ONEWATER MARINE INC. – 10-K – Management's Discussion and Analysis of Financial Condition and Results of Operations.

Unless the context requires otherwise, references in this report to the
"Company," "we," "us," and "our" refer to OneWater Marine Inc. and its
consolidated subsidiaries. The following discussion and analysis of our
financial condition and results of operations should be read in conjunction with
our audited consolidated financial statements and related notes appearing
elsewhere in this Form 10-K. The following discussion contains forward-looking
statements that reflect our future plans, estimates, beliefs and expected
performance. The forward-looking statements are dependent upon events, risks and
uncertainties that may be outside our control. Our actual results could differ
materially from those discussed in these forward-looking statements as a result
of a variety of risks and uncertainties, including those described in this Form
10-K under "Special Note Regarding Forward-Looking Statements" and "Risk
Factors." In light of these risk, uncertainties and assumptions, the
forward-looking events discussed may not occur. We do not undertake any
obligation to publicly update any forward-looking statements, except as
otherwise required by applicable law.


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Overview

We believe that we are one of the largest and fastest-growing marine retailers
in the United States with 96 dealerships, 12 distribution centers/warehouses and
multiple online marketplaces as of September 30, 2022. Our dealer groups are
located within highly attractive markets throughout the Southeast, Gulf Coast,
Mid-Atlantic and Northeast, many of which are in the top twenty states for
marine retail expenditures. We believe that we are a market leader by volume in
sales of premium boats in 13 of the markets in which we operate. In addition to
boat sales, we also generate sales from related products including finance &
insurance and service, parts and other sales. The recent acquisitions of T-H
Marine and Ocean Bio-Chem will significantly expand our sales of marine parts
and accessories. The combination of our significant scale, diverse inventory,
access to premium boat brands, access to a broad array of parts and accessories
and meaningful group brand equity enables us to provide a consistently
professional experience as reflected in the number of our repeat customers and
Dealership same-store sales growth.

We were formed in 2014 as OneWater LLC through the combination of Singleton
Marine and Legendary Marine, which created a marine retail platform that
collectively owned and operated 19 dealerships. Since the combination in 2014,
we have acquired a total of 75 additional dealerships, 12 distribution
centers/warehouses and multiple online marketplaces through 30 acquisitions. Our
current portfolio as of September 30, 2022 consists of multiple brands which are
recognized on a local, regional or national basis. Because of this, we believe
we are one of the largest and fastest-growing marine retailers in the United
States based on number of dealerships and total boats sold. While we have
opportunistically opened new dealerships in select markets, we believe that it
is generally more effective economically and operationally to acquire existing
dealerships with experienced staff and established reputations.

Effective August 9, 2022, our reportable segments changed as a result of the
Company's acquisition of Ocean Bio-Chem, which changed management's reporting
structure and operating activities. We now report our operations through two new
reportable segments: Dealerships and Distribution.

As of September 30, 2022, the Dealerships reporting segment includes operations
of 96 dealerships in 15 states including Florida, Texas, Alabama and Georgia,
among others, and represents approximately 92% of revenues. The Dealership
segment engages in the sale of new and pre-owned boats, arranges financing and
insurance products, performs repairs and maintenance services, offers marine
related parts and accessories and offers slip and storage accommodations in
certain locations.

As of September 30, 2022, the Distribution reporting segment includes the
activity of PartsVu, Ocean Bio Chem and T-H Marine and its subsidiaries which
together operate 12 distribution centers/warehouses in Alabama, Florida, Texas,
Oklahoma, Indiana, Tennessee and Illinois and represents approximately 8% of
revenues. The Distribution segment engages in the manufacturing, assembly and
distribution of marine related products (and adjacent industries).

The boat dealership market is highly fragmented and is comprised of
approximately 4,200 dealerships nationwide. Most competing boat retailers are
operated by local business owners who own three or fewer stores; however we do
have other large competitors including MarineMax and Bass Pro Shops. We believe
we are one of the largest and fastest-growing marine retailers in the United
States. Despite our size, we comprise less than 3% of total industry sales. Our
scale and business model allow us to leverage our extensive inventory to provide
consumers with the ability to find a boat that matches their preferences (e.g.,
make, model, color, configuration and other options) and to deliver the boat
within days while providing a personalized sales experience. In addition to boat
sales, we also generate sales from related products including finance &
insurance and service, parts and other sales. The recent acquisitions of T-H
Marine and Ocean Bio-Chem have significantly expanded our sales of marine parts
and accessories. Our strategic growth in this area is also expected to
materially expand our addressable market in the parts and accessories business.
We are able to operate with a comparatively higher degree of profitability than
other independent retailers because we allocate support resources across our
broader base, focus on high-margin service parts and accessories, utilize floor
plan financing and provide core back-office functions on a scale that many
independent retailers are unable to match. We seek to be the leading marine
retailer by total market share within each boating market and within the product
segments in which we participate. To the extent that we are not, we will
evaluate acquiring other local retailers in order to increase our sales, to add
additional brands or to provide us with additional high-quality personnel.


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Impact of COVID-19

The COVID-19 pandemic and its related effects, including restraints on U.S.
economic and leisure activities, has and may continue to have a significant
impact on our operations and financial condition. National, state and local
governments in affected regions previously implemented and in the future may
reimplement safety precautions, including shelter in place orders, travel
restrictions, business closures, cancellations of public gatherings, including
boat shows, and other measures. At times, these measures have affected our
ability to sell and service boats, required us to temporarily close or partially
close certain locations and may require additional closures in the future.

The COVID-19 pandemic and its related effects have, to date, positively impacted
our sales as more customers desire to engage in outdoor recreational activities
that can be enjoyed close to first or second homes, in a socially distanced
manner. However, the COVID-19 pandemic has also caused significant supply chain
challenges as suppliers were, and continue to be, faced with business closures
and shipping delays. This has led to an industry wide inventory shortage of
boats, engines and certain marine parts.  The COVID-19 pandemic and its related
effects may continue to interfere with the ability of our employees,
contractors, customers, suppliers, and other business partners to perform our
and their respective responsibilities and obligations with respect to the
operation of our business.

While we continue to monitor the impact of the COVID-19 pandemic on our business
and operations, our financial results for the year ended September 30, 2022
suggest that spending in all our regions and across product lines has proven
resilient despite the challenges posed by the pandemic as customers have
continued to focus on socially distanced outdoor recreations. The ultimate
impact of the COVID-19 pandemic on our business remains uncertain and dependent
on various factors including consumer demand, a possible resurgence of COVID-19,
including variants of the virus in certain geographic areas, our ability to
safely operate locations and the existence and extent of a prolonged economic
downturn.

Trends and Other Factors Impacting Our Performance

Acquisitions

We are a highly acquisitive company. Since the combination of Singleton Marine
and Legendary Marine in 2014, we have acquired 75 additional dealerships through
25 dealer group acquisitions. Our team remains focused on expanding our
dealership growth in regions with strong boating cultures, enhancing the
customer experience and generating value for our shareholders. In addition to
dealership acquisitions, the Company has strategically acquired parts and
accessories companies as part of our growth and diversification strategy. We
have acquired 12 distribution centers and warehouses through the acquisition of
5 parts and accessories companies.  We plan to continue to strategically
evaluate and complete acquisitions moving forward. For the years ended September
30, 2022 and 2021, we completed 8 and 5 acquisitions, respectively.

Since September 30, 2022 we have completed the acquisitions of Taylor Marine
Centers and Harbor View Marine as of October 1, 2022 and December 1, 2022,
respectively.

We have an extensive acquisition track record within the retail marine industry
and believe we have developed a reputation for treating sellers and their staff
in an honest and fair manner. We typically retain the management team and name
of the acquired group. We believe this practice preserves customer relationships
and goodwill in the local marketplace. We believe our reputation and scale have
positioned us as a buyer of choice for marine retailers who want to sell their
businesses. Our strategy is to acquire dealerships at attractive EBITDA
multiples and then grow same-store sales while benefitting from cost-reducing
synergies. Historically, we have typically acquired dealerships for less than
4.0x EBITDA on a trailing twelve month basis and believe that we will be able to
continue to make attractive acquisitions within this range. With the expansion
of our Distribution segment, we look to acquire parts and accessories
manufacturing and distribution companies within a range of 5.0x - 10.0x EBITDA
on a trailing twelve month basis, depending on the size of the business.


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General Economic Conditions

General economic conditions and consumer spending patterns can negatively impact
our operating results. Unfavorable local, regional, national, or global economic
developments or uncertainties, including the adverse economic effects of the
COVID-19 pandemic, including supply chain constraints, or a prolonged economic
downturn, could reduce consumer spending and adversely affect our business.
Consumer spending on discretionary goods may also decline as a result of lower
consumer confidence levels, higher interest rates or higher fuel costs, even if
prevailing economic conditions are otherwise favorable. Economic conditions in
areas in which we operate dealerships, particularly in the Southeast, can have a
major impact on our overall results of operations. Local influences, such as
corporate downsizing and inclement weather such as hurricanes and other storms,
environmental conditions, global public health concerns and events could
adversely affect our operations in certain markets and in certain periods. Any
extended period of adverse economic conditions or low consumer confidence is
likely to have a negative effect on our business.

Our business was significantly impacted during the recessionary period that
began in 2007. This period of weakness in consumer spending and depressed
economic conditions had a substantial negative effect on our operating results.
In response to these conditions we reduced our inventory purchases, closed
certain dealerships and reduced headcount. Additionally, in an effort to
counteract the downturn, we increased our focus on pre-owned sales, parts and
repair services, and finance & insurance services. As a result, we surpassed our
pre-recession sales levels in less than 24 months. While we believe the measures
we took significantly reduced the impact of the downturn on the business, we
cannot guarantee similar results in the event of a future downturn.
Additionally, we cannot predict the timing or length of unfavorable economic or
industry conditions, including a downturn as a result of pandemics, rising
interest rates, inflation, or the extent to which they could adversely affect
our operating results.

