period of time and involve difficult business integration and other issues, including in some cases management succession and related matters.

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If we finance future acquisitions in whole or in part through the issuance of common stock or securities convertible into or exercisable for common stock, existing stockholders will experience dilution in the voting power of their common stock and earnings per share could be negatively impacted.

The extent to which we will be able and willing to use our common stock or membership interests in OneWater LLC for acquisitions will depend on the market value of our common stock and the willingness of potential sellers to accept our common stock or membership interests in OneWater LLC as full or partial consideration.

Our inability to use our common stock or membership interests in OneWater LLC as consideration, to generate cash from operations or to obtain additional funding through debt or equity financings in order to pursue our acquisition program could materially limit our growth.

The extent to which we will be able and willing to use our Class A common stock or membership interests in OneWater LLC for acquisitions will depend on the market value of our Class A common stock and the willingness of potential sellers to accept our Class A common stock or membership interests in OneWater LLC as full or partial consideration.

Our inability to use our Class A common stock or membership interests in OneWater LLC as consideration, to generate cash from operations or to obtain additional funding through debt or equity financings in order to pursue our acquisition program could materially limit our growth.

Any borrowings made to finance future acquisitions or for operations could make us more vulnerable to a downturn in our operating results, a downturn in economic conditions, or increases in interest rates on borrowings that are subject to interest rate fluctuations.

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For additional information relating to our credit arrangements, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Debt Agreements” in this Form 10-K.

With our growth and diversification strategy into marine related parts, products and accessories, we now import, assemble and/or manufacturer marine parts, products and accessories, which could expose us to potential increased costs and certain additional risks.

Our acquisitions of Ocean Bio-Chem, T-H Marine and PartsVu expanded our business to include the import, assembly, manufacture and sale of marine parts and accessories.

We import, assemble and/or manufacturer marine parts, products and accessories, which could expose us to potential increased costs and certain additional risks.

Our business includes the import, assembly, manufacture and sale of marine parts and accessories.

We may invest considerable resources to develop, import, warehouse and distribute new and existing parts, products and accessories, and there is no assurance that they will be successful.

Consequently, we might curtail or abandon them at any time, which could result in asset impairments and inventory write-downs.

Factors that could cause us to curtail or abandon one of such products include unexpected or increased costs or delays in development or manufacturing, excessive demands on management resources, legal or regulatory constraints, changes in consumer demands, preferences and shopping patterns regarding boat parts and accessories, or a determination that consumer demand no longer supports the product.

Factors that could cause us to curtail or abandon one of such products include unexpected or increased costs or tariffs, delays in development or manufacturing, excessive demands on management resources, legal or regulatory constraints, changes in consumer demands, preferences and shopping patterns regarding boat parts and accessories, or a determination that consumer demand no longer supports the product.

Additional risks relating to such product offerings include product liability and product recalls for which we do not have third-party indemnification and contractual rights or remedies;

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The availability and costs of borrowed funds can adversely affect our ability to obtain adequate boat inventory, the ability and willingness of our customers to finance boat purchases and our ability to fund future acquisitions.

The availability and costs of borrowed funds can adversely affect our ability to obtain and maintain adequate boat inventory and the holding costs of that inventory, the ability and willingness of our customers to finance boat purchases and our ability to fund future acquisitions.

OneWater LLC and certain of its subsidiaries are parties to the Inventory Financing Facility, which consists of uncommitted inventory floorplan financing of up to $595.0 million as of November 13, 2024 .

Failure to extend or source alternative financing arrangements could adversely impact our business.

As of September 30, 2023 and 2022, we had an aggregate of $489.0 million and $267.1 million, respectively, outstanding under the Seventh Inventory Financing Facility, which consisted of uncommitted inventory floorplan financing of up to $550.0 million as of September 30, 2023.

As of September 30, 2024 and 2023, we had an aggregate of $443.4 million and $489.0 million, respectively, outstanding under the Inventory Financing Facility.

We rely on the Inventory Financing Facility to purchase and maintain our inventory of boats.

For additional information relating to the terms of our Inventory Financing Facility including the entrance into the Eighth Amended and Restated Inventory Financing Agreement on November 14, 2023, please see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Debt Agreements—Inventory Financing Facility.”

For additional information relating to the terms of our Inventory Financing Facility including the entrance into the Consent, Waiver and Second Amendment to Eighth Amended and Restated Inventory Financing Agreement on November 14, 2023, please see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Debt Agreements—Inventory Financing Facility.”

Effective August 9, 2022, we entered into the A&R Credit Facility (together with the Inventory Financing Facility, the “Credit Facilities”), which provides for, among other things, (i) a single tranche of Revolving Commitments in an amount equal to $65.0 million (the “Revolving Facility”) and (ii) a single tranche of Initial Term Loans in an aggregate principal amount equal to $445.0 million (the “Term Facility”).

