OneWater Marine Inc. (NASDAQ:ONEW) This fall 2023 Earnings Convention Name November 16, 2023 8:30 AM ET
Firm Individuals
Jack Ezzell – Chief Monetary Officer
Austin Singleton – Chief Government Officer
Anthony Aisquith – President and Chief Working Officer
Convention Name Individuals
Michael Swartz – Truist Securities
Craig Kennison – R.W. Baird
Griffin Bryan – D.A. Davidson
Noah Zatzkin – KeyBanc Capital Markets
Operator
Good day, and thanks for standing by. Welcome to OneWater Marine’s Fiscal Fourth Quarter 2023 Monetary Outcomes Convention name. Right now, all members are in a listen-only mode. After the audio system’ presentation, there might be a question-and-answer session. [Operator Instructions] Please be suggested that at the moment’s convention is being recorded.
I might now like at hand the convention over to your speaker at the moment, Mr. Jack Ezzell, Chief Monetary Officer. Please go forward, sir.
Jack Ezzell
Good morning, and welcome to OneWater Marine’s Fiscal Fourth Quarter and Full 12 months 2023 Earnings Convention Name.
I’m joined on the decision at the moment by Austin Singleton, Chief Government Officer; and Anthony Aisquith, President and Chief Working Officer.
Earlier than we start, I would prefer to remind you that sure statements made by administration on this morning’s convention name relating to OneWater Marine and its operations could also be thought of forward-looking statements beneath securities regulation and contain a variety of dangers and uncertainties. Consequently, the corporate cautions you that there are a selection of things, lots of that are past the corporate’s management, which might trigger precise outcomes and occasions to vary materially from these described within the forward-looking statements.
Elements which may have an effect on the long run outcomes are mentioned within the firm’s earnings launch, which will be discovered within the Investor Relations part on the corporate’s web site and in its SEC filings. The corporate disclaims any obligation or enterprise to replace forward-looking statements to replicate circumstances or occasions that happen after the date the forward-looking statements are made, besides as required by regulation.
And with that, I would like to show the decision over to Austin Singleton, who will start with a number of opening remarks. Austin?
Austin Singleton
Thanks, Jack, and thanks, everybody, for becoming a member of at the moment’s name.
I want to start by thanking the OneWater staff for his or her strong execution within the difficult working surroundings. Regardless of the return to historic shopping for patterns and normalized pricing, we delivered document income in 2023, which elevated 11% on high of the 42% progress in 2022.
Moreover, the staff delivered same-store gross sales progress of three% for the total 12 months. For the quarter, same-store gross sales of 14.6% considerably outperformed the {industry}, which market knowledge indicated was down high-single digits.
Full 12 months income from our higher-margin service, components and different gross sales grew 26%, which helped us offset the anticipated decline in new boat margins because the {industry} returned to normalized pricing.
Margins within the fourth quarter have been in-line with the third quarter, which is encouraging. General, we consider that margins will proceed to fluctuate the seasonality in mannequin combine, however it does appear to really feel like boat margins have been stabilizing.
OneWater’s confirmed observe document of managing by numerous financial cycles served us effectively throughout 2023. Over the previous 12 months, our proactive and aggressive method to stock administration resulted in stock ranges at 19 weeks available in comparison with an {industry} common of 25 weeks available. We proceed to aggressively work down non-current stock, saving on curiosity expense and different carrying prices. This positioned us with a very good provide of mannequin 12 months 2024 boats in comparison with 2023, which supplies a extra compelling gross sales alternative. This aggressive positioning in a market flooded with non-current stock is driving outcomes at the moment and set us up for achievement within the quarters to return.
I am happy to announce that earlier this week, regardless of the troublesome banking surroundings, we have been in a position to improve our flooring plan facility by $100 million to a complete capability of $650 million. It will help the enterprise and up to date accomplished acquisitions.
It is vital to notice that whereas same-store gross sales stock hasn’t grown by way of items in comparison with 2019, it has elevated greater than 40% on a greenback foundation. This extra capability supplies us larger flexibility, particularly as we combine the sellers we now have acquired over the previous few years.
We additionally accomplished a sale leaseback settlement for Roscioli Yachting Heart, which bolstered our money, permits us to sharpen our deal with Sunseeker Yacht gross sales, guarantee and repair operations. The proceeds from the sale have been used to pay down a portion of our long-term debt and to accumulate the remaining 20% curiosity in High quality Boats positioned on the West Coast of Florida. As a reminder, we first acquired a significant curiosity again in December of 2021 and have been happy with High quality’s efficiency in one of the engaging boating markets within the nation.