Although past economic conditions have adversely affected our operating results,
we believe we are capable of responding in a manner that allows us to
substantially outperform the industry and gain market share. We believe our
ability to capture such market share enables us to align our retail strategies
with the desires of customers. We expect our core strengths, including retail
and acquisition strategies, will allow us to capitalize on growth opportunities
as they occur, despite market conditions.

Critical Accounting Estimates

The preparation of financial statements in conformity with GAAP requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities, contingent assets and liabilities, each as of the date
of the financial statements, and revenues and expenses during the periods
presented. On an ongoing basis, management evaluates their estimates and
assumptions, and the effects of any such revisions are reflected in the
financial statements in the period in which they are determined to be necessary.
Actual outcomes could differ materially from those estimates in a manner that
could have a material effect on our consolidated financial statements. Set forth
below are the policies and estimates that we have identified as critical to our
business operations and understanding our results of operations, based on the
high degree of judgment or complexity in their application.

Inventories

Inventories are stated at the lower of cost or net realizable value. The cost of
new and pre-owned boat inventory is determined using the specific identification
method. New and pre-owned boat sales histories indicated that the overwhelming
majority of such boats are sold for, or in excess of, the cost to purchase those
boats. In assessing the lower of cost or net realizable value, we consider the
aging of the boats, historical sales of a particular product and current market
conditions. There are inherent uncertainties in assessing net realizable value
as management must make assumptions and apply judgment to changes in the market,
brands and other factors that drive consumer preferences and spending. The cost
of acquired, manufactured and assembled parts and accessories is determined
using methods which vary by subsidiary and include both the average cost method
and first-in, first-out. Inventory is reported net of write downs for obsolete
and slow moving items of approximately $3.0 million, $0.8 million and $0.6
million at September 30, 2022, 2021 and 2020, respectively.


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Goodwill and Other Intangible Assets

In accordance with Accounting Standards Codification ("ASC") 350, Intangibles -
Goodwill and Others ("ASC 350"), we review goodwill for impairment annually in
the fourth fiscal quarter, or more often if events or circumstances indicate
that impairment may have occurred. When evaluating goodwill for impairment, if
the fair value of a reporting unit is less than its carrying value, the
difference would represent the amount of required goodwill impairment in
accordance with ASC 350. To the extent the reporting unit's earnings decline
significantly or there are changes in one or more of these inputs that would
result in a lower valuation, it could cause the carrying value of the reporting
unit to exceed its fair value and thus require the Company to record goodwill
impairment.

Identifiable intangible assets as a result of the acquisitions we have completed
consist of trade names, developed technologies, including design libraries, and
customer relationships. We have determined that trade names have an indefinite
life, as there is no economic, contractual or other factors that limit their
useful lives and they are expected to generate value as long as the trade name
is utilized by the marine retailer, and therefore, are not subject to
amortization. Developed technologies and customer relationships are amortized
over their estimated useful lives of ten years and are reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount of
the asset may not be recoverable.

Impairment testing requires the assessment of both qualitative and quantitative
factors, including, but not limited to whether there has been a significant or
adverse change in the business climate that could affect the value of an asset
and/or significant or adverse changes in cash flow projections or earnings
forecasts. These assessments require management to make judgements, assumptions
and estimates regarding the macroeconomic and industry conditions, our financial
performance, and other factors. The Company determined that it was more likely
than not that the fair value of the goodwill and identifiable intangible assets
was greater than its carrying amount, and as a result, no impairment for
goodwill and identifiable intangible assets was required for the years ended
September 30, 2022, 2021 and 2020. We do not believe that there is a reasonable
likelihood that there will be a change in the judgements and assumptions used in
our qualitative assessment that would result in a material effect on our
operating results.

Business Combinations

We account for business combinations using the acquisition method of accounting,
which requires recognition of assets acquired and liabilities assumed at fair
value as of the date of the acquisition. Determination of the estimated fair
value assigned to each asset acquired or liability assumed can materially impact
the net income in subsequent periods through depreciation and amortization and
potential impairment charges.

The most critical areas of judgment in applying the acquisition method include
selecting the appropriate valuation techniques and assumptions that are used to
measure the acquired assets and assumed liabilities at fair value, particularly
for inventory, contingent consideration, trade names, developed technologies,
including design libraries, and customer relationships. The fair value of
acquired inventory is based on manufacturer invoice cost, curtailments, and
market data. The significant estimates used to value contingent consideration
are future earnings and discount rates. Management estimated the fair value of
the trade names and developed technologies using the relief from royalty method
and customer relationships using the multi-period excess earnings method. The
fair value determination of the trade names and design libraries required
management to make significant estimates and assumptions related to future
revenues and the selection of the royalty rate and discount rate. The fair value
determination of the customer relationships require management to make
significant estimates and assumptions related to future revenues attributable to
existing customers, future EBITDA margins and the selection of the customer
attrition rate and discount rate. Changes in assumptions concerning future
financial results or other underlying assumptions could have a significant
impact on the determination of the fair value.

In selecting the techniques and assumptions noted above, we generally engage
third-party, independent valuation professionals to assist us in developing the
assumptions and applying the valuation techniques to a particular business
combination transaction. In particular, the discount rates selected are compared
to and evaluated with (i) the industry weighted-average cost of capital, (ii)
the inherent risks associated with each type of asset and (iii) the level and
timing of future cash flows appropriately reflecting market participant
assumptions.


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How We Evaluate Our Operations

Revenue

We have a diversified revenue profile that is comprised of new boat sales,
pre-owned boat sales, finance & insurance products, repair and maintenance
services, and parts and accessories. During different phases of the economic
cycle, consumer behavior may shift away from new boats; however, we are
well-positioned to benefit from revenue from pre-owned boats, repair and
maintenance services, and parts and accessories, which have all historically
increased during periods of economic uncertainty. We generate pre-owned sales
from boats traded-in for new and pre-owned boats, boats purchased from
customers, brokerage transactions, consignment sales and wholesale sales. We
continue to focus on all aspects of our business including non-boat sales of
finance & insurance products, repair and maintenance services, and parts and
accessories. Although non-boat sales contributed approximately 17.8%, 11.3% and
9.8% to revenue in fiscal years 2022, 2021 and 2020, respectively, due to the
higher gross margin on these product and service lines, non-boat sales
contributed 30.1%, 25.8% and 28.3% to gross profit in fiscal years 2022, 2021
and 2020, respectively. We have also diversified our business across
geographies, dealership types (e.g., fresh water and salt water), and product
offerings (e.g., focus on parts and accessories businesses through PartsVu, T-H
Marine and Ocean Bio-Chem) in order to reduce the effects of seasonality and
cyclicality of our business. In addition to seasonality, revenue and operating
results may be significantly affected by quarter-to-quarter changes in economic
conditions, manufacturer incentive programs, adverse weather conditions and
other developments outside of our control.

Gross Profit

We calculate gross profit as revenue less cost of sales. Cost of sales consists
of actual amounts paid for products, costs of services (primarily labor),
transportation costs from manufacturers to our dealerships and vendor
consideration. Gross profit excludes the majority of our depreciation and
amortization, which is presented separately in our consolidated statements of
operations.

Gross Profit Margin

Our overall gross profit margin varies with our revenue mix. Sales of new and
pre-owned boats, which have comparable margins, generally result in a lower
gross profit margin than our non-boat sales. As a result, when revenue from
non-boat sales increases as a percentage of total revenue, we expect our overall
gross profit margin to increase.

Selling, General and Administrative Expenses

Selling, general, and administrative expenses consist primarily of salaries and
incentive-based compensation, advertising, rent, insurance, utilities, and other
customary operating expenses. A portion of our cost structure is variable (such
as sales commissions and incentive compensation), or controllable (such as
advertising), which we believe allows us to adapt to changes in the retail
environment over the long term. We typically evaluate our variable expenses,
selling expenses and all other selling, general, and administrative expenses in
the aggregate as a percentage of total revenue.

Dealership Same-Store Sales

We assess the organic growth of our Dealership segment revenue on a same-store
basis. We believe that our assessment on a same-store basis represents an
important indicator of comparative financial results and provides relevant
information to assess our performance. New and acquired dealerships become
eligible for inclusion in the comparable dealership base at the end of the
dealership's thirteenth month of operations under our ownership and revenues are
only included for identical months in the same-store base periods. Dealerships
relocated within an existing market remain in the comparable dealership base for
all periods. Additionally, amounts related to closed dealerships are excluded
from each comparative base period. Because Dealership same-store sales may be
defined differently by other companies in our industry, our definition of this
measure may not be comparable to similarly titled measures of other companies,
thereby diminishing its utility.


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Adjusted EBITDA

We define Adjusted EBITDA as net income (loss) before interest expense - other,
income tax expense, depreciation and amortization and other (income) expense,
further adjusted to eliminate the effects of items such as the change in the
fair value of warrant liability, change in fair value of contingent
consideration, loss on extinguishment of debt and transaction costs. See
"-Comparison of Non-GAAP Financial Measure" for more information and a
reconciliation of Adjusted EBITDA to net income (loss), the most directly
comparable financial measure calculated and presented in accordance with GAAP.

Summary of Acquisitions

The comparability of our results of operations between the periods discussed
below is naturally affected by the acquisitions we have completed during such
periods. We are also continuously evaluating and pursuing acquisitions on an
ongoing basis, and such acquisitions, if completed, will continue to impact the
comparability of our financial results. While we expect continued growth and
strategic acquisitions in the future, our acquisitions may have materially
different characteristics than our historical results, and such differences in
economics may impact the comparability of our future results of operations to
our historical results.

Fiscal Year 2022 Acquisitions

• Effective October 1, 2021, we acquired Naples Boat Mart, a full-service marine

retailer with one location in Florida.

• Effective November 30, 2021, we acquired T-H Marine, a leading provider of

   branded marine parts and accessories for OEMs and the aftermarket, with
   locations in Alabama, Florida, Illinois, Indiana, Oklahoma and Texas.

• Effective December 1, 2021, we acquired Norfolk Marine Company, a full-service

marine retailer with one location in Virginia.