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Any inability to utilize the Credit Facilities or the acceleration of amounts owed, resulting from a covenant violation, insufficient collateral or lender difficulties, could require us to seek other sources of funding to repay amounts outstanding under the Credit Facilities or replace or supplement the Credit Facilities, which may not be possible at all or under commercially reasonable terms.

As of September 30, 2023, we were in compliance with all of the covenants under our Credit Facilities and our additional available borrowings under the Credit Facilities were approximately $96.0 million in the aggregate based upon the outstanding borrowings and maximum facility amounts.

Additionally, the replacement of LIBOR could materially adversely affect our revenue or expenses and the value of our assets or obligations.

LIBOR ceased to be published on June 30, 2023 as a result of national, international, and other regulatory guidance and proposals for reform.

In May 2018, the Federal Reserve Bank of New York started to publish the Secured Overnight Finance Rate (“SOFR”) as an alternative to LIBOR.

SOFR is a broad measure of the cost of borrowing cash overnight collateralized by the U.S.

Department of the Treasury (the "U.S.

Treasury") securities, given the depth and robustness of the U.S.

Treasury repurchase market.

The Credit Facilities were previously amended such that the interest rate applied to the loans are no longer calculated using LIBOR but instead calculated using SOFR (as further described in the Credit Facilities).

SOFR will fluctuate with changing market conditions and, as SOFR increases, our interest expense will mechanically increase.

The market transition away from LIBOR to an alternative reference rate, including the conversion of our LIBOR-based loans to SOFR, is complex and could have a range of material adverse effects on our business, financial condition, and results of operations.

In particular, any such transition could:

• adversely affect the interest rates paid, and the expenses associated with, our obligations, loans and other financial instruments tied to LIBOR rates, due to the significant differences between LIBOR and SOFR;

• result in disputes, litigation, or other actions with counterparties regarding the interpretation and enforceability of certain fallback language contained in the Inventory Financing Facility;

• require the transition to or development of appropriate systems to effectively transition from LIBOR-based loans to those based on SOFR or another applicable alternative pricing benchmark.

As of September 30, 2024, we were not in compliance with all of the covenants under our Credit Facilities;

however, the covenant noncompliance was waived pursuant to Amendment No.

to the Amended and Restated Credit Agreement and Waiver and Amendment No.

1 to Pledge and Security Agreement ("Amendment No.

6") entered into on November 13, 2024 and the Consent, Waiver and Second Amendment to Eighth Amended and Restated Inventory Financing Agreement (the "November 2024 Inventory Financing Amendment") entered into on November 13, 2024.

For additional information relating to Amendment No.

6 and the November 2024 Inventory Financing Amendment, please see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Debt Agreements.” Our additional available borrowings under the Credit Facilities as of September 30, 2024, prior to the 2024 Inventory Financing Amendment which decreased the capacity on the Inventory Financing Facility by $55.0 million, were approximately $218.9 million in the aggregate based upon the outstanding borrowings and maximum facility amounts.

The interest rates on the Credit Facilities are calculated using SOFR and Term SOFR (as further described in the Credit Facilities).

SOFR and Term SOFR will fluctuate with changing market conditions and, as SOFR and Term SOFR increase, our interest expense will mechanically increase.

Although we have entered into floating to fixed interest rate swap agreements with respect to the Credit Facilities, there can be no assurance that such agreements will be effective at reducing our exposure to risks caused by fluctuations in interest rates, and such agreements subject us to the risk that the counterparty to one or more of these arrangements may default on its performance under the terms of the agreement.

Similarly, decreases in the availability of credit and increases in the cost of credit could adversely affect the ability of our customers to purchase boats from us and thereby adversely affect our ability to sell our products and impact the profitability of our finance & insurance activities.

For example, tight credit conditions during each fiscal year beginning with fiscal year 2008 and continuing through fiscal year 2011 adversely affected the ability of customers to finance boat purchases, which had a negative effect on our operating results.

Increases in fuel prices may adversely affect our business.

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Consequently, a significant increase in the price or tax on the sale of fuel on a regional or national basis could have a material adverse effect on our sales and operating results.

Increases in fuel prices (such as those that occurred during 2008) may negatively impact boat sales.

Increases in fuel prices may negatively impact boat sales.

The price of or tax on fuels may significantly increase in the future, adversely affecting our business.

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Historically, affordable boat insurance has been available.

However, as a severe storm approaches land, insurance providers cease underwriting until the storm passes.

However, as a severe storm approaches land,

insurance providers cease underwriting until the storm passes.

This loss of insurance prevents or delays lenders from lending.

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Such a result could materially and adversely affect our business, results of operations and financial condition.

The Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”) established a consumer financial protection bureau with broad regulatory powers.

Although boat dealers are generally excluded, the Dodd-Frank Act could lead to additional, indirect regulation of boat dealers through its regulation of other financial institutions which provide such financing to our customers.