On the M&A entrance, deal pipeline continues to be engaging, and our sturdy steadiness sheet supplies dry powder for the fitting deal. Whereas we’re seeing loads of exercise, we’re being extraordinarily selective and scrutinize each alternative to search out the fitting dealership so as to add to our portfolio.
In abstract, I am pleased with our staff’s execution whereas navigating {industry} challenges as we return to a extra normalized working surroundings. We proceed to work tirelessly to offer our prospects with the boat [Technical Difficulty]. We stay nimble in our response to altering market dynamics and proceed to focus our efforts on strategic priorities that place OneWater for long-term success.
With that, I will flip it over to Anthony to debate enterprise operations.
Anthony Aisquith
Thanks, Austin.
Regardless of the normalizing the gross sales surroundings, our staff stays lively in delivering a strong near the summer season promoting season. Buyer sentiment is holding up and the fourth quarter same-store gross sales was over 14% was supported by power from new and pre-owned boat gross sales. Our manufacturing companions proceed to be very modern on constructing thrilling new fashions within the premium phase with distinctive options that prospects need. We noticed this pleasure firsthand at current boat exhibits, together with the Fort Lauderdale Worldwide Boat Present, which [indiscernible] exercise. Whereas we’re too early within the boat present season to attract on a conclusion, we’re off to a very good begin.
Turning to our higher-margin companies, finance and insurance coverage revenue for the fourth quarter was additionally up barely, although not proportionately to boat gross sales as a result of present unfold on the rate of interest. The typical buyer appears to be getting used to greater rates of interest and credit score continues to stay broadly out there and broadly used. We consider the vast majority of the shoppers use a point of financing to pay for a portion of their buy. Up to now, roughly 70% of recent boat prospects within the September quarter financed a portion of their purchases straight with us, which is on the excessive aspect of historic averages. From the place we sit at the moment, our prospects are usually adjusting the upper value of financing their boats are usually considerably insulated from rates of interest and financial headwinds. General, we consider our retail technique has positioned us to proceed to outperform the {industry}.
With that, I will flip the decision over to Jack to go over the financials in additional element.
Jack Ezzell
Thanks, Anthony.
Fiscal fourth quarter income elevated 13% to $451 million in 2023 from $398 million within the prior 12 months quarter. New boat gross sales grew 12% to $264 million within the fiscal fourth quarter, whereas pre-owned boat gross sales elevated 36% to $92 million. We’re happy with the tempo of boat gross sales which have outperformed {industry} stories regardless of the difficult macroeconomic surroundings.
Income from service, components and different gross sales for the quarter elevated 1% to $82 million in comparison with the prior 12 months and finance and insurance coverage income grew 2% to $13 million within the fourth quarter. These gross sales positive aspects generated over 14% same-store gross sales progress for the quarter, which considerably outpaced the {industry}.
Gross revenue decreased 6% to $119 million within the fourth quarter in comparison with $126 million within the prior 12 months, pushed by the normalization of gross margins on boats bought. Gross revenue margin seems to be stabilizing when in comparison with the June quarter, however has declined from the fourth quarter of final 12 months. We now count on margins to fluctuate with historic seasonal patterns and mannequin combine. Within the pre-COVID period, we sometimes benefited from stronger margins in the course of the summer season promoting months with a combination shift to greater unit volumes and decrease ASP versus the slower winter months, the place the combo shifts to greater ASP with decrease margins.
Fourth quarter 2023 promoting, normal and administrative bills elevated to $85 million from $80 million. SG&A as a share of gross sales was 18.8%, down 120 foundation factors from the prior 12 months, pushed by the variable value construction of the enterprise, value optimization and integration efforts of the acquired components and repair companies.
Within the fourth quarter, the corporate reported a non-cash impairment cost of $147 million. The cost is primarily associated to the write-down of goodwill and identifiable tangible belongings that have been reported in our Distribution phase and was largely pushed by the current decline within the phase outcomes, the inventory value and the general valuation. We consider there’s large worth in our Distribution phase, which we might be realized as a part of our long-term progress technique. Consequently, we posted an working lack of $117 million in comparison with revenue of $40 million within the prior 12 months.
