OneWater (ONEW) Q3 Revenue Up 1.9% | The Motley Fool

OneWater Marine (ONEW 2.67%), a leading U.S. marine retailer with a focus on premium boat brands, released its Q3 FY2025 results on July 31, 2025. The company posted GAAP revenue of $552.9 million for Q3 FY2025, exceeding analyst expectations of $532.0 million (GAAP) and reflecting a 1.9% increase from the prior-year quarter. However, Adjusted earnings per share (non-GAAP) reached only $0.79—well below the consensus estimate of $1.12 and down from $1.05 (adjusted, non-GAAP) in Q3 FY2024. The quarter highlighted sales resilience and market share gains relative to broader industry weakness, as OneWater outperformed the industry in Q2 FY2025 with same-store sales down 2% compared to an industry unit sales decline of over 10%, but also revealed margin pressures, lower profits, and ongoing business adjustments as OneWater continued its push to streamline inventory and brand offerings.

Source: Analyst estimates provided by FactSet. Management expectations based on management’s guidance, as provided in Q2 2025 earnings report.

Business Overview and Key Growth Drivers

OneWater Marine runs a large network of nearly 100 retail dealerships and multiple distribution centers across the U.S. The company’s main activities involve the sale of new and pre-owned boats, as well as offering marine parts, service, and insurance products. Its core business involves partnering with top boat manufacturers and serving a wide customer base with a focus on premium and high-demand brands. OneWater also sells related products such as marine parts and accessories and provides repair services at its dealerships.

The company’s growth strategy relies on expanding its store footprint through acquisitions and diversifying its sources of revenue. Key success factors for OneWater include its ability to manage inventory levels efficiently, maintain competitive pricing, and continually refresh its lineup to target the most profitable market segments. Its significant size gives it negotiating power with manufacturers and the ability to provide value-added services—factors that help it outperform smaller rivals.

Quarter in Review: Revenue Resilience, Margin Pressures, and Brand Streamlining

During the quarter, OneWater’s total revenue (GAAP) rose to $552.9 million for Q3 FY2025—beating expectations and outperforming broader market trends in Q2 FY2025, where industry unit sales fell by more than 10%. Same-store sales were up 2%. The strongest performance came from pre-owned boat sales, where GAAP revenue climbed 17.8% to $125.9 million on both higher unit volumes and average selling prices. The company reported that increased trade-ins and trade-ups supported this growth.—a positive indicator for the market’s health and OneWater’s position as a destination for upgraders.

In new boat sales, revenue slipped 2.1% to $326.1 million (GAAP) as lower unit volume was not fully offset by higher selling prices. The finance and insurance segment, which offers loans and insurance to boat buyers, held steady at $17.8 million, remaining flat as a proportion of total boat sales. Service, parts, and other sales fell 1.7% to $83.0 million (GAAP). The company noted that while dealership-level service and parts sales improved, the distribution segment faced headwinds due to reduced boat production from manufacturers. These shifts highlight OneWater’s efforts to balance cyclical retail sales with steady service, repair, and insurance revenues.

Profitability metrics highlighted the most notable challenges for the quarter. Gross profit margin (GAAP) dropped to 23.3%, down 1.1 percentage points versus the prior year. Overall gross profit (GAAP) fell 2.9%, while adjusted EBITDA declined 16.2%. The margin decline was linked to ongoing aggressive promotions—especially discounting of non-current and exiting brands—as well as changes in the mix of boats sold. Notably, as a greater mix of trade-in units carried lower margins. CEO commentary confirmed that as OneWater completes the sale of aged and low-performing brands, margins should see improvement in future quarters (as discussed on the Q2 FY2025 earnings call).

A significant achievement this period was inventory reduction. Inventory dropped 13.6% year-over-year to $517.1 million as of June 30, 2025. This disciplined management of inventory is part of a broader plan to “clean up” the product portfolio by exiting 15 low-performing brands and focusing on higher-quality, high-demand offerings. The company made it clear that only a small portion of boats in inventory remain from these exiting brands, suggesting that most promotional pricing and zero-margin sales should be completed soon.

Meanwhile, operating expenses rose. Selling, general, and administrative spending increased to $92.1 million, or 16.7% of total revenue. Management cited increased expenses to drive same-store sales results and inflationary costs related to administrative and fixed expenses. Leverage remains high, with adjusted net debt at 5.8 times trailing twelve-month adjusted EBITDA—a level that signals potential limitations on future financial flexibility if profits do not recover.

Through these changes, OneWater’s strategic efforts were clear: prioritize higher-margin, premium brands; manage inventory tightly; and increase efficiency through portfolio rationalization. No major acquisitions or structural changes were reported this period, but the company continues to rank as a top-three customer with 25 brands, bolstering its negotiation leverage with suppliers.

Looking Ahead: Guidance and Investor Watch Points

Management updated its guidance for FY2025. The new outlook calls for full-year revenue between $1.80 billion and $1.85 billion, reflecting an upward revision from prior targets. However, profitability expectations were trimmed: adjusted EBITDA is forecast at $65 million to $80 million and adjusted diluted EPS is now expected to fall between $0.50 and $0.75, down from a prior range of $0.75 to $1.25 for adjusted diluted EPS and up to $95 million for adjusted EBITDA. Guidance for same-store sales moved from “flat to down low single digits” to “up low single digits”. The lowered profitability guidance was framed as a response to ongoing price competition, margin pressures, and careful inventory clean-up.

For the remainder of fiscal 2025, leverage and liquidity levels are also important, as the company works to restore earnings and cash flow.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.