If interest rates rise, or continue to rise, the fees we receive in connection with the financing may be limited or reduced as customers become more interest rate sensitive and the spreads that we are able to charge are compressed.

Although boat dealers are generally excluded from regulatory oversight under the Dodd-Frank Wall Street Reform and Consumer Protection Act, future changes in law could lead to additional, indirect regulation of boat dealers through its regulation of other financial institutions which provide such financing to our customers.

If interest rates rise, the fees we receive in connection with the financing may be limited or reduced as customers become more interest rate sensitive and the spreads that we are able to charge are compressed.

The reduction of profit margins on sales of finance & insurance products or the lack of demand for or the unavailability of these products could have a material adverse effect on our operating margins.

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• imposition of restrictions on currency conversion or the transfer of funds;

• imposition of tariffs;

• maintenance of quality standards;

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Our competitors may have e-commerce businesses that are substantially larger and more developed than ours, which could place us at a competitive disadvantage.

If we are unable to expand our online platforms, our growth plans could suffer, and the price of our common stock could decline.

If we are unable to expand our online platforms, our growth plans could suffer, and the price of our Class A common stock could decline.

We may be unable to adequately maintain, enforce, and protect our intellectual property rights and we may be accused of infringing the intellectual property rights of third parties, which could have a material adverse effect on our business, financial condition, and operations.

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These quarterly adjustments could have a material effect on our results of operations.

An impairment in the carrying value of long-lived assets, goodwill and identifiable intangible assets could negatively impact our financial results and net worth.

An impairment in the carrying value of long-lived assets, goodwill and identifiable intangible assets or restructuring charges could negatively impact our financial results and net worth.

Our long-lived assets, such as property and equipment, are required to be reviewed for impairment whenever events or changes in circumstance indicate that the carrying value of an asset may not be recoverable.

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Uncertainties are inherent in evaluating and applying these factors to the assessment of goodwill.

For the fiscal year ended September 30, 2023, we recorded a non-cash intangible asset impairment of $147.4 million.

See Note 8 to the consolidated financial statements for additional information.

While we do not believe there is currently a reasonable likelihood that there will be a change in the judgments and assumptions used in our assessments of goodwill and long-lived assets which would result in any further material effect on our operating results, we cannot predict whether events or circumstances will change in the future that could result in non-cash impairment charges that could adversely impact our financial results and net worth.

Our Dealership same-store sales may fluctuate and may not be a meaningful indicator of future performance.

Our Dealership same-store sales may vary from quarter to quarter.

A number of factors have historically affected, and will continue to affect, our Dealership same-store sales results, including:

• changes or anticipated changes to regulations related to some of the products we sell;

• consumer preferences, buying trends and overall economic trends;

• our ability to identify and respond effectively to local and regional trends and customer preferences;

• our ability to provide quality customer service that will increase our conversion of shoppers into paying customers;

• competition in the regional market of a dealership;

• atypical weather patterns;

• changes in our product availability and mix;

• changes in sales of services;

• changes in pricing and average unit sales.

An unanticipated decline in revenues or Dealership same-store sales may cause the price of our Class A common stock to fluctuate significantly.

While we do not believe there is currently a reasonable likelihood that there will be a change in the judgments and assumptions used in our assessments of goodwill and long-lived assets which would result in a material effect on our operating results, we cannot predict whether events or circumstances will change in the future that could result in non-cash impairment charges that could adversely impact our financial results and net worth.

During the year ended September 30, 2024, we evaluated our operations and underwent a restructuring plan (the "2024 Restructuring"), which resulted in the reduction of headcount and retail locations, cancellation of certain dealer agreements, and the cancellation of certain in-process information and technology related projects.

As a result of the 2024 Restructuring, we recognized $15.3 million of restructuring charges during the fiscal year ended September 30, 2024.

If we undergo additional restructuring plans in the future, we may take additional, potentially material, restructuring charges related to, among other things, employee termination or exit costs, which could have a material negative impact on our operating results and related financial statements.

In addition, workforce changes can also temporarily reduce workforce productivity.

We may not achieve or sustain the expected cost savings or other benefits of the 2024 Restructuring, or do so in a timely manner.

We primarily lease our locations.

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Climatic events in the areas where we operate have caused, and future climatic events may cause, disruptions and in some cases delays or suspensions in our operations that adversely impacted our business.

For example, the physical effects of unseasonably wet weather, extended periods of below freezing weather, tropical storms, hurricanes or other natural disasters occurring on land or in the Gulf of Mexico or Atlantic Ocean may force boating areas to close or render boating dangerous or inconvenient, which could result in curtailment of customer demand for our products and services.

Similarly, drought conditions arising from minimal or reduced rainfall events may have a similar effect in respect of the availability of boating areas or usable dock space, and result in reduced interest in boating activities.

One or more of these climatic events has in the past and may in the future result in physical damage to, or closure of, one or more of our facilities, inadequate work force in our markets, and disruption or reduction in the availability of products at our locations.