Internet loss for the fiscal fourth quarter totaled $111 million or $6.89 per share in comparison with web revenue of $22 million or $1.28 per diluted share within the prior 12 months.
Excluding the impairment cost and different changes, we reported adjusted EBITDA of $28 million in comparison with $45 million within the prior 12 months.
We now have additionally launched a brand new metric, adjusted earnings per share to help with the comparability of the outcomes. Accordingly, for fiscal fourth quarter of 2023, our adjusted earnings per diluted share was $0.42 in comparison with $1.68 in 2022.
Turning to our full 12 months outcomes. Whole income for the 12 months 2023 elevated 11% to $1.9 billion in comparison with the prior 12 months, pushed by a rise within the common unit value of each new and pre-owned boats, a rise within the unit gross sales of pre-owned boats and gross sales progress from higher-margin companies. Similar-store gross sales elevated 3% in fiscal 2023. Moreover, service, components and different income elevated 26% to $322 million for the fiscal 2023, pushed by contributions from our just lately acquired companies and supplier operations.
Full 12 months 2023 gross revenue decreased 3% to $535 million in comparison with the prior 12 months because of industry-wide normalization of boat pricing, partially offset by significant contributions of acquired components and repair enterprise. Gross revenue margin for fiscal 2023 was 27.6%, a decline of 410 foundation factors in comparison with fiscal 2022.
Promoting, normal and administrative bills in fiscal 2023 elevated to $346 million, or 17.8% of income from $302 million, or 17.3% of income in fiscal ’22. The rise in SG&A as a share of income was pushed by the return of extra conventional promotional surroundings and better prices related to our acquired service, components and different companies. We are going to proceed to reasonable value with our variable expense construction and produce the upper expense constructions of the acquired companies in-line with the legacy enterprise.
Full 12 months 2023 working revenue fell $18 million in comparison with the prior 12 months’s working revenue of $218 million, primarily pushed by the $147 million impairment cost reported in fiscal 12 months 2023.
Internet loss for fiscal 12 months 2023 was $39 million or $2.69 per share in comparison with web revenue of $153 million or $9.13 per share within the prior 12 months. The enterprise generated adjusted EBITDA of $167 million for the fiscal 12 months 2023, and adjusted earnings per diluted share of $5.10 in comparison with $10.55 per diluted share in 2022.
Turning now to the steadiness sheet. On September 30, 2023, the entire liquidity continues to be in extra of $100 million, together with $85 million of money and availability beneath our credit score services. As Austin talked about earlier, we entered right into a sale leaseback transaction disclosed on September 30 that didn’t fund in October 2nd. As such, $45 million proceeds mirrored as a receivable on our books on the shut of the 12 months. Whereas the sale has a barely detrimental affect on adjusted EBITDA, total, it will increase money circulation on an annual foundation.
Subsequent to year-end, we used $25 million of proceeds to pay down long-term debt and the steadiness to buy the non-controlling curiosity of High quality Boats. Whole stock on September 30 was $610 million in comparison with $373 million at September 30, ’22. On account of improved lead instances and {industry} normalization, our boat stock has returned to pre-COVID ranges, and each items are up lower than 1% in comparison with fiscal 2019 on a same-store foundation.
Lengthy-term debt presently stands at $458 million, a web debt to adjusted EBITDA ratio is 2.2x. We’re comfy with our liquidity and leverage place, and we’ll proceed to watch the macro surroundings as we handle our steadiness sheet.
Waiting for 2024, we count on demand and margins to proceed to reasonable to extra conventional seasonal cycle and usually are not assuming a significant financial downturn or a restoration as a part of our outlook. We anticipate same-store gross sales to be up low to mid-single digits. We count on adjusted EBITDA to be within the vary of $130 million to $155 million, and earnings per diluted share to be within the vary of $3.25 to $3.75.
We want to word that starting in fiscal 12 months 2024, our adjusted EBITDA calculation will exclude stock-based compensation and can stay a part of our definition for each steerage and outcomes on a go-forward foundation. We really feel this system is extra in-line with {industry} requirements and supplies higher perception into the corporate’s true efficiency. Our fiscal fourth quarter and full 12 months 2023 outcomes offered beneath the historic definition, however I want to direct our traders to the reconciliation tables on this morning’s press launch for additional clarification of those elements.
