OneWater Marine (ONEW) risk factors, FY2024 10-K

Risks Related to General Economic Conditions

1. 01General economic conditions and consumer spending patterns can have a material adverse effect on our business, financial condition and results of operations
2. 02Inflation could adversely affect our financial results
3. 03Our sales may be adversely affected by a material increase in interest rates and adverse changes in fiscal policy or credit market conditions

Risks Related to Our Industry and Competition

1. 04Our success depends to a significant extent on our manufacturers, and the loss of certain manufacturers could have an adverse effect on our business, financial condition, and results of operations
2. 05Boat manufacturers exercise control over our business
3. 06Manufacturer recall campaigns could adversely affect our business
4. 07Our business, as well as the entire retail marine industry, is highly seasonal, with seasonality varying in different geographic markets
5. 08The failure to receive rebates and other manufacturer incentives on inventory purchases or retail sales could substantially reduce our margins
6. 09Other 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
7. 10We face intense competition

Risks Related to Our Acquisition and Growth Strategies

1. 11Failure to implement strategies to enhance our performance could have a material adverse effect on our business and financial condition
2. 12Our success depends, in part, on our ability to continue to make successful acquisitions at attractive or fair prices and to integrate the operations of acquired marine retailers and each marine retailer we acquire in the future
3. 13Unforeseen expenses, difficulties and delays frequently encountered in connection with expansion through acquisitions could inhibit our growth and negatively impact our profitability
4. 14We are required to obtain the consent of our manufacturers prior to the acquisition of other dealers
5. 15Our internal growth and operating strategies of opening new dealerships and offering new products involve risk
6. 16Our growth strategy may require us to secure significant additional capital, the amount of which will depend upon the size, timing and structure of future acquisitions and our working capital and general corporate needs
7. 17We import, assemble and/or manufacturer marine parts, products and accessories, which could expose us to potential increased costs and certain additional risks

Risks Related to Our Operations

1. 18The 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
2. 19Increases in fuel prices may adversely affect our business
3. 20The availability of boat insurance is critical to our success
4. 21Our failure to successfully order and manage our inventory to reflect consumer demand and to anticipate changing consumer preferences and buying trends, or the lack or excess of inventory in the industry, generally, could have a material adverse effect on our business, financial condition and results of operations
5. 22We depend on our ability to attract and retain customers
6. 23We depend on income from financing, insurance and extended service contracts
7. 24Our operations are dependent upon key personnel and team members
8. 25The products we sell or service may expose us to potential liability for personal injury, product liability or property damage claims relating to the use of those products
9. 26If we cannot dispose of pre-owned boats acquired through our trade-in or direct purchase processes at prices that allow us to recover its costs, our profitability will be adversely affected
10. 27Our sales of boats and other products produced by certain foreign manufacturers expose us to international political, economic, and other risks
11. 28We have established online marketplaces and a failure in such online operations, security breaches and cybersecurity risks could disrupt our business and lead to reduced sales and growth prospects and reputational damage
12. 29We 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
13. 30Changes in the assumptions used to calculate our acquisition related contingent consideration liabilities could have a material adverse impact on our financial results
14. 31An 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
15. 32We primarily lease our locations. If we are unable to maintain those leases or locate alternative sites for our locations in our target markets and on terms that are acceptable to us, our revenues and profitability could be adversely affected
16. 33Because we use various materials and substances in manufacturing our chemical products, our production facilities are subject to operating hazards that could cause personal injury and loss of life, severe damage to, or destruction of, property and equipment

Risks Related to Environmental and Geographic Factors

1. 34Climatic events may adversely impact our operations, disrupt the business of our third party vendors on whom we rely upon for products and services, and may not be adequately covered by our insurance
2. 35Environmental and other regulatory issues impact our operations from time to time
3. 36Our operations are subject to risks arising out of the threat of climate change, which could result in increased operating costs and reduced demand for the products that we and the retail recreational boat industry provide
4. 37or 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
5. 38Increased focus on ESG matters could impact our operations and expose us to additional risks

Risks Related to Our Class A Common Stock

1. 39An active, liquid and orderly trading market for our Class A common stock may not be maintained, and our stock price may be volatile
2. 40Our Legacy Owners own a significant amount of our voting stock, and their interests may conflict with those of our other stockholders
3. 41Certain of our executive officers and directors have significant duties with, and spend significant time serving, entities that may compete with us in seeking business opportunities and, accordingly, may have conflicts of interest in allocating time or pursuing business opportunities
4. 42Our certificate of incorporation and bylaws, as well as Delaware law, contain provisions that could discourage acquisition bids or merger proposals, which may adversely affect the market price of our Class A common stock and could deprive our investors of the opportunity to receive a premium for their shares
5. 43We 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
6. 44Future sales or issuances of our Class A common stock in the public market, or the perception that such sales or issuances may occur, could reduce our stock price, and any additional capital raised by us through the sale or issuance of equity or convertible securities may dilute your ownership in us
7. 45On July 1, 2022, the first offering period began under the 2021 Employee Stock Purchase Plan (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
8. 46OneWater Inc. is required to make payments under the Tax Receivable Agreement for certain tax benefits that it may claim, and the amounts of such payments could be significant
9. 47In certain cases, payments under the Tax Receivable Agreement may be accelerated and/or significantly exceed the actual benefits, if any, OneWater Inc. realizes in respect of the tax attributes subject to the Tax Receivable Agreement
10. 48In the event that OneWater Inc.’s payment obligations under the Tax Receivable Agreement are accelerated upon certain mergers, other forms of business combinations or other changes of control, the consideration payable to holders of OneWater Inc.’s Class A common stock could be substantially reduced
11. 49OneWater Inc. will not be reimbursed for any payments made under the Tax Receivable Agreement in the event that any tax benefits are subsequently disallowed
12. 50Changes to applicable tax laws and regulations or exposure to additional income tax liabilities could affect our business and future profitability
13. 51We may issue preferred stock whose terms could adversely affect the voting power or value of our Class A common stock
14. 52If securities or industry analysts cease publishing research or reports about our business, if they adversely change their recommendations regarding our Class A common stock or if our operating results do not meet their expectations, our stock price could decline
15. 53Our business operations could be negatively impacted by an outage or breach of our informational technology systems or a cybersecurity event
16. 54attacks. Controls employed by our information technology department and our customers and third-party service providers could prove inadequate
17. 55Our growing use of artificial intelligence systems in our operations poses inherent risks and could adversely affect our results of operations
18. 56We may be named in litigation, which may result in substantial costs and reputational harm and divert management’s attention and resources
19. 57Changes in accounting standards could significantly affect our results of operations and the presentation of those results
20. 58Adverse federal or state tax policies or changes in law could have a negative effect on us
21. 59Our business could be materially adversely impacted by the widespread outbreak of a contagious disease