For example, the physical effects of unseasonably wet weather, drought conditions, extended periods of below freezing weather, tropical storms, hurricanes, flooding, or other natural disasters have forced and may in the future force boating areas to close or render boating dangerous.

This has resulted in and, in the future, could result in reduced customer demand for our products and services.

One or more of these climatic events has in the past and may in the future result in physical damage to, or closure of, one or more of our facilities, and disruption or reduction in the availability of products.

Concerns regarding global changes in climate could also adversely affect the levels of boat purchases.

In addition, unseasonably cool weather and prolonged winter conditions may lead to shorter selling seasons in certain locations.

Many of our dealerships sell boats to customers for use on reservoirs, which could be subject to reduced capacity as a result of drought, extreme temperatures, or other climatic changes, thereby subjecting our business to the continued viability of these reservoirs for boating use.

In addition, the physical effects of climatic events, including wintry conditions, increased frequency and severity of tropical storms or hurricanes, tornadoes, fires, floods and other natural disasters, as well as sea level rise, could result in the disruption of our operations and/or third party supply chain vendors on whom we rely upon for products and services, including boat deliveries from manufacturers, or damage to or the loss of our boat inventories and facilities as has been the case when the Southeast and Gulf Coast regions and other markets have been affected by hurricanes.

Such disruptions in our supply chain could damage our on-site inventory at our locations or cause serious limitations or delays in the operations of our locations.

We maintain hurricane and casualty insurance, subject to deductibles.

In addition, the physical effects of climatic events, including wintry conditions, increased frequency and severity of tropical storms or hurricanes, tornadoes, fires, floods and other natural disasters, as well as sea level rise, could result in the disruption of our operations and/or third party supply chain vendors on whom we rely upon for products and services, including boat deliveries from manufacturers, damage to or inadvertent releases from fueling stations, or damage to or the loss of our boat inventories and facilities as has been the case when the Southeast and Gulf Coast regions and other markets have been affected by hurricanes such as Hurricane Helene, and Hurricane Milton in 2024.

Such disruptions in our supply chain could damage our on-site inventory at our locations, result in remedial liability or administrative penalties, or cause serious limitations or delays in the operations of our locations.

We maintain hurricane and casualty insurance, subject to deductibles, but such coverage may become signifciantly more expensive or impossible to procure in the future.

Our planning for normal climatic variation, insurance programs and emergency recovery plans may inadequately mitigate the effects of such climatic conditions, and not all such effects can be predicted, eliminated, mitigated, or insured against.

Accordingly, while we traditionally maintain property and casualty insurance coverage for damage caused by climatic events such as severe weather or other natural disasters, there can be no assurance that such insurance coverage is adequate to cover losses that we may sustain as a result thereof.

A significant amount of our boat sales are from the Southeast and Gulf Coast regions.

Economic conditions, weather and environmental conditions, competition, market conditions and any other adverse conditions impacting the Southeast and Gulf Coast regions of the United States, in which we generated approximately 81%, 79% and 80% of our revenue during fiscal years 2023, 2022 and 2021, respectively, could have a major impact on our operations.

Environmental and other regulatory issues impact our operations from time to time.

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As with companies in the marine retail industry generally, and parts and service operations in particular, our business involves the use, handling, storage, transportation and contracting for recycling or disposal of waste materials, including hazardous or toxic substances and wastes as well as environmentally sensitive materials, such as motor oil, waste motor oil and filters, transmission fluid, antifreeze, freon, waste paint and lacquer thinner, batteries, solvents, lubricants, degreasing agents, gasoline, and diesel fuels.

Laws and regulations regarding the prevention of pollution or remediation of environmental contamination generally apply regardless of whether we lease or purchase the land and facilities.

Laws and regulations

regarding the prevention of pollution or remediation of environmental contamination generally apply regardless of whether we lease or purchase the land and facilities.

Additionally, certain of our locations and/or repair facilities utilize USTs and ASTs, primarily for storing and dispensing petroleum-based products.

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As a result, numerous proposals have been made and are likely to continue to be made at the international, national, regional and state levels of government to monitor and limit existing emissions of GHGs and eliminate future GHG emissions.

Governmental and public concern arising from GHG emissions has resulted in increasing regulatory, political, financial and litigation risks in the United States and globally that target predominantly fossil fuel-related energy entities or their operations, which may have indirect adverse effects on other companies or industries, such as the retail recreational boat industry, for example, whose services or products generate GHGs or rely upon motor fuels refined from fossil fuels, which effects could be material.

or industries, such as the retail recreational boat industry, for example, whose services or products generate GHGs or rely upon motor fuels refined from fossil fuels, which effects could be material.

In the United States, no comprehensive federal climate change legislation has been implemented.

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The emissions fee and renewable and low carbon energy funding provisions of the law could accelerate the transition away from fossil fuels or otherwise adversely impact the production of marine motor fuels, which could in turn have an indirect adverse effect on our business and results of operations.