Lastly, our capital allocation priorities stay unchanged. We are going to proceed to watch the macroeconomic surroundings as we conservatively consider alternatives to deploy money. We may even proceed to discover alternatives like gross sales leaseback transactions, which improved the steadiness sheet and annual money flows. We stay disciplined in our method and unwavering our dedication to drive long-term worth for shareholders.
This concludes our ready remarks. Operator, will you please open the road for questions?
Query-and-Reply Session
Operator
Thanks. [Operator Instructions] Our first query comes from the road of Michael Swartz with Truist Securities. Your line is now open.
Michael Swartz
Hey, guys, good morning. There was plenty of static on the road in the course of the pre-recorded feedback, so I apologize. I missed a number of issues. However by way of the — I suppose, the transaction, the sale leaseback, mixed with the acquisition of the non-controlling curiosity in high quality, did you quantify or might you quantify what, I suppose, that truly means to the P&L or to steerage for 2024?
Jack Ezzell
Yeah. Once you take a look at it, proper, so while you take a look at our two divestitures we had in late September, that was a few $3 million hit to EBITDA. There isn’t any — the acquisition of the remaining portion of High quality would not affect EBITDA, however it definitely will — it impacts money circulation, proper, as a result of we have been having to pay out earnings of that enterprise by distribution. So, it nets out the entire — these two transactions find yourself netting out a constructive a few $3 million to $5 million money circulation while you take a look at the diminished curiosity value and the diminished distributions regardless that we now have these misplaced earnings.
Michael Swartz
Okay. That is superior. Thanks, Jack. After which simply possibly because it pertains to your broader commentary on fiscal ’24 steerage, I imply, I feel you stated you count on a normalization of, I suppose, seasonality in margins. Ought to we be occupied with — on the brand new boat aspect, ought to we be occupied with new boat margins sort of getting again to that prime teenagers, whether or not that is 18%, 19% degree going ahead?
Jack Ezzell
Yeah. I feel in case you take a look at the final two quarters, that is sort of the place we have been. We have been proper round 20%. So, I feel in that high-teens is sort of the place it appears. It feels prefer it’s normalizing. Definitely, as we go ahead, what which means is the June and September quarters, we had that reset on new boat margins. So, now as we glance into Q1 and Q2 of subsequent 12 months, proper, we’re up in opposition to a lot greater comps by way of that new boat margin. And so, I feel that can — definitely, as you consider modeling and as you lay out the quarters, you bought to recollect these, we nonetheless want these first half of the 12 months sort of to reset on the margin standpoint.
And so which means Q1 — if we return a few years, I do know you have been round some time, Mike, we are able to keep in mind instances when the Q1 was a breakeven-type quarter. I feel we’ll be constructive from an EBITDA perspective. However definitely, as you take a look at web revenue, earnings per share, we will in all probability getting again to that sort of surroundings. However that is simply sort of the conventional seasonality of the enterprise, the place within the December quarter, issues gradual after which they choose up with the winter boat exhibits into the spring and summer season.
Michael Swartz
Okay. Nice. After which simply remaining one for me is, I suppose, simply with the brand new retailer or new comp — or comp retailer gross sales, sorry, outlook for the 12 months forward, possibly give us a way of what the items are there by way of your {industry} quantity outlook versus value versus possibly market share?
Jack Ezzell
For certain. I imply, look, I feel we’re at all times trying to exceed the {industry} and achieve market share as we take into consideration the {industry} and I do not suppose anyone is anticipating unit quantity be up dramatically. I feel we’re in all probability extra round a flat unit quantity, a bit little bit of value improve. It isn’t — I feel that is in all probability the easiest way to characterize it.
Michael Swartz
Okay, thanks.
Jack Ezzell
Thanks, Mike.
Operator
Thanks. [Operator Instructions] Our subsequent query comes from the road of Craig Kennison with R.W. Baird. Your line is now open.
Craig Kennison
Hey, good morning. Thanks for taking my questions as effectively. It looks as if the massive story in the previous few months has been the rise in rates of interest till just lately. And I am simply questioning in case you see in your shopper profile, a profile that is considerably proof against these rate of interest will increase after which a shopper profile that actually is reacting to that affect on the month-to-month cost. Simply questioning in case you see in your knowledge the place that line of demarcation is perhaps.