• Effective December 31, 2021, we acquired a majority interest in Quality Boats,

a full-service marine retailer with three locations in Florida.

• Effective February 1, 2022 we acquired JIF Marine, a leading supplier of

stainless steel ladders, dock products and other accessories which is based in

   Tennessee.

• Effective March 1, 2022, we acquired YakGear, a leading supplier of kayak

equipment, paddle sport accessories and boat mounting accessories which is

   based in Texas.

• Effective April 1, 2022, we acquired Denison Yachting, a leader in yacht and

superyacht sales as well as ancillary yacht services, with 20 retail locations.

• Effective August 9, 2022, we acquired Ocean Bio-Chem, including Star Brite

Europe, Inc., a leading supplier and distributor of appearance, cleaning and

maintenance products for the marine industry and the automotive, powersports,

recreational vehicles, and outdoor power equipment markets with locations in

   Alabama and Florida.



We refer to the fiscal year 2022 acquisitions described above collectively as
the "2022 Acquisitions." Naples Boat Mart is fully reflected in our consolidated
statements of operations for the year ended September 30, 2022. The remaining
2022 Acquisitions are partially reflected in our consolidated statements of
operations for the year ended September 30, 2022, beginning on the date of
acquisition. None of our 2022 Acquisitions impact our results of operations for
the years ended September 30, 2021 and 2020.

Fiscal Year 2021 Acquisitions

• Effective December 1, 2020, we acquired Tom George Yacht Group, a full-service

   marine retailer based in Florida with two locations.




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• Effective December 31, 2020, we acquired Walker Marine Group, a full-service

marine retailer based in Florida with five locations.

• Effective December 31, 2020, we acquired Roscioli Yachting Center, a

full-service marine and yachting facility located in Florida, including the

related real estate and in-water slips.

• Effective August 1, 2021, we acquired Stone Harbor Marina, a full-service

marine retailer based in New Jersey with one location.

• Effective September 1, 2021 we acquired PartsVu, an online marketplace for OEM

marine parts, electronics and accessories with a warehouse in Florida.

We refer to the fiscal year 2021 acquisitions described above collectively as
the "2021 Acquisitions." The 2021 Acquisitions are fully reflected in our
consolidated financial statements for the year ended September 30, 2022 but are
only partially reflected in our consolidated financial statements for the year
ended September 30, 2021, beginning on the date of acquisition, and will not
impact our results of operations for the year ended September 30, 2020.

Fiscal Year 2020 Acquisitions

We did not complete any acquisitions in fiscal year 2020.

Other Factors Affecting Comparability of Our Future Results of Operations to Our
Historical Results of Operations

Our historical financial results discussed below may not be comparable to our
future financial results for the reasons described below.

• OneWater Inc. is subject to U.S. federal, state and local income taxes as a

corporation. Our accounting predecessor, OneWater LLC, was and is treated as a

partnership for U.S. federal income tax purposes, and as such, was and is

generally not subject to U.S. federal income tax at the entity level. Rather,

the tax liability with respect to its taxable income is passed through to its

members. Accordingly, the financial data attributable to our predecessor

contains no provision for U.S. federal income taxes or income taxes in any

state or locality. OneWater Inc.'s effective tax rates were 22.1%, 18.1% and

11.5% for the years ended September 30, 2022, 2021 and 2020, respectively.

• As we further implement controls, processes and infrastructure applicable to

companies with publicly traded equity securities, it is likely that we will

incur additional selling, general, and administrative expenses relative to

historical periods. Our future results will depend on our ability to

efficiently manage our combined operations and execute our business strategy.

Results of Operations

Year Ended September 30, 2022, Compared to Year Ended September 30, 2021

                                                   For the Year Ended September 30,
                                   2022                           2021
                                           % of                           % of
Description               Amount         Revenue         Amount         Revenue       $ Change       % Change
                                                           ($ in thousands)
Revenues
New boat                $ 1,139,331           65.3 %   $   872,680           71.1 %   $ 266,651           30.6 %
Pre-owned boat              294,832           16.9 %       216,416           17.6 %      78,416           36.2 %
Finance and insurance
income                       55,977            3.2 %        42,668            3.5 %      13,309           31.2 %
Service, parts and
other                       254,682           14.6 %        96,442            7.9 %     158,240          164.1 %
Total revenues            1,744,822          100.0 %     1,228,206          100.0 %     516,616           42.1 %
Gross Profit
New boat                    305,305           17.5 %       210,916           17.2 %      94,389           44.8 %
Pre-owned boat               81,665            4.7 %        54,138            4.4 %      27,527           50.8 %
Finance & insurance          55,977            3.2 %        42,668            3.5 %      13,309           31.2 %
Service, parts &
other                       110,708            6.3 %        49,733            4.0 %      60,975          122.6 %
Total gross profit          553,655           31.7 %       357,455           29.1 %     196,200           54.9 %
Selling, general and
administrative
expenses                    302,113           17.3 %       199,049           16.2 %     103,064           51.8 %
Depreciation and
amortization                 15,605            0.9 %         5,411            0.4 %      10,194          188.4 %
Transaction costs             7,724            0.4 %           869            0.1 %       6,855          788.8 %
Change in fair value
of contingent
consideration                10,380            0.6 %         3,249            0.3 %       7,131          219.5 %
Income from
operations                  217,833           12.5 %       148,877           12.1 %      68,956           46.3 %
Interest expense -
floor plan                    4,647            0.3 %         2,566            0.2 %       2,081           81.1 %
Interest expense -
other                        13,201            0.8 %         4,344            0.4 %       8,857          203.9 %
Loss on
extinguishment of
debt                            356            0.0 %             -            0.0 %         356          100.0 %
Other expense
(income), net                 3,793            0.2 %          (248 )          0.0 %       4,041              *
Income before income
tax expense                 195,836           11.2 %       142,215           11.6 %      53,621           37.7 %
Income tax expense           43,225           22.1 %        25,802            2.1 %      17,423           67.5 %
Net income                  152,611            8.7 %       116,413            9.5 %      36,198           31.1 %
Less: Net income
attributable to
non-controlling
interests                     2,998                              -
Less: Net income
attributable to
non-controlling
interests of One
Water Marine
Holdings, LLC                18,669                         37,354
Net income
attributable to
OneWater Marine Inc.    $   130,944                    $    79,059



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Revenue

Overall, revenue increased by $516.6 million, or 42.1%, to $1,744.8 million for
the year ended September 30, 2022 from $1,228.2 million for the year ended
September 30, 2021. Revenue generated from Dealership same-store sales increased
11.9% for the year ended September 30, 2022 as compared to the year ended
September 30, 2021, primarily due to an increase in the average selling price of
new boats, the number of pre-owned boats sold, the model mix of boats sold, an
increase in finance & insurance sales and an increase in service, parts and
other sales. We believe that COVID-19 has had a positive overall impact on the
retail marine industry as people continue to seek recreational activities that
could be done in a safe, socially distanced way. Overall revenue increased by
$147.0 million as a result of our increase in Dealership same-store sales and
$369.6 million from revenue from our Distribution segment as well as revenue not
eligible for inclusion in the Dealership same-store sales base. New and acquired
dealerships become eligible for inclusion in the comparable dealership base at
the end of the dealership's thirteenth month of operations under our ownership,
and revenues are only included for identical months in the same-store base
periods. For the years ended September 30, 2022 and 2021, we completed 8 and 5
acquisitions, respectively.

New Boat Sales

New boat sales increased by $266.7 million, or 30.6%, to $1,139.3 million for
the year ended September 30, 2022 from $872.7 million for the year ended
September 30, 2021. The increase was the result of our Dealership same-store
sales growth during the twelve-month period, our acquisitions and an increase in
our average selling price. We believe the increase in sales was primarily due to
continued execution of operational improvements on previously acquired dealers,
the mix on boat brands and models sold, and product improvements in the
functionality of technology which drove average unit prices higher.


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Pre-owned Boat Sales

Pre-owned boat sales increased by $78.4 million, or 36.2%, to $294.8 million for
the year ended September 30, 2022 from $216.4 million for the year ended
September 30, 2021. We sell a wide range of brands and sizes of pre-owned boats
under different types of sales arrangements (e.g., trade-ins, brokerage,
consigned and wholesale), which causes periodic and seasonal fluctuations in the
average sales price. The increase in pre-owned boat sales was primarily
attributable to an increase in the number of units sold which was driven by
Dealership same-store sales growth and acquisition growth.

Finance & Insurance Income

We generate revenue from arranging finance & insurance products, including
financing, insurance and extended warranty contracts, to customers through
various third-party financial institutions and insurance companies. Finance &
insurance income increased by $13.3 million, or 31.2%, to $56.0 million for the
year ended September 30, 2022 from $42.7 million for the year ended September
30, 2021. The increase was primarily due to the additional new and pre-owned
boat revenues. We remain very focused on improving sales of finance & insurance
products throughout our dealer network and implementing best practices at
acquired dealer groups and existing dealerships. Finance & insurance products
decreased slightly as a percentage of total revenue to 3.2% in the year ended
September 30, 2022 from 3.5% for the year ended September 30, 2021. Finance &
insurance income is recorded net of related fees, including fees charged back
due to any early cancellation of loan or insurance contracts by a customer.
Since finance & insurance income is fee-based, we do not incur any related cost
of sale.

Service, Parts & Other Sales

Service, parts & other sales increased by $158.2 million, or 164.1%, to $254.7
million for the year ended September 30, 2022 from $96.4 million for the year
ended September 30, 2021. This increase in service, parts & other sales is
primarily due to the contributions from our recently acquired parts and
accessories businesses, including T-H Marine and Ocean Bio-Chem, as well as
increases across the board in labor, parts, fuel and storage sales, driven by
ancillary sales generated from our increase in new and pre-owned boat sales at
our dealerships.