Under the Biden Administration, it is anticipated that efforts by the EPA or other federal agencies to restrict GHG emissions will continue.

Additionally, various states and groups of states have adopted or are considering adopting legislation, regulations or other regulatory initiatives that are focused on such areas as GHG cap and trade programs, carbon taxes, reporting and tracking programs, and restriction of emissions.

At the international level, there exists the United Nations-sponsored “Paris Agreement,” which requires nations to submit non-binding GHG emissions reduction goals every five years after 2020.

President Biden announced in April 2021 a new, more rigorous nationally determined emissions reduction level of 50-52% reduction from 2005 levels in economy-wide net GHG emissions by 2030.

The international community gathered again in Glasgow in November 2021 at the 26th Conference to the Parties (“COP26”), during which multiple announcements were made, including a call for parties to eliminate certain fossil fuel subsidies and pursue further action on non-carbon dioxide GHGs.

In April 2021, the Biden Administration established a more rigorous nationally determined emissions reduction level of 50-52% reduction from 2005 levels in economy-wide net GHG emissions by 2030.

Additionally, various agreements and commitments have been made at the annual Conference of the Parties (“COP”) to eliminate certain fossil fuel subsidies, phase out fossil fuels in energy systems, and pursue further action on non-carbon dioxide GHGs, though none have been legally binding.

Relatedly, the United States and European Union jointly announced at COP26 the launch of the Global Methane Pledge, an initiative committing to a collective goal of reducing global methane emissions by at least 30 percent from 2020 levels by 2030.

As a result, there exists the possibility of executive orders being issued or federal legislation or regulatory initiatives being adopted that could result in further restrictions on fossil fuels and have a further indirect adverse effect on the demand for our and the retail recreational boat industry products.

However, the incoming United States presidential administration may make changes to the United States’ participation in such initiatives or seek other legislative or regulatory changes related to climate change, but we cannot predict what, when or how the new Administration may take actions to exit, rollback or otherwise revise existing climate change-related agreements, orders, laws, or regulations or the ultimate impact such changes may have on our business or results of operations.

Litigation risks, including lawsuits against fossil-fuel energy companies arising from the production and use of fossil fuels that contribute to global warming effects, such as rising sea levels, erosion and damage to existing physical infrastructure, and financial risks for such entities as stockholders and bondholders currently invested in fossil fuel energy companies concerned about the potential effects of climate change may elect in the future to shift some or all of their investments into non-fossil fuel energy related sectors further exacerbate the potential for these indirect adverse effects.

Moreover, the increased competitiveness of alternative “clean” energy sources such as wind and solar photovoltaic could also reduce demand for fossil fuels and therefore for our boating products, which would lead to a reduction in our revenues.

For example, at COP26, the Glasgow Financial Alliance for Net Zero (“GFANZ”) announced that commitments from over 450 firms across 45 countries had resulted in over $130 trillion in capital committed to net zero goals.

The various suballiances of GFANZ generally require participants to set short-term, sector-specific targets to transition their financing, investing, and/or underwriting activities to net zero by 2050.

Furthermore, at COP28, parties agreed to set global targets to triple the capacity of renewable energy like wind and solar power, and to double the rate of energy efficiency improvements, both by 2023, and also called on countries to accelerate low- and zero-emission technologies like carbon capture and storage.

These efforts could reallocate resources or potentially disincentive the production and sale of products like boat motors and other marine conveyances that rely upon fossil fuels, which could have a negative impact on our operations.

There is also the possibility that financial institutions will be required to adopt policies that limit funding for companies producing, developing or bolstering the use of fossil fuels.

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Increasingly, various jurisdictions are considering or implementing increased disclosure data for companies related to climate change and GHG emissions.

In March of 2022, the SEC released a proposed rule that would establish a framework for reporting of climate risks, targets, and metrics.

The final rule has not yet been released and we cannot predict what any such rule may require.

To the extent the final rule imposes additional reporting obligations, we could incur increased costs, particularly as it relates to the requirement to collect and disclose data on physical climate-related risks.

Further, in October 2023 California passed climate disclosure laws that, among other requirements, will require public and private companies that do business in California with total annual revenues exceeding certain thresholds to make disclosures including GHG emission data and climate-related financial risks.

In March of 2024, the SEC released a rule establishing a framework for reporting of climate risks, targets, and metrics.

However, the rule is currently paused pending litigation and we cannot predict the final outcome.

In addition, the incoming presidential administration is expected to repeal the SEC climate rule;

however, the timeline for any repeal is subject to a number of uncertainties and likely could face legal challenges that would further delay the implementation of any repeal.

Further, in October 2023 California passed climate disclosure laws that, among other requirements, will require public and private companies that do business in

California with total annual revenues exceeding certain thresholds to make disclosures including GHG emission data and climate-related financial risks.