Austin Singleton
Yeah. I do not — Craig, I do not suppose we actually deal — the merchandise that we feature, I feel, are a bit bit extra — that purchaser is a bit more insulated to the purpose. I imply, Anthony has a very good quantity. He is sort of been taking part in round with this. I will let him leap in. However I feel we’re a bit bit extra insulated and it isn’t affecting our purchaser as a lot now.
One factor I do wish to level out is, I imply we spend plenty of effort and time in coaching and ensuring the method that we have had in place for years is one of the best within the {industry} that offers us and retains us in that mid-60% penetration price on financing, the place I feel the {industry} is far, a lot decrease than that. And if we did not work and have a course of that we, I imply enforced with the iron fist, I do not suppose we might be that prime. And at the same time as excessive as we’re, we nonetheless really feel the vast majority of the shoppers are financing, they’re simply getting their cash from some other place.
So Anthony, you wish to leap in on that stuff that you simply sort of taking part in round with it?
Anthony Aisquith
Yeah. I imply in case you take a look at it at $100,000 mark is principally while you take all of the noise of the massive boats out, from three years in the past to at the moment, it is about $183 a month distinction within the cost. And actually, we’re not seeing individuals again away from $183 extra a month than they did two or three years in the past. In order that’s actually what the maths comes all the way down to while you take 3 share factors over 240 months, it is $183 extra a month that the customers having to pay. So, we’re not seeing anyone falter or again away from that in any respect.
Craig Kennison
And I feel I heard throughout your ready remarks, Anthony, one thing with respect to the F&I penetration price. And I suppose I am curious how does the F&I penetration price change over time? I do know it is an excellent quantity for you. I feel you stated over 60%. However I am curious if customers who’ve the choice to take it or not simply primarily based on their very own private state of affairs relatively than the necessity to finance a ship, in case you see your penetration sort of slip a bit bit.
Anthony Aisquith
No. Really, within the quarter, our new boat penetration was at 70%. We truthfully consider that about 90% of all prospects finance, simply possibly not all by us, they’re borrowing in opposition to their very own cash, they’re borrowing in opposition to their HELOC on their house or what have you ever. They are not truly totally paying money for the boat. So, we simply attempt to — over time, we have — our goal has at all times been 65%-plus. And our new boat finance penetration price for the fourth quarter was truly 70%. It is only a course of is in place in our — the way in which we promote.
Austin Singleton
I feel, actual fast, Craig, one factor like after we discuss this course of, it is fairly straightforward in case you practice and you bought not solely the enterprise supervisor, however the gross sales guys, in the event that they speak and begin setting this up from the start, it isn’t onerous to inform any person, “Hey, this can be a easy curiosity mortgage, no prepayment penalty. In case you’re shopping for a $200,000 boat, certain, you have bought $200,000 sitting over right here some other place. So, you’ll be able to at all times pay that boat quantity. You may at all times pay it off tomorrow, however do not you suppose that, that $200,000 may very well be used some other place at a greater use.”
So, simply crafting the way in which that we script and we speak to individuals and stuff like that, it is sort of like, “Sure, I pays my boat off any time. It is extra of a luxurious. Properly, why do not I take the cash and put it out there? Or why do not I do that with it? Or why do not I hold it simply as a recent liquidity?” So, you sort of construct that story by the entire course of, and that is sort of one of many issues that we have accomplished during the last seven years that is actually allowed us to extend that price. And I feel that is why our penetration is greater. It is simply — once more, it goes again to the method ranging from the minute you meet the client. And it is simply the little issues that you simply add in on as you are going by the gross sales course of to get to closing that boat.
Craig Kennison
Nice. Thanks.
Operator
Thanks. [Operator Instructions] Our subsequent query comes from the road of Joe Altobello with Raymond James. Your line is now open.
Unidentified Analyst
Good morning. That is Martin on for Joe. Simply questioning if we are able to get a bit extra colour across the EBITDA steerage for subsequent 12 months. And I consider you are actually together with stock-based comps. So simply questioning if we are able to get a quantity or some sort of path round that as effectively.
Jack Ezzell
Yeah, no drawback. Simply on the stock-based comp, it is a few $9 million quantity for subsequent 12 months. Once you take a look at the information, proper, and also you take a look at the place we printed this 12 months, you suppose by the primary half of the 12 months and normalizing margins. So I feel in case you undergo a course of in calculating sort of what’s that margin differential while you again out that $3 million that I discussed earlier than for Roscioli and the Lookout divestiture, it will get again to — it will get you to about that $155 million quantity.