Gross Profit

Overall, gross profit increased by $196.2 million, or 54.9%, to $553.7 million
for the year ended September 30, 2022 from $357.5 million for the year ended
September 30, 2021. This increase was mainly due to our overall increase in
Dealership same-store sales which was driven by increases in all revenue
streams, the impact of the 2022 Acquisitions and the Company's focus on dynamic
pricing. Overall gross margins increased 260 basis points to 31.7% for the year
ended September 30, 2022 from 29.1% for the year ended September 30, 2021 due to
the factors noted below.

New Boat Gross Profit

New boat gross profit increased by $94.4 million, or 44.8%, to $305.3 million
for the year ended September 30, 2022 from $210.9 million for the year ended
September 30, 2021. This increase was due to our overall increase in Dealership
same-store sales and acquired dealerships during fiscal year 2022. New boat
gross profit as a percentage of new boat revenue was 26.8% for the year ended
September 30, 2022 as compared to 24.2% in the year ended September 30, 2021.
The increase in new boat gross profit and gross profit margin is due primarily
to a shift in the mix and size of boat models sold, the margin profile of
recently acquired locations, our emphasis on expanding new boat gross profit
margins and the impact of industry wide inventory and supply chain constraints.

Pre-owned Boat Gross Profit

Pre-owned boat gross profit increased by $27.5 million, or 50.8%, to $81.7
million for the year ended September 30, 2022 from $54.1 million for the year
ended September 30, 2021. This increase was primarily due to an overall increase
in pre-owned revenue as a result of our Dealership same-store sales and acquired
dealerships during fiscal year 2022. Pre-owned boat gross profit as a percentage
of pre-owned boat revenue was 27.7% for the year ended September 30, 2022 as
compared to 25.0% for the year ended September 30, 2021. We sell a wide range of
brands and sizes of pre-owned boats under different types of sales arrangements
(e.g., trade-ins, brokerage, consignment and wholesale), which may cause
periodic and seasonal fluctuations in pre-owned boat gross profit as a
percentage of revenue. For the year ended September 30, 2022 compared to the
year ended September 30, 2021, we experienced a strong increase in our gross
profit on pre-owned sales for trade-ins, brokerage and consignment which all
have a higher margin percentage than wholesale which saw a slight decrease in
gross profit.


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Finance & Insurance Gross Profit

Finance & insurance gross profit increased by $13.3 million, or 31.2%, to $56.0
million for the year ended September 30, 2022 from $42.7 million for the year
ended September 30, 2021. Finance & insurance income is fee-based revenue for
which we do not recognize incremental cost of sales.

Service, Parts & Other Gross Profit

Service, parts & other gross profit increased by $61.0 million, or 122.6%, to
$110.7 million for the year ended September 30, 2022 from $49.7 million for the
year ended September 30, 2021. The increase in gross profit was primarily the
result of our acquisitions of parts and accessories businesses, including T-H
Marine and Ocean Bio-Chem, but was also further enhanced by our Dealership
same-store sales growth. Service, parts & other gross profit as a percentage of
service, parts & other revenue was 43.5% and 51.6% for the years ended September
30, 2022 and 2021, respectively. The decrease in gross profit margin was due to
a shift in the mix of revenue towards parts & accessories which has a lower
gross profit percentage than service and other sales. Although the service,
parts and other mix shifted and led to a year over year decrease in margin
percentage, our parts and accessories gross profit percentage was still
accretive to the overall company gross profit percentage of 31.7% for the year
ended September 30, 2022.

Selling, General & Administrative Expenses

Selling, general & administrative expenses increased by $103.1 million, or
51.8%, to $302.1 million for the year ended September 30, 2022 from $199.0
million for the year ended September 30, 2021. This increase was primarily due
to expenses incurred to support the overall increase in revenues and gross
profit. Selling, general & administrative expenses as a percentage of revenue
increased to 17.3% from 16.2% for the years ended September 30, 2022 and 2021,
respectively. The increase in selling, general & administrative expenses as a
percentage of revenue was primarily due to higher variable personnel costs
driven by the increased level of profitability for the year ended September 30,
2022 as well as increased costs given the current personnel environment.

Depreciation and Amortization

Depreciation and amortization expense increased $10.2 million, or 188.4%, to
$15.6 million for the year ended September 30, 2022 compared to $5.4 million for
the year ended September 30, 2021. The increase in depreciation and amortization
expense is primarily due to a $7.6 million increase in amortization of
identifiable intangible assets, primarily attributable to the 2022 Acquisitions,
as well as an increase in our property, plant and equipment.

Transaction Costs

The increase in transaction costs of $6.9 million, or 788.8%, to $7.7 million
for the year ended September 30, 2022 compared to $0.9 million for the year
ended September 30, 2021 was primarily attributable to expenses related to the
2022 Acquisitions.

Change in Fair Value of Contingent Consideration

During the year ended September 30, 2022, we incurred expenses of $10.4 million
related to updated forecasts and accretion of contingent consideration
liabilities related to fiscal 2021 and 2022 acquisitions.

Income from Operations

Income from operations increased $69.0 million, or 46.3%, to $217.8 million for
the year ended September 30, 2022 compared to $148.9 million for the year ended
September 30, 2021. The increase was primarily attributable to the $196.2
million increase in gross profit for the year ended September 30, 2022 as
compared to the year ended September 30, 2021, partially offset by a $103.1
million increase in selling, general & administrative expenses, a $10.2 million
increase in depreciation and amortization, a $6.9 million increase in
transaction costs and a $7.1 million increase in the change in fair value of
contingent consideration during the same periods.


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Interest Expense - Floor Plan

Interest expense - floor plan increased $2.1 million, or 81.1%, to $4.6 million
for the year ended September 30, 2022 compared to $2.6 million for the year
ended September 30, 2021. The increase in floor plan interest expense is
primarily attributable to an increase in the average inventory for the year
ended September 30, 2022 compared to the year ended September 30, 2021 as well
as an increase in interest rates.

Interest Expense - Other

Interest expense - other increased $8.9 million, or 203.9%, to $13.2 million for
the year ended September 30, 2022 compared to $4.3 million for the year ended
September 30, 2021. The increase was primarily attributable to the increase in
our long term debt which was primarily used to fund certain 2022 Acquisitions.

Loss on Extinguishment of Debt

During the year ended September 30, 2022, we incurred $0.4 million in debt
extinguishment expenses related to the August 9, 2022 amendment of our term
debt.

Other Expense (Income), Net

Other expense (income), net changed by $4.0 million to $3.8 million of expense
for the year ended September 30, 2022, compared to $0.2 million of income for
the year ended September 30, 2021. The increase is primarily attributable to the
unrealized loss on our Forza X1, Inc. equity investment and expenses associated
with Hurricane Ian.

Income Tax Expense

Income tax expense increased $17.4 million, or 67.5%, to $43.2 million for the
year ended September 30, 2022, compared to $25.8 million for the year ended
September 30, 2021. The increase was primarily attributable to the 37.7%
increase in income before tax expense as well as the increased proportion of
consolidated income before income tax expense that is allocated to OneWater
Marine Inc. and therefore taxable due to the exchanges of shares of Class B
common stock for shares of Class A common stock.

Net Income (Loss)

Net income increased by $36.2 million to $152.6 million for the year ended
September 30, 2022 compared to $116.4 million for the year ended September 30,
2021. The increase was primarily attributable to the increase in gross profit,
partially offset by an increase in selling, general and administrative expenses,
income tax expense, depreciation and amortization and the increase in the change
in fair value of contingent consideration during the same periods.


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Results of Operations

Year Ended September 30, 2021, Compared to Year Ended September 30, 2020

                                                   For the Year Ended September 30,
                                   2021                           2020
                                           % of                           % of
Description               Amount         Revenue         Amount         Revenue        $ Change       % Change
                                                           ($ in thousands)
Revenues
New boat                $   872,680           71.0 %   $   717,093           70.1 %    $ 155,587           21.7 %
Pre-owned boat              216,416           17.6 %       205,650           20.1 %       10,766            5.2 %
Finance and insurance
income                       42,668            3.5 %        36,792            3.6 %        5,876           16.0 %
Service, parts and
other                        96,442            7.9 %        63,435            6.2 %       33,007           52.0 %
Total revenues            1,228,206          100.0 %     1,022,970          100.0 %      205,236           20.1 %
Gross Profit
New boat                    210,916           17.2 %       131,373           12.8 %       79,543           60.5 %
Pre-owned boat               54,138            4.4 %        37,389            3.7 %       16,749           44.8 %
Finance & insurance          42,668            3.5 %        36,792            3.6 %        5,876           16.0 %
Service, parts &
other                        49,733            4.0 %        29,970            2.9 %       19,763           65.9 %
Total gross profit          357,455           29.1 %       235,524           23.0 %      121,931           51.8 %
Selling, general and
administrative
expenses                    199,049           16.2 %       143,575           14.0 %       55,474           38.6 %
Depreciation and
amortization                  5,411            0.4 %         3,249            0.3 %        2,162           66.5 %
Transaction costs               869            0.1 %         3,648            0.4 %       (2,779 )        (76.2 )%
Change in fair value
of contingent
consideration                 3,249            0.3 %         6,762            0.7 %       (3,513 )        (52.0 )%
Income from
operations                  148,877           12.1 %        78,290            7.7 %       70,587           90.2 %
Interest expense -
floor plan                    2,566            0.2 %         8,861            0.9 %       (6,295 )        (71.0 )%
Interest expense -
other                         4,344            0.4 %         8,828            0.9 %       (4,484 )        (50.8 )%
Change in fair value
of warrant
liability                         -            0.0 %          (771 )         (0.1 )%         771         (100.0 )%
Loss on
extinguishment of
debt                              -            0.0 %         6,559            0.6 %       (6,559 )       (100.0 )%
Other (income)
expense, net                   (248 )          0.0 %           (24 )          0.0 %         (224 )            *
Income before income
tax expense                 142,215           11.6 %        54,837            5.4 %       87,378          159.3 %
Income tax expense           25,802            2.1 %         6,329            0.6 %       19,473          307.7 %
Net income                  116,413            9.5 %        48,508            4.7 %       67,905          140.0 %
Less: Net income
attributable to
non-controlling
interests                         -                            350
Less: Net income
attributable to
non-controlling
interests of One
Water Marine
Holdings, LLC                37,354                         30,733
Net income
attributable to
OneWater Marine Inc.    $    79,059                    $    17,425

Revenue

Overall, revenue increased by $205.2 million, or 20.1%, to $1,228.2 million for
the year ended September 30, 2021 from $1,023.0 million for the year ended
September 30, 2020. Revenue generated from Dealership same-store sales increased
9.7% for the year ended September 30, 2021 as compared to the year ended
September 30, 2020, primarily due to an increase in the average selling price of
new and pre-owned boats, the model mix of boats sold, an increase in finance &
insurance sales and an increase in service, parts and other sales. We believe
that COVID-19 has had a positive overall impact on the retail marine industry as
people continue to seek recreational activities that could be done in a safe
socially distanced way. Overall revenue increased by $99.3 million as a result
of our increase in Dealership same-store sales and $105.9 million from
dealerships not eligible for inclusion in the same-store sales base. New and
acquired dealerships become eligible for inclusion in the comparable dealership
base at the end of the dealership's thirteenth month of operations under our
ownership, and revenues are only included for identical months in the same-store
base periods. For the year ended September 30, 2021, we completed 5
acquisitions. We did not make any acquisitions in the year ended September 30,
2020.