The implementing regulations for the law have not yet been drafted and the requirements are currently set to begin taking effect in 2026, with additional requirements phasing in through 2030.

While we are still assessing the impact of these requirements, additional reporting obligations could cause us to incur increased costs.

Moreover, some other states in which we operate, such as Illinois and New York, are considering adopting climate disclosure laws.

While the laws have been subject to legal challenges and we are still assessing the impact of these requirements, additional reporting obligations could cause us to incur increased costs.

Increased focus on ESG matters could impact our operations and expose us to additional risks.

Increasing attention to, and societal expectations on companies to address, climate change and other environmental and social impacts, investor, regulatory and societal expectations regarding voluntary and mandatory ESG-related disclosures may result in increased costs, reduced profits, increased investigations and litigation, negative impacts on our stock price and reduced access to capital.

Furthermore, public statements with respect to ESG matters, such as emissions reduction goals or progress, other environmental targets or other commitments addressing certain social issues, are becoming increasingly subject to heightened scrutiny from public and governmental authorities related to the risk of potential “greenwashing,” i.e., misleading information or false claims overstating potential ESG benefits.

Certain regulators, such as the SEC and various state agencies, as well as nongovernmental organizations and other private actors have filed lawsuits under various securities and consumer protection laws alleging that certain ESG statements, goals or standards were misleading, false or otherwise deceptive.

As a result, we may face increased litigation risks from private parties and regulatory enforcement from governmental authorities related to our real or perceived ESG efforts or lack thereof.

Additionally, we could face increasing costs as we attempt to comply with and navigate further regulatory focus and scrutiny.

Furthermore, we could be criticized by various anti-ESG stakeholders for the scope of our climate or ESG related goals or policies, our strategic choices regarding ESG matters as they may impact our operations now or in the future, or for any revisions to the same, as well as initiatives we may pursue or any public statements we may make.

We could be subjected to negative responses by governmental actors (such as anti-ESG legislation or retaliatory legislative or administrative treatment) or consumers (such as boycotts or negative publicity campaigns), which could adversely affect our reputation, business, financial performance, market access and growth.

Risks Related to Our Class A Common Stock

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is a holding company.

OneWater Inc.’s only material asset is its equity interest in OneWater LLC directly or indirectly through its equity ownership in other wholly owned subsidiaries, and OneWater Inc.

OneWater Inc.’s only material asset is its equity interest in OneWater LLC directly or indirectly through its equity ownership in other subsidiaries, and OneWater Inc.

is accordingly dependent upon distributions from OneWater LLC to pay taxes, make payments under the Tax Receivable Agreement and cover OneWater Inc.’s corporate and other overhead expenses.

OneWater Inc.

is a holding company and has no material assets other than its equity interest in OneWater LLC which it holds directly and through other direct and/or indirect wholly owned subsidiaries.

is a holding company and has no material assets other than its equity interest in OneWater LLC which it holds directly and through other direct and/or indirect subsidiaries.

OneWater Inc.

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has no independent means of generating revenue, OneWater Inc.’s ability to make tax payments and payments under the Tax Receivable Agreement is dependent on the ability of OneWater LLC to make distributions to OneWater Inc.

and/or its direct and/or indirect wholly owned subsidiaries that are OneWater Unit Holders in an amount sufficient to cover OneWater Inc.’s tax obligations and obligations under the Tax Receivable Agreement.

This ability, in turn, may depend on the ability of OneWater LLC’s subsidiaries to make distributions to it and of OneWater Inc.'s direct and/or indirect wholly owned subsidiaries that are OneWater Unit Holders ability to make ultimate distributions to OneWater Marine Inc.

The ability of OneWater Inc.'s direct and/or indirect wholly owned subsidiaries that are OneWater Unit Holders and/or OneWater LLC, its subsidiaries and other entities in which it directly or indirectly holds an equity interest to make such distributions is subject to, among other things, (i) the applicable provisions of Delaware law (or other applicable jurisdiction) that may limit the amount of funds available for distribution and (ii) restrictions in relevant debt instruments issued by OneWater Inc.'s direct and/or indirect wholly owned subsidiaries that are OneWater Unit Holders or OneWater LLC or its subsidiaries and other entities in which it directly or indirectly holds an equity interest.

and/or its direct and/or indirect subsidiaries that are OneWater Unit Holders in an amount sufficient to cover OneWater Inc.’s tax obligations and obligations under the Tax Receivable Agreement.

This ability, in turn, may depend on the ability of OneWater LLC’s subsidiaries to make distributions to it and of OneWater Inc.'s direct and/or indirect subsidiaries that are OneWater Unit Holders ability to make ultimate distributions to OneWater Marine Inc.