So, whereas we’re cautiously optimistic about subsequent 12 months, I feel there are a good quantity of headwinds. We just lately bought some good inflationary-type information or some moderation of inflation information right here within the final day or two. Nevertheless it looks as if that data is persons are actually enthusiastic about it sooner or later after which one thing else comes out two days later, and we’re again in a special camp. So, we will management what we are able to management. We’ll promote as many boats as we are able to and keep hyper-focused on that, keep hyper-focused on ensuring we now have the fitting stock on the proper areas that it is prepared and out there on the market.
Unidentified Analyst
Acquired it. It is very useful. Simply one other query, steerage, does that assume the present traits in the case of retail all through the fiscal 12 months? Otherwise you suppose it’s going to begin bettering into summer season?
Jack Ezzell
Yeah. I feel there’s plenty of unknowns at this level with the 12 months as we glance in the direction of current boat exhibits and most just lately with Fort Lauderdale, we’re definitely inspired, however I feel it is just a bit too early within the 12 months to inform. I feel as we get by the winter boat exhibits, usually sort of that boat present season from November, Lauderdale to Miami sort timeframe sometimes provides you a very good sentiment for what the remainder of the 12 months goes to appear to be and what the season goes to appear to be. And so, we’re cautiously optimistic. The low to mid-single-digit information is, like I stated this earlier, I used to be assuming principally a flat unit sort surroundings. So, we’re being cautious. However there’s — like I stated, there’s simply plenty of unknowns with the macro that may very well be headwinds in opposition to us.
Unidentified Analyst
Acquired it. Thanks very a lot.
Operator
Thanks. [Operator Instructions] Our subsequent query comes from the road of Griffin Bryan with D.A. Davidson. Your line is now open.
Griffin Bryan
Yeah, thanks. That is Griffin on for Brandon. Are you able to discuss any current class traits you have seen during the last 45 to 60 days, something to name on the market as we head into the present season?
Austin Singleton
Properly, I imply, I do not suppose something during the last 45 to 60 days has modified, there’s been any vital change. I imply, clearly, we have had a very good — popping out of the nice Fort Lauderdale Boat Present, that is an even bigger boat combine. So, that is — it isn’t a good analysis of the final 45 to 60 days. I feel that it is actually been the buyer — if there’s any pattern that we’re seeing is the buyer is buying a bit bit tougher, and it is fairly broad throughout all manufacturers, makes, mannequin, segments.
I feel while you take a look at the SSI knowledge, it sort of speaks in all probability to one of the best generalization of the {industry}, we now have sure segments which are doing higher than others. However while you take a look at us, Anthony, if I am unsuitable, let me know, however it simply looks as if every little thing is sort of toe within the line. It is simply — it is a hard-fought battle on the market, however I haven’t got — we haven’t any shining stars or something that we’re like, “Oh my gosh, you bought to do away with this stuff.”
Anthony Aisquith
No, under no circumstances. There’s nothing, however we nonetheless have a number of of our producers that proceed to be very modern that make individuals wish to purchase the boat. So, there’s new boats that proceed to return out which are doing very effectively.
Griffin Bryan
Okay. Nice. After which, are you able to simply give any colour on OEM promotions you have seen as of late? And the way these promotions might evaluate versus earlier years?
Anthony Aisquith
We did not have them within the earlier 12 months. And sure, they’re plentiful now. The producers are standing behind the sellers and ensuring we’re transferring by stock.
Austin Singleton
Yeah. I feel the producers going into that — the month of June, I feel they have been, “We’re not going to have to do that. We’re not going to do that.” And I feel it was simply — that final couple of weeks of June was a reckoning for us all. And I feel they perceive that sellers are nervous about inventories constructing. They are not ordering as many 2024s, and they also got here out and bought fairly aggressive into the summer season. And I feel they’re persevering with that figuring out that we have to get the stock within the area, proper?
I imply — and we’re truly at the moment, I am way more constructive concerning the {industry} than I used to be on the finish of final quarter. Having plenty of conversations with Wells Fargo and the way their e book of enterprise on the ground plan seems to be, it is trying so much higher. And if we are able to proceed that momentum and that pattern by the top of the 12 months — Lauderdale was a very good signal. Everyone was feeling actually good popping out of there. If that continues by the top of the 12 months, we are able to go into subsequent promoting season with a really wholesome {industry} in comparison with what we thought 90 days in the past. So, that may very well be a bit shining star or a brilliant gentle that we simply sort of bought to attend and see what occurs over — by the top of the 12 months by January.