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New Boat Sales

New boat sales increased by $155.6 million, or 21.7%, to $872.7 million for the
year ended September 30, 2021 from $717.1 million for the year ended September
30, 2020. The increase was the result of our Dealership same-store sales growth
during the twelve-month period, the increased unit sales attributable to the
2021 Acquisitions and an increase in our average unit price. We believe the
increase in sales was primarily due to the shift towards outdoor leisure
activity during the COVID-19 pandemic, as well as, the continued execution of
operational improvements on previously acquired dealers. The increase in average
sales price was due to consumer demand, the mix of boat brands and models sold,
and product improvements in the functionality and technology of boats.

Pre-owned Boat Sales

Pre-owned boat sales increased by $10.8 million, or 5.2%, to $216.4 million for
the year ended September 30, 2021 from $205.7 million for the year ended
September 30, 2020. We sell a wide range of brands and sizes of pre-owned boats
under different types of sales arrangements (e.g., trade-ins, brokerage,
consigned and wholesale), which causes periodic and seasonal fluctuations in the
average sales price. Pre-owned boat sales for the year ended September 30, 2021
experienced a decrease in the number of units sold due to industry-wide supply
constraints. The average sales price per pre-owned unit in the year ended
September 30, 2021 increased largely due to the mix of pre-owned products and
the composition of the brands and models sold during the period as well as the
industry-wide supply restrictions and higher prices.

Finance & Insurance Income

We generate revenue from arranging finance & insurance products, including
financing, insurance and extended warranty contracts, to customers through
various third-party financial institutions and insurance companies. Finance &
insurance income increased by $5.9 million, or 16.0%, to $42.7 million for the
year ended September 30, 2021 from $36.8 million for the year ended September
30, 2020. The increase was primarily a result of the increase in Dealership
same-store sales, process improvements and additional revenue attributable to
the 2021 Acquisitions. We remain very focused on improving sales of finance &
insurance products throughout our dealer network and implementing best practices
at acquired dealer groups and existing dealerships. Finance & insurance products
decreased slightly as a percentage of total revenue to 3.5% in the year ended
September 30, 2021 from 3.6% for the year ended September 30, 2020. Finance &
insurance income is recorded net of related fees, including fees charged back
due to any early cancellation of loan or insurance contracts by a customer.
Since finance & insurance income is fee-based, we do not incur any related cost
of sale.

Service, Parts & Other Sales

Service, parts & other sales increased by $33.0 million, or 52.0%, to $96.4
million for the year ended September 30, 2021 from $63.4 million for the year
ended September 30, 2020. This increase in service, parts & other sales is
primarily due to increases across the board in labor, parts, fuel and storage
sales, driven by ancillary sales generated from our increase in new and
pre-owned boat sales and the impact of our 2021 Acquisitions.

Gross Profit

Overall, gross profit increased by $121.9 million, or 51.8%, to $357.5 million
for the year ended September 30, 2021 from $235.5 million for the year ended
September 30, 2020. This increase was mainly due to our overall increase in
Dealership same-store sales, primarily driven by an increase in new boat sales,
as well as higher pre-owned boat sales, finance & insurance income and service,
parts and other sales. The increase in gross profit was also a result of an
increase in the number of locations due to the 2021 Acquisitions. Overall gross
margins increased 610 basis points to 29.1% for the year ended September 30,
2021 from 23.0% for the year ended September 30, 2020 due to the factors noted
below.

New Boat Gross Profit

New boat gross profit increased by $79.5 million, or 60.5%, to $210.9 million
for the year ended September 30, 2021 from $131.4 million for the year ended
September 30, 2020. This increase was due to our overall increase in Dealership
same-store sales and acquired dealerships during fiscal year 2021. New boat
gross profit as a percentage of new boat revenue was 24.2% for the year ended
September 30, 2021 as compared to 18.3% in the year ended September 30, 2020.
The increase in new boat gross profit and gross profit margin is due primarily
to a shift in the mix and size of boat models sold, the margin profile of
recently acquired locations and our emphasis on expanding new boat gross profit
margins.


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Pre-owned Boat Gross Profit

Pre-owned boat gross profit increased by $16.7 million, or 44.8%, to $54.1
million for the year ended September 30, 2021 from $37.4 million for the year
ended September 30, 2020. This increase was primarily due to an overall increase
in our Dealership same-store sales and acquired dealerships during fiscal year
2021. Pre-owned boat gross profit as a percentage of pre-owned boat revenue was
25.0% for the year ended September 30, 2021 as compared to 18.2% in the year
ended September 30, 2020. We sell a wide range of brands and sizes of pre-owned
boats under different types of sales arrangements (e.g., trade-ins, brokerage,
consignment and wholesale), which may cause periodic and seasonal fluctuations
in pre-owned boat gross profit as a percentage of revenue. In the year ended
September 30, 2021 as compared to the year ended September 30, 2020, we
experienced an increase in our gross profit on pre-owned sales for each of the
different sales arrangements.

Finance & Insurance Gross Profit

Finance & insurance gross profit increased by $5.9 million, or 16.0%, to $42.7
million for the year ended September 30, 2021 from $36.8 million for the year
ended September 30, 2020. Finance & insurance income is fee-based revenue for
which we do not recognize incremental expense.

Service, Parts & Other Gross Profit

Service, parts & other gross profit increased by $19.8 million, or 65.9%, to
$49.7 million for the year ended September 30, 2021 from $30.0 million for the
year ended September 30, 2020. Service, parts & other gross profit as a
percentage of service, parts & other revenue was 51.6% and 47.2% for the year
ended September 30, 2021 and 2020, respectively. This increase was the result of
the mix of products sold, which shifted towards service work, which has a higher
margin. Additionally, due to the increased demand, we experienced an increase in
the overall productivity of our service technicians, which also drove margins
higher.

Selling, General & Administrative Expenses

Selling, general & administrative expenses increased by $55.5 million, or 38.6%,
to $199.0 million for the year ended September 30, 2021 from $143.6 million for
the year ended September 30, 2020 This increase was primarily due to the impact
of acquisitions and expenses incurred to support the overall increase in
Dealership same-store sales. The increase in selling, general & administrative
expenses primarily consisted of a $45.0 million increase in personnel expenses,
a $5.9 million increase in administrative expenses and a $5.1 million increase
in fixed expenses. Selling, general & administrative expenses as a percentage of
revenue increased to 16.2% from 14.0% for the years ended September 30, 2021 and
2020, respectively. The increase in selling, general & administrative expenses
as a percentage of revenue was primarily due to higher variable-based
compensation expense as a result of the Company's increased net profit margin.

Depreciation and Amortization

Depreciation and amortization expense increased $2.2 million, or 66.5%, to $5.4
million for the year ended September 30, 2021 compared to $3.2 million for the
year ended September 30, 2020. The increase in depreciation and amortization
expense for the year ended September 30, 2021 compared to the year ended
September 30, 2020 was primarily attributable to an increase in property and
equipment from our 2021 Acquisitions.

Transaction Costs

The decrease in transaction costs of $2.8 million, or 76.2%, to $0.9 million for
the year ended September 30, 2021 compared to $3.6 million for the year ended
September 30, 2020 was primarily attributable to expenses recognized in
conjunction with the IPO and the public offering on September 22, 2020 (the
"September Offering") that were not able to be capitalized for the year ended
September 30, 2020.


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Change in Fair Value of Contingent Consideration

During the year ended September 30, 2021, we increased our contingent
consideration related to a fiscal 2021 acquisition in the amount of $3.2
million. During the year ended September 30, 2020, we increased our contingent
consideration related to a fiscal 2019 acquisition in the amount of $6.8
million.

Income from Operations

Income from operations increased $70.6 million, or 90.2%, to $148.9 million for
the year ended September 30, 2021 compared to $78.3 million for the year ended
September 30, 2020. The increase was primarily attributable to the $121.9
million increase in gross profit for the year ended September 30, 2021 as
compared to the year ended September 30, 2020, partially offset by a $55.5
million increase in selling, general & administrative expenses during the same
period.

Interest Expense - Floor Plan

Interest expense - floor plan decreased $6.3 million, or 71.0%, to $2.6 million
for the year ended September 30, 2021 compared to $8.9 million for the year
ended September 30, 2020. The decrease was primarily attributable to a decrease
in the average outstanding borrowings on our Inventory Financing Facility for
the year ended September 30, 2021 compared to the year ended September 30, 2020,
falling interest rates, and interest assistance received from our manufacturers
and banks.

Interest Expense - Other

The decrease in interest expense - other of $4.5 million, or 50.8%, to $4.3
million for the year ended September 30, 2021 compared to $8.8 million for the
year ended September 30, 2020 was primarily attributable to the payoff of our
Term and Revolver Credit Facility with Goldman Sachs Specialty Lending Group,
L.P. (the "Term and Revolver Credit Facility") and entry into the Credit
Facility (as defined below), which offers a more favorable interest rate.

Change in Fair Value of Warrant Liability

The change in fair value of warrant liability of $0.8 million for the year ended
September 30, 2020 was attributable to an overall change in the enterprise value
of the Company. No charge was recorded for the year ended September 30, 2021 as
the warrants were exercised in conjunction with the IPO.

Loss on Extinguishment of Debt

During the year ended September 30, 2020, we incurred $6.6 million in debt
extinguishment expenses. On July 22, 2020 in connection with the refinancing of
our term debt, we repaid in full the Term and Revolver Credit Facility. As part
of the pre-payment of the Term and Revolver Credit Facility, we were required to
pay an early termination fee of $4.2 million. Additionally, in connection with
the debt extinguishment, we recognized $2.4 million of expense for unamortized
debt issuance costs.

Other (Income) Expense, Net

Other income, net was approximately $248,000 and $24,000 for the year ended
September 30, 2021 and the year ended September 30, 2020, respectively.

Income Tax Expense

The $19.5 million increase in income tax expense for the year ended September
30, 2021 as compared to the year ended September 30, 2020 was primarily the
result of the $87.4 million increase in income before income tax expense and the
IPO and the taxability of OneWater Inc. as a corporation for the full year ended
September 30, 2021 versus only the period subsequent to the IPO for the year
ended September 30, 2020. Additionally, as Class B common stock was exchanged
for Class A common stock (in accordance with the terms of the OneWater LLC
Agreement), the proportion of consolidated income before income tax expense
allocated to OneWater Inc. increased, yielding higher income tax expense.


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Net Income (Loss)

Net income increased by $67.9 million to $116.4 million for the year ended
September 30, 2021 compared to $48.5 million for the year ended September 30,
2020. The increase was primarily attributable to the $121.9 million increase in
gross profit for the year ended September 30, 2021 compared to September 30,
2020. The increase was partially offset by a $55.5 million increase in selling,
general and administrative expenses for the year ended September 30, 2021
compared to the year ended September 30, 2020, as well as a $19.5 million
increase in income tax expense for the same period.

Comparison of Non-GAAP Financial Measure

We view Adjusted EBITDA as an important indicator of performance. We define
Adjusted EBITDA as net income (loss) before interest expense - other, income tax
expense, depreciation and amortization and other (income) expense, further
adjusted to eliminate the effects of items such as the change in the fair value
of warrant liability, change in fair value of contingent consideration, gain
(loss) on extinguishment of debt and transaction costs.

Our board of directors, management team and lenders use Adjusted EBITDA to
assess our financial performance because it allows them to compare our operating
performance on a consistent basis across periods by removing the effects of our
capital structure (such as varying levels of interest expense), asset base (such
as depreciation and amortization) and other items (such as the fair value
adjustment of the warrants, change in fair value of contingent consideration,
gain (loss) on extinguishment of debt and transaction costs) that impact the
comparability of financial results from period to period. We present Adjusted
EBITDA because we believe it provides useful information regarding the factors
and trends affecting our business in addition to measures calculated under GAAP.
Adjusted EBITDA is not a financial measure presented in accordance with GAAP. We
believe that the presentation of this non-GAAP financial measure will provide
useful information to investors and analysts in assessing our financial
performance and results of operations across reporting periods by excluding
items we do not believe are indicative of our core operating performance. Net
income (loss) is the GAAP measure most directly comparable to Adjusted EBITDA.
Our non-GAAP financial measure should not be considered as an alternative to the
most directly comparable GAAP financial measure. You are encouraged to evaluate
each of these adjustments and the reasons we consider them appropriate for
supplemental analysis. In evaluating Adjusted EBITDA, you should be aware that
in the future we may incur expenses that are the same as or similar to some of
the adjustments in such presentation. Our presentation of Adjusted EBITDA should
not be construed as an inference that our future results will be unaffected by
unusual or non-recurring items. There can be no assurance that we will not
modify the presentation of Adjusted EBITDA in the future, and any such
modification may be material. Adjusted EBITDA has important limitations as an
analytical tool and you should not consider Adjusted EBITDA in isolation or as a
substitute for analysis of our results as reported under GAAP. Because Adjusted
EBITDA may be defined differently by other companies in our industry, our
definition of this non-GAAP financial measure may not be comparable to similarly
titled measures of other companies, thereby diminishing its utility.

The following tables present a reconciliation of Adjusted EBITDA to our net
income (loss), which is the most directly comparable GAAP measure for the
periods presented.

Year Ended September 30, 2022, Compared to Year Ended September 30, 2021.

                                                        Years Ended September 30,
Description                                          2022          2021         Change
                                                             ($ in thousands)
Net income                                         $ 152,611     $ 116,413     $ 36,198
Interest expense - other                              13,201         4,344        8,857
Income tax expense                                    43,225        25,802       17,423
Depreciation and amortization                         16,297         5,411  

10,886

Change in fair value of contingent consideration 10,380 3,249

7,131

Transaction costs                                      7,724           869  

6,855

Loss on extinguishment of debt                           356             -          356
Other expense (income), net                            3,793          (248 )      4,041
Adjusted EBITDA                                    $ 247,587     $ 155,840     $ 91,747




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Adjusted EBITDA was $247.6 million for the year ended September 30, 2022
compared to $155.8 million for the year ended September 30, 2021. The increase
in Adjusted EBITDA resulted from our 11.9% increase in Dealership same-store
sales growth for the year ended September 30, 2022 as compared to the year ended
September 30, 2021, combined with the results of the 2022 Acquisitions and our
ability to increase gross profit margins and control selling, general and
administrative expenses.

Year Ended September 30, 2021, Compared to Year Ended September 30, 2020.

                                                        Years Ended September 30,
Description                                          2021          2020        Change
                                                            ($ in thousands)
Net income                                         $ 116,413     $ 48,508     $ 67,905
Interest expense - other                               4,344        8,828       (4,484 )
Income tax expense                                    25,802        6,329       19,473
Depreciation and amortization                          5,411        3,249   

2,162

Change in fair value of warrant liability                  -         (771 ) 

771

Change in fair value of contingent consideration 3,249 6,762

     (3,513 )
Transaction costs                                        869        3,648       (2,779 )
Loss on extinguishment of debt                             -        6,559       (6,559 )
Other income, net                                       (248 )        (24 )       (224 )
Adjusted EBITDA                                    $ 155,840     $ 83,088     $ 72,752



Adjusted EBITDA was $155.8 million for the year ended September 30, 2021
compared to $83.1 million for the year ended September 30, 2020. The increase in
Adjusted EBITDA resulted from our 9.7% increase in Dealership same-store sales
growth for the year ended September 30, 2021 as compared to the year ended
September 30, 2020, combined with the results of the 2021 Acquisitions and our
ability to increase gross profit margins and the impact of the adjusting items
noted above.

Seasonality

Our business, along with the entire boating industry, is highly seasonal, and
such seasonality varies by geographic market. With the exception of Florida, we
generally realize significantly lower sales and higher levels of inventories,
and related floor plan borrowings, in the quarterly periods ending December 31
and March 31. Revenue generated from our dealerships in Florida serves to offset
generally lower winter revenue in our other states and enables us to maintain a
more consistent revenue stream. The onset of the public boat and recreation
shows in January stimulates boat sales and typically allows us to reduce our
inventory levels and related floor plan borrowings throughout the remainder of
the fiscal year. The impact of seasonality on our results of operations could be
materially impacted based on the location of our acquisitions. For example, our
operations could be substantially more seasonal if we acquire dealer groups that
operate in colder regions of the United States. Our business is also subject to
weather patterns, which may adversely affect our results of operations. For
example, prolonged winter conditions, reduced rainfall levels or excessive rain,
may limit access to boating locations or render boating dangerous or
inconvenient, thereby curtailing customer demand for our products and services.
In addition, unseasonably cool weather and prolonged winter conditions may lead
to a shorter selling season in certain locations. Hurricanes and other storms
could result in disruptions of our operations or damage to our boat inventories
and facilities, as has been the case when Florida and other markets were
affected by hurricanes. We believe our geographic diversity is likely to reduce
the overall impact to us of adverse weather conditions in any one market area.
Additionally, due to a global pandemic, our seasonal trends may also change as a
result of, among other things, location closures, disruptions to the supply
chain and inventory availability, manufacturer delays, and cancellation of boat
shows. For more information, see "Risk Factors-Risks Related to Industry and
Competition-Our business, as well as the entire retail marine industry, is
highly seasonal, with seasonality varying in different geographic markets" and
"Business-Seasonality."


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Liquidity and Capital Resources

Overview

OneWater Inc. is a holding company with no operations and is the sole managing
member of OneWater LLC. OneWater Inc's principal asset consists of common units
of OneWater LLC. Our earnings and cash flows and ability to meet our obligations
under the A&R Credit Facility, and any other debt obligations will depend on the
cash flows resulting from the operations of our operating subsidiaries, and the
payment of distributions by such subsidiaries. Our A&R Credit Facility and
Inventory Financing Facility (described below) contain certain restrictions on
distributions or transfers from our operating subsidiaries to their members or
unitholders, as applicable, as described in the summaries below under "-Debt
Agreements-A&R Credit Facility" and "-Inventory Financing Facility."
Accordingly, the operating results of our subsidiaries may not be sufficient for
them to make distributions to us. As a result, our ability to make payments
under the A&R Credit Facility and any other debt obligations or to declare
dividends could be limited.

Our cash needs are primarily for growth through acquisitions and working capital
to support our operations, including new and pre-owned boat and related parts
inventories and off-season liquidity. We routinely monitor our cash flow to
determine the amount of cash available to complete acquisitions. We monitor our
inventories, inventory aging and current market trends to determine our current
and future inventory and related floorplan financing needs. Based on current
facts and circumstances, we believe we will have adequate cash flow from
operations, borrowings under our Credit Facilities and proceeds from any future
public or private issuances of debt or equity to fund our current operations, to
make share repurchases and to fund essential capital expenditures and
acquisitions for the next twelve months and beyond.

Cash needs for acquisitions have historically been financed with our Credit
Facilities and cash generated from operations. Our ability to utilize the A&R
Credit Facility to fund acquisitions depend upon Adjusted EBITDA and compliance
with covenants of the A&R Credit Facility. Cash needs for inventory have
historically been financed with our Inventory Financing Facility. Our ability to
fund inventory purchases and operations depends on the collateral levels and our
compliance with the covenants of the Inventory Financing Facility. As of
September 30, 2022, we were in compliance with all covenants under the A&R
Credit Facility and the Inventory Financing Facility.

Cash Flows

Analysis of Cash Flow Changes Between the Year Ended September 30, 2022 and 2021

The following table summarizes our cash flows for the periods indicated:

                                                             Year Ended September 30,
Description                                             2022           2021          Change
                                                           ($ in thousands, unaudited)
Net cash provided by operating activities            $    7,447     $  159,423     $ (151,976 )
Net cash used in investing activities                  (476,844 )     (117,130 )     (359,714 )
Net cash provided by (used in) financing
activities                                              456,403        (36,497 )      492,900
Effect of exchange rate changes on cash and
restricted cash                                              (8 )            -             (8 )
Net change in cash                                   $  (13,002 )   $    5,796     $  (18,798 )



Operating Activities. Net cash provided by operating activities was $7.4 million
for the year ended September 30, 2022 compared to net cash provided by operating
activities of $159.4 million for the year ended September 30, 2021. The $152.0
million decrease in cash provided by operating activities was primarily
attributable to a $192.5 million increase in the change in inventory, partially
offset by a $36.2 million increase in net income for the year ended September
30, 2022 as compared to the year ended September 30, 2021.

Investing Activities. Net cash used in investing activities was $476.8 million
for the year ended September 30, 2022 compared to $117.1 million for the year
ended September 30, 2021. The $359.7 million increase in cash used in investing
activities was primarily attributable to a $352.1 million increase in cash used
in acquisitions for the year ended September 30, 2022 as compared to the year
ended September 30, 2021.


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Financing Activities. Net cash provided by financing activities was $456.4
million for the year ended September 30, 2022 compared to net cash used in
financing activities of $36.5 million for the year ended September 30, 2021. The
$492.9 million increase in cash provided by financing activities was primarily
attributable to a $176.4 million increase in net borrowings on our Inventory
Financing Facility and a $382.5 million increase in proceeds on long-term debt,
partially offset by $79.2 million increase in payments on long-term debt for the
year ended September 30, 2022 as compared to the year ended September 30, 2021.

Analysis of Cash Flow Changes Between the Year Ended September 30, 2021 and 2020

The following table summarizes our cash flows for the periods indicated:

                                                    Year Ended September 30,
Description                                    2021           2020          Change
                                                  ($ in thousands, unaudited)

Net cash provided by operating activities $ 159,423 $ 212,477 $

  (53,054 )
Net cash used in investing activities         (117,130 )       (4,672 )     (112,458 )
Net cash used in financing activities          (36,497 )     (151,144 )      114,647
Net change in cash                          $    5,796     $   56,661     $  (50,865 )



Operating Activities. Net cash provided by operating activities was $159.4
million for the year ended September 30, 2021 compared to net cash provided by
operating activities of $212.5 million for the year ended September 30, 2020.
The $53.1 million decrease in cash provided by operating activities was
primarily attributable to a $101.9 million decrease in the change in inventory,
partially offset by a $67.9 million increase in net income for the year ended
September 30, 2021 as compared to the year ended September 30, 2020.

Investing Activities. Net cash used in investing activities was $117.1 million
for the year ended September 30, 2021 compared to $4.7 million for the year
ended September 30, 2020. The $112.5 million increase in cash used in investing
activities was primarily attributable to a $107.5 million increase in cash used
in acquisitions for the year ended September 30, 2021 as compared to the year
ended September 30, 2020.

Financing Activities. Net cash used in financing activities was $36.5 million
for the year ended September 30, 2021 compared to net cash used in financing
activities of $151.1 million for the year ended September 30, 2020. The $114.6
million decrease in cash used in financing activities was primarily attributable
to an $90.5 million decrease in the distributions to redeemable preferred
interest members and redemption of redeemable preferred interest, a $77.8
million increase in net borrowings on our Inventory Financing Facility and a
$112.9 million decrease in payments on long-term debt, partially offset by $59.2
million decrease in proceeds from issuance of Class A common stock sold in the
IPO, net of underwriting discounts and commissions, $8.1 million decrease in
proceeds from issuance of Class A common stock sold in the September Offering,
net of underwriting discounts and commissions, and a $99.3 million decrease in
proceeds on long-term debt for the year ended September 30, 2021 as compared to
the year ended September 30, 2020.

Share Repurchase Program

On March 30, 2022, the Board authorized a share repurchase program of up to $50
million of outstanding shares of Class A common stock. Repurchases under the
share repurchase program may be made at any time or from time to time, without
prior notice, in the open market or in privately negotiated transactions at
prevailing market prices, or such other means as will comply with applicable
state and federal securities laws and regulations, including the provisions of
the Securities Exchange Act of 1934, including Rule 10b5-1 and, to the extent
practicable or advisable, Rule 10b-18 thereunder, and consistent with the
Company's contractual limitations and other requirements. For the year ended
September 30, 2022, the Company repurchased 10,134 shares at an average price of
$34.89 per share. The Company has $49.6 million remaining under the share
repurchase program.

The Inflation Reduction Act, which was signed into law in August 2022, imposes a
1%, non-deductible excise tax on certain repurchases of common stock that occur
after December 31, 2022. We expect the excise tax to apply to our share
repurchase program, but do not expect the tax to have a material effect on our
business.


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Debt Agreements

Credit Facility

Effective July 22, 2020, we and certain of our subsidiaries entered into the
Credit Agreement (as amended by the First Incremental Amendment and the Second
Incremental Amendment and as further amended, restated, amended and restated,
supplemented or otherwise modified from time to time, the "Credit Facility")
with Truist Bank and the other lenders party thereto. The Credit Facility
provided for (i) a $50.0 million revolving credit facility that was used for
revolving credit loans (including up to $5.0 million in swingline loans and up
to $5.0 million in letters of credit from time to time), and (ii) a term loan
facility (which includes incremental term loans as provided in the First
Incremental Amendment (as defined below) and Second Incremental Amendment (as
defined below)). Subject to certain conditions, the available amount under the
revolving credit facility and the term loans may be increased. The revolving
credit facility was scheduled to mature on July 22, 2025. The term loan was
repayable in installments beginning on March 31, 2021, with the remainder due on
the earlier of (i) July 22, 2025 or (ii) the date on which the principal amount
of all outstanding term loans have been declared or automatically have become
due and payable pursuant to the terms of the Credit Facility.

On February 2, 2021, we entered into the Incremental Amendment No. 1 (the "First
Incremental Amendment") to the Credit Facility to provide for, among other
things, an incremental term loan to OWAO in an aggregate principal amount equal
to $30.0 million, which was added to, and constituted a part of, the existing
$80.0 million term loan.

On November 30, 2021, we entered into the Incremental Amendment No. 2 (the
"Second Incremental Amendment") to the Credit Facility to provide for, among
other things, an incremental term loan to OWAO in an aggregate principal amount
equal to $200.0 million, which was added to, and constituted a part of, the
existing $110.0 million term loan. The Second Incremental Amendment further
provided for a $20.0 million increase in the existing revolving commitment,
which was added to, and constituted a part of, the existing $30.0 million
revolving commitment.

A&R Credit Facility

On August 9, 2022 we entered into the Amended and Restated Credit Agreement (the
"A&R Credit Facility"), with certain of our subsidiaries, Truist Bank and the
other lenders party thereto. The A&R Credit Facility amends and restates and
replaces in its entirety the Credit Facility. The A&R Credit Facility provides
for, among other things, (i) a $65.0 million revolving credit facility
(including up to $5.0 million in swingline loans and up to $5.0 million in
letters of credit from time to time) and (ii) a $445.0 million term loan
facility. Subject to certain conditions, the available amount under the Term
Facility and the Revolving Facility may be increased by $125.0 million plus
additional amounts subject to additional conditions (including satisfaction of a
consolidated leverage ratio requirement) in the aggregate (with up to $50.0
million allocable to the Revolving Facility). The Revolving Facility matures on
August 9, 2027. The Term Facility is repayable in installments beginning on
December 31, 2022, with the remainder due on the earlier of (i) August 9, 2027
or (ii) the date on which the principal amount of all outstanding term loans
have been declared or automatically have become due and payable pursuant to the
terms of the A&R Credit Facility.

Borrowings under the A&R Credit Facility bear interest, at our option, at either
(a) a base rate (the "Base Rate") equal to the highest of (i) the prime rate (as
announced by Truist Bank from time to time), (ii) the Federal Funds Rate, as in
effect from time to time, plus 0.50%, (iii) Term SOFR (as defined in the A&R
Credit Facility) for a one-month Interest Period (calculated on a daily basis
after taking into account a floor equal to 0.00%) plus 1.00%, and (iv) 1.00%, in
each case, plus an applicable margin ranging from 0.75% to 1.75%, or (b) Term
SOFR, plus an applicable margin ranging from 0.75% to 1.75%. Interest on
swingline loans shall bear interest at the Base Rate plus an applicable margin
ranging from 1.75% to 2.75%. All applicable interest margins are based on
certain consolidated leverage ratio measures.

The A&R Credit Facility is subject to certain financial covenants including the
maintenance of a minimum fixed charge coverage ratio and a maximum consolidated
leverage ratio. The A&R Credit Facility also contains non-financial covenants
and restrictive provisions that, among other things, limit the ability of the
Loan Parties (as defined in the A&R Credit Facility) to incur additional debt,
transfer or dispose of all of their respective assets, make certain investments,
loans or restricted payments and engage in certain transactions with affiliates.
The A&R Credit Facility also includes events of default, borrowing conditions,
representations and warranties and provisions regarding indemnification and
expense reimbursement. The Company was in compliance with all covenants as of
September 30, 2022.


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Inventory Financing Facility

On December 29, 2021, the Company and certain of its subsidiaries entered into
the Seventh Amended and Restated Inventory Financing Agreement (as amended,
restated, supplemented or otherwise modified, the "Inventory Financing
Facility") to, among other things, increase the maximum borrowing amount
available to $500.0 million. Loans under the Inventory Financing Facility may be
extended from time to time to enable the Company to purchase inventory from
certain manufacturers. The Inventory Financing Facility Expires on December 1,
2023.

On February 24, 2022, April 1, 2022 and August 9, 2022, the Company entered into
the First, Second and Third Amendments to the Inventory Financing Facility,
respectively, to join various subsidiaries of the Company to the Inventory
Financing Facility in connection with certain acquisitions made by the Company,
in each case, as permitted by and under the Inventory Financing Facility.
Additionally, the Third Amendment to the Inventory Financing Facility increased
the Funded Debt to EBIDTA Ratio (as defined in the Inventory Financing
Facility). No other terms of the Inventory Financing Facility were changed with
the amendments.

Interest on new boats and for rental units is calculated using the Adjusted
30-Day Average SOFR plus an applicable margin of 2.75% to 5.00% depending on the
age of the inventory. Interest on pre-owned boats is calculated at the new boat
rate plus 0.25%. Loans are extended from time to time to enable us to purchase
inventory from certain manufacturers and to lease certain boats and related
parts to customers. The applicable financial terms, curtailment schedule and
maturity for each loan are set forth in separate program terms letters that were
entered into from time to time. The collateral for the Inventory Financing
Facility consisted primarily of our inventory that was financed through the
Inventory Financing Facility and related assets, including accounts receivable,
bank accounts, and proceeds of the foregoing, and excludes the collateral that
secures the A&R Credit Facility.

We are required to comply with certain financial and non-financial covenants
under the Inventory Financing Facility, including certain provisions related to
the Funded Debt to EBITDA Ratio, and the Fixed Charge Coverage Ratio (as defined
in the Inventory Financing Facility). We are also subject to additional
restrictive covenants, including restrictions on our ability to (i) use, sell,
rent or otherwise dispose of any collateral securing the Inventory Financing
Facility except for the sale of inventory in the ordinary course of business,
(ii) incur certain liens, (iii) engage in any material transaction not in the
ordinary course of business, (iv) change our business in any material manner or
our organizational structure, other than as otherwise provided for in the
Inventory Financing Facility, (v) engage in certain mergers or consolidations,
(vi) acquire certain assets or ownership interests of any other person or
entities, except for certain permitted acquisitions, (vii) guarantee or
indemnify or otherwise become in any way liable with respect to certain
obligations of any other person or entity, except as provided by the Inventory
Financing Facility, (viii) redeem, retire, purchase or otherwise acquire,
directly or indirectly, any of the equity of our acquired marine retailers (ix)
make any change in any of our marine retailers' capital structure or in any of
their business objectives or operations which might in any way adversely affect
the ability of such marine retailer to repay its obligations under the Inventory
Financing Facility, (x) incur, create, assume, guarantee or otherwise become or
remain liable with respect to certain indebtedness, and (xi) make certain
payments of subordinated debt. OneWater LLC and certain of its subsidiaries are
restricted from, among other things, making cash dividends or distributions
without the prior written consent of Wells Fargo. Under the Inventory Financing
Facility, among other exceptions, OneWater LLC may make distributions to its
members for certain permitted tax payments subject to certain financial ratios,
may make scheduled payments on certain subordinated debt and is permitted to
make pro rata distributions to the OneWater Unit Holders, including OneWater
Inc., in an amount sufficient to allow OneWater Inc. to pay its taxes and to
make payments under the Tax Receivable Agreement. OneWater LLC's subsidiaries
are generally restricted from making loans or advances to OneWater LLC. Our
Chief Executive Officer, Philip Austin Singleton, Jr., and our Chief Operating
Officer, Anthony Aisquith, provide certain personal guarantees of the Inventory
Financing Facility.


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On June 16, 2021, OneWater Inc. and OneWater LLC obtained a written consent from
the Agent (as defined in the Inventory Financing Facility) to permit the payment
of the one-time special cash dividend of $1.80 per share on June 17, 2021.

As of September 30, 2022 and September 30, 2021, our indebtedness associated
with financing our inventory under the Inventory Financing Facility totaled
$267.1 million and $114.2 million, respectively. Certain of our manufacturers
enter into independent agreements with the lenders to the Inventory Financing
Facility, which results in a lower effective interest rate charged to us for
borrowings related to the products by such manufacturer. As of September 30,
2022 and September 30, 2021, the effective interest rate on the outstanding
short-term borrowings under the Inventory Financing Facility was 2.2% and 2.0%,
respectively. As of September 30, 2022 and September 30, 2021, our additional
available borrowings under our Inventory Financing Facility were $232.9 million
and $278.3 million, respectively, based upon the outstanding borrowings and the
maximum facility amount. The aging of our inventory limits our borrowing
capacity as defined curtailments reduce the allowable advance rate as our
inventory ages. As of September 30, 2022, we were in compliance with all
covenants under the Inventory Financing Facility.

Notes Payable

Acquisition Notes Payable. In connection with certain of our acquisitions of
dealer groups, we have entered into notes payable agreements with the acquired
entities to finance these acquisitions. As of September 30, 2022, our
indebtedness associated with our 2 acquisition notes payable totaled an
aggregate of $3.2 million with a weighted average interest rate of 5.0% per
annum. As of September 30, 2022, the principal amount outstanding under these
acquisition notes payable ranged from $1.1 million to $2.1 million, and the
maturity dates ranged from December 1, 2023 to December 1, 2024.

Commercial Vehicles Notes Payable. Since 2015, we have entered into multiple
notes payable with various commercial lenders in connection with our acquisition
of certain vehicles utilized in our retail operations. Such notes bear interest
ranging from 0.0% to 8.9% per annum, require monthly payments of approximately
$145,000, and mature on dates between November 2022 to October 2028. As of
September 30, 2022, we had $4.2 million outstanding under the commercial
vehicles notes payable.

Contractual Obligations

The table below provides estimates of the timing of future payments that we are
contractually obligated to make based on agreements in place at September 30,
2022.

                                                               Payments Due by Period
                                   Less than 1                                           More than 5
                                      year           1 - 3 years       3 - 5 years          years           Total
                                                                   (in thousands)
A&R Credit Facility(1)            $      22,250     $      55,625     $     367,125     $           -     $ 445,000
Inventory Financing Facility(2)         267,108                 -                 -                 -       267,108
Notes Payable(3)                          1,421             5,313               611                10         7,355
Estimated interest payments(4)           23,323            42,477            34,571                 -       100,371
Operating lease obligations(5)           18,746            35,271            30,394            74,498       158,909
Total                             $     332,848     $     138,686     $     432,701     $      74,508     $ 978,743

--------------------------------------------------------------------------------

(1) Payments are generally made as required pursuant to the A&R Credit Facility

discussed above under "-Debt Agreements-A&R Credit Facility."

(2) Payments are generally made as required pursuant to the Inventory Financing

    Facility discussed above under "-Debt Agreements-Inventory Financing
    Facility." Amounts do not include estimated interest payments.

(3) Includes notes payable entered into in connection with certain of our

acquisitions of dealer groups and notes payable entered into with various

commercial lenders in connection with our acquisition of certain vehicles.

Payments are generally made as required pursuant to the terms of the relevant

notes payable and as discussed above under "-Debt Agreements-Notes Payable."

(4) Estimated interest payments based on the outstanding principal and stated

interest rates on the A&R Credit Facility and Notes Payable.

(5) Includes certain physical facilities and equipment that we lease under

    noncancelable operating leases.




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Tax Receivable Agreement

The Tax Receivable Agreement generally provides for the payment by OneWater Inc.
to certain of the OneWater Unit Holders of 85% of the net cash savings, if any,
in U.S. federal, state and local income tax and franchise tax (computed using
the estimated impact of state and local taxes) that OneWater Inc. actually
realizes (or is deemed to realize in certain circumstances) in periods after the
IPO as a result of certain tax basis increases and certain tax benefits
attributable to imputed interest. OneWater Inc. will retain the benefit of the
remaining 15% of these net cash savings. To the extent OneWater LLC has
available cash and subject to the terms of any current or future debt or other
agreements, the OneWater LLC Agreement will require OneWater LLC to make pro
rata cash distributions to OneWater Unit Holders, including OneWater Inc., in an
amount sufficient to allow OneWater Inc. to pay its taxes and to make payments
under the Tax Receivable Agreement. We generally expect OneWater LLC to fund
such distributions out of available cash. However, except in cases where
OneWater Inc. elects to terminate the Tax Receivable Agreement early, the Tax
Receivable Agreement is terminated early due to certain mergers or other changes
of control or OneWater Inc. has available cash but fails to make payments when
due, generally OneWater Inc. may elect to defer payments due under the Tax
Receivable Agreement if it does not have available cash to satisfy its payment
obligations under the Tax Receivable Agreement or if its contractual obligations
limit its ability to make these payments. Any such deferred payments under the
Tax Receivable Agreement generally will accrue interest. In 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. In the
case of such an acceleration, where applicable, we generally expect the
accelerated payments due under the Tax Receivable Agreement to be funded out of
the proceeds of the change of control transaction giving rise to such
acceleration. OneWater Inc. intends to account for any amounts payable under the
Tax Receivable Agreement in accordance with ASC Topic 450, Contingencies.

Off Balance Sheet Arrangements

We have no material off balance sheet arrangements, except for operating leases
and purchase commitments under supply agreements entered into in the normal
course of business.

Recent Accounting Pronouncements

See Note 3 of the Notes to the Consolidated Financial Statements.