The ability of OneWater Inc.'s direct and/or indirect subsidiaries that are OneWater Unit Holders and/or OneWater LLC, its subsidiaries and other entities in which it directly or indirectly holds an equity interest to make such distributions is subject to, among other things, (i) the applicable provisions of Delaware law (or other applicable jurisdiction) that may limit the amount of funds available for distribution and (ii) restrictions in relevant debt instruments issued by OneWater Inc.'s direct and/or indirect subsidiaries that are OneWater Unit Holders or OneWater LLC or its subsidiaries and other entities in which it directly or indirectly holds an equity interest.

To the extent that OneWater Inc.

is unable to make payments under the Tax Receivable Agreement for any reason, such payments will be deferred and will accrue interest until paid.

The requirements of being a public company, including compliance with the reporting requirements of the Exchange Act, and the requirements of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), may strain our resources, increase our costs and distract management, and we may be unable to comply with these requirements in a timely or cost-effective manner.

As a public company, we are required to comply with laws, regulations and requirements, certain corporate governance provisions of the Sarbanes-Oxley Act, related regulations of the SEC and the requirements of The Nasdaq Stock Market (“Nasdaq”), with which we were not required to comply as a private company.

Complying with these statutes, regulations and requirements occupies a significant amount of time of our Board of Directors and management and significantly increases our costs and expenses.

We are required to:

• maintain a comprehensive compliance function;

• comply with rules promulgated by Nasdaq;

• prepare and distribute periodic public reports in compliance with our obligations under the federal securities laws;

• accurately implement and interpret U.S.

generally accepted accounting principles (“GAAP”);

• comply with certain internal policies, such as those relating to insider trading;

• involve and retain to a greater degree outside counsel and accountants in the above activities.

As a public company, we are also required to comply with the SEC’s rules implementing Sections 302 and 404 of the Sarbanes-Oxley Act, which require management to certify financial and other information in our quarterly and annual reports and provide an annual management report on the effectiveness of internal controls over financial reporting.

We are required to have our auditors formally attest to the effectiveness of our internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act (“Section 404”).

Our compliance with Section 404 necessitates that we incur substantial accounting expense and expend significant management efforts.

In addition, we expect that being a public company subject to these rules and regulations may make it more difficult and more expensive for us to obtain director and officer liability insurance and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage.

As a result, it may be more difficult for us to attract and retain qualified individuals to serve on our Board of Directors or as executive officers.

If we experience any material weaknesses in the future or otherwise fail to develop or maintain an effective system of internal controls in the future, we may not be able to accurately report our financial condition or results of operations, which may adversely affect investor confidence in us and, as a result, the value of our Class A common stock.

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We cannot assure you that there will not be material weaknesses or significant deficiencies in our disclosure controls or our internal controls over financial reporting in the future.

An active, liquid and orderly trading market for our Class A common stock may not develop or be maintained, and our stock price may be volatile.

An active, liquid and orderly trading market for our Class A common stock may not be maintained, and our stock price may be volatile.

Although our Class A common stock is listed on Nasdaq, we do not know how liquid that market might be at any point in time.

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• the failure of research analysts to continue to cover our Class A common stock;

• sales of our Class A common stock by us or other stockholders, or the perception that such sales may occur;

• sales of our Class A common stock by us or our stockholders, or the perception that such sales may occur;

• changes in accounting principles, policies, guidance, interpretations or standards;

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The stock markets in general have experienced extreme volatility that has often been unrelated to the operating performance of particular companies.

For some companies this volatility was exacerbated by the continued wide ranging impacts of the COVID-19 pandemic.

These broad market fluctuations may adversely affect the trading price of our Class A common stock.

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Alternatively, if a court were to find these provisions of our certificate of incorporation or bylaws inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions, which could adversely affect our business, financial condition or results of operations.

While the Board of Directors declared a one-time special cash dividend of $1.80 per share on June 17, 2021, we do not intend to pay cash dividends on our Class A common stock, and our Credit Facilities place certain restrictions on our ability to do so.

We do not intend to pay cash dividends on our Class A common stock, and our Credit Facilities place certain restrictions on our ability to do so.

Consequently, your only opportunity to achieve a return on your investment is if the price of our Class A common stock appreciates.

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Subject to the satisfaction of vesting conditions, the expiration of lock-up agreements and the requirements of Rule 144, shares registered under each of the registration statements on Form S-8 may be made available for resale immediately in the public market without restriction.

On September 7, 2021, we filed a registration statement with the SEC on Form S-3 providing for the registration of (i) an indeterminate number of shares of Class A common stock to be offered, on a primary basis, at indeterminate prices with an aggregate initial offering price not to exceed $250,000,000 and (ii) 375,000 shares of Class A common stock that may be sold in one or more secondary offerings by the selling stockholders named therein.

On September 7, 2021, we filed a registration statement with the SEC on Form S-3 providing for, among other things, the registration of 375,000 shares of Class A common stock that may be sold in one or more secondary offerings by the selling stockholders named therein.

On September 6, 2024, we filed a registration statement with the SEC on Form S-3 providing for the registration of an indeterminate number of shares of Class A common stock to be offered, on a primary basis, at indeterminate prices with an aggregate offering price not to exceed $250,000,000.