Griffin Bryan
Nice. That is all from me. Thanks.
Operator
Thanks. [Operator Instructions] Our subsequent query comes from the road of Noah Zatzkin with KeyBanc Capital Markets. Your line is now open.
Noah Zatzkin
Hello. Thanks for taking my questions. Perhaps only one on the same-store gross sales power in the course of the quarter. How a lot of that may you attribute to your buyer relative to the broader {industry} shopper versus stock versus working otherwise than possibly the broader {industry} supplier base? Simply any ideas across the power relative to the {industry} could be useful. Thanks.
Austin Singleton
Properly, I imply, in fact, we wish to leap in there and discuss how our CRM system, we really feel, provides us a leg up over our competitors, our processes and the issues that we do or why we’re in a position to proceed to take market share and develop. I imply — however I feel a bit little bit of it’s the shopper continues to be lively. I am nonetheless going to beat on the drum that — it seems that lots of people are nonetheless transferring on or close to water. And when individuals transfer on or close to water, they need a ship. After which, in order that’s nonetheless taking place.
And then you definately’ve bought the churn of the what I might name the skilled boater that owns a number of boats that sort of was out of the market throughout COVID as a result of they did not wish to wait that lengthy. They did not need — they knew the pricing weren’t going to be there endlessly. So I imply, it is simply — it is an total good market. And I simply suppose that our processes and our procedures assist us together with that. After which, we’re on the market for the primary time, what in like three years with promotional rebates coming from the producers as incentives. In order that helps so much, too.
So I feel that these two issues are serving to OneWater sort of buck the {industry} and achieve market share.
Noah Zatzkin
Actually useful. And possibly sort of relatedly, I do know you touched on this, however simply in ideas — by way of your ideas round M&A, simply given relative outperformance taking share, like is the pipeline extra full than it was three months in the past? Or how do you consider the chance within the subsequent 12 months?
Austin Singleton
No, I feel the pipeline is sort of held regular, identical to it did not leap up, it did not lower. It is simply sort of been regular. I feel while you take a look at the pipeline, the primary driver behind the pipeline, which is what we stated since day one, it is an aged {industry} with no exit technique. And so, as daily that goes by, issues change. For us, as we take a look at the pipeline, we’re a bit bit extra in all probability cautious proper now than we needs to be as a result of we really feel like there’s nonetheless some room for another — for the sellers that we’re to normalize. These subsequent two quarters, like Jack spoke about earlier, we have to alter these margins to what they’re at the moment as a result of they have been greater within the first two quarters final 12 months of the way in which we take a look at it. And a few sellers are simply nonetheless satisfied of their head, no, they will maintain, they are going to come again or no matter.
So, there’s all these little issues that sort of actually need to normalize. And so, we do have a few guys that we’re speaking to which have sort of come to the conclusion that, hey, sure, I am not going to have as a lot EBITDA. So, our method is our a number of actually hasn’t modified. It is — we’re attempting to get to a normalization and be sure that all people is comfy with how we take a look at, what we’re paying a a number of on, and that is normalizing the upper rates of interest on flooring plan and throughout the board, ensuring the margins and stuff are in-line with what they are going to be on a yearly foundation. In order that brings their quantity down even additional than they’re.
After which, the largest concern that we’re wanting to ensure is we do not wish to go purchase any person and have to scrub up 27 weeks available of outdated stock. In order that stock issues bought to sort of flush by. And I feel that is what’s given us a bit bit extra of a pause proper now or proceed within the pause that we have been on is we all know that three months from now, six months from now, issues are going to look so much totally different and that cash — that’s going to return again — the EBITDA goes to proceed to sort of normalize on a year-to-year trailing 12. So, we’re some stuff and we’re simply not speeding on the market to only leap in and do something proper now.
Noah Zatzkin
Very useful. Thanks.
Operator
Thanks. [Operator Instructions] I am not displaying any additional questions presently. I would like at hand the convention again over to Mr. Austin Singleton for closing remarks.
Austin Singleton
Properly, I do not actually have any closing remarks. We simply respect all people on the decision, and thanks all.
Operator
Girls and gents, thanks in your participation in at the moment’s convention. You could now disconnect. Everybody, have an exquisite day.