On July 1, 2022, the first offering period began under the 2021 Employee Stock Purchase Plan (the “ESPP”).

The ESPP provides for a maximum issuance of 449,257 shares of Class A common stock, subject to certain adjustments set forth in the ESPP.

As of September 30, 2024, the ESPP provides for a maximum issuance of 453,870 shares of Class A common stock, subject to certain adjustments set forth in the ESPP.

We cannot predict the size of future issuances of our Class A common stock or securities convertible into Class A common stock or the effect, if any, that future issuances and sales of shares of our Class A common stock will have on the market price of our Class A common stock.

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If we were deemed to be an investment company under the Investment Company Act of 1940, as amended (the “1940 Act”), as a result of our ownership of OneWater LLC, applicable restrictions could make it impractical for us to continue our business as contemplated and could have a material adverse effect on our business, financial condition and results of operations.

Under Sections 3(a)(1)(A) and (C) of the 1940 Act, a company generally will be deemed to be an “investment company” for purposes of the 1940 Act if (i) it is, or holds itself out as being, engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting or trading in securities or (ii) it engages, or proposes to engage, in the business of investing, reinvesting, owning, holding or trading in securities and it owns or proposes to acquire investment securities having a value exceeding 40% of the value of its total assets (exclusive of U.S.

trading in securities and it owns or proposes to acquire investment securities having a value exceeding 40% of the value of its total assets (exclusive of U.S.

government securities and cash items) on an unconsolidated basis.

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Any unauthorized access to or material failure of our information technology systems, or systems used by our third-party suppliers or service providers, could result in negative consequences, including damage to our reputation or competitiveness, remediation or increased protection costs, or litigation or regulatory action, all of which could have a material and adverse effect on our business, financial condition, operations, or cash flows.

Additionally, in response to the COVID-19 pandemic, we instituted certain remote work policies, as did many of our service providers.

The continued prevalence of remote working has increased our vulnerability to risks related to our computer and communications hardware and software systems and exacerbated certain related risks, including risks of phishing and other cybersecurity attacks.

Certain of our employees work remotely.

Remote working has increased our vulnerability to risks related to our computer and communications hardware and software systems and exacerbated certain related risks, including risks of phishing and other cybersecurity

Controls employed by our information technology department and our customers and third-party service providers could prove inadequate.

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Any real or perceived failure by us or our third-party service providers to comply with any applicable federal, state or similar foreign law, rule, regulation, industry standard, policy, certification or order relating to data privacy and security, or any compromise of security that results in the theft, unauthorized access, acquisition, use, disclosure, or misappropriation of personal data or other customer data, could result in significant awards, fines, civil or criminal penalties or judgments, proceedings or litigation by governmental agencies or customers, including class action privacy litigation in certain jurisdictions and negative publicity and reputational harm, one or all of which could have an adverse effect on our reputation, business, financial condition and results of operations.

Our growing use of artificial intelligence systems in our operations poses inherent risks and could adversely affect our results of operations.

We have and are continuing to incorporate artificial intelligence, including machine learning, in certain of our operations with the intent to enhance efficiency and effectiveness.

For example, we have incorporated artificial intelligence and/or generative artificial intelligence to manage inventory and assist in creating boat listings.

Flaws, breaches or malfunctions in these systems could lead to operational disruptions, data loss, or erroneous decision-making, impacting our operations, financial condition and reputation.

Legal challenges may arise, including cybersecurity incidents, non-compliance with data protection regulations, and lack of transparency.

The legal and regulatory landscape and industry standards surrounding artificial intelligence technologies is rapidly evolving and remains uncertain, and compliance may impose significant operational costs and may limit our ability to develop, deploy or use artificial intelligence technologies.

Furthermore, the deployment of artificial intelligence systems could expose us to increased cybersecurity threats, such as data breaches and unauthorized access leading to financial losses, legal liabilities, and reputational damage.

We also face competitive risks if we fail to adopt artificial intelligence or other machine-learning technologies in a timely manner.

We may be named in litigation, which may result in substantial costs and reputational harm and divert management’s attention and resources.

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The COVID-19 pandemic's effects led to disruptions in our supply chain, including our ability to obtain boats and parts from our suppliers.

We experienced shortages of inventory in 2021 and 2022, and we believe such shortages resulted in a reduction in our revenues for fiscal year 2021 and 2022.

Though disruptions in our supply chain eased during 2023, such shortages could again adversely impact our revenues for future periods.

It is possible that such shortages could become more severe as a result of a global pandemic and its effects on, among other things, supply chains, operations and consumer demand.

It is not possible to estimate the entirety of the effect that COVID-19 or any other future global pandemic will have on our business, customers, suppliers or other business partners.

Unresolved Staff Comments.

A similar contagious disease outbreak could have a similar effect on our supply chain that could adversely affect our results of operations.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors