OneWater Marine: TH Marine Acquisition, Marine Parts & Accessories

This is a snippet of the transcript, sign up to read more.

OneWater, obviously, is highly acquisitive and I know their rationale for the T-H Marine purchase, but what is your impression of that rationale and the logic behind it?

As an example, we sold a lot of the stainless-steel ladders that you use to get on and off boats. We have got to have tight margins, to compete in the OEM space, but that same ladder could be 2X or 3X sales dollars, at the individual boat owner level, if they need a ladder replaced after a couple of seasons. It’s not a warranty thing; you are going to pay for the service and you are going to pay for the part. If you can get that at scale – which OneWater has with their dealer network – to me, that seems like a long-term play to be as vertically integrated as possible. Even if it’s under a brand, like a T-H Marine, you are providing the components and maybe even managing the inventory centrally, so that these dealers don’t have to sit on a lot of inventory, you can make some nice margins there, post boat sale.

This is a snippet of the transcript, sign up to read more.

Just to clarify what you are saying about the margin differential, do you just meant that, on the standalone business, selling a ladder to a boat owner, through a dealership, is a lot higher margin? You’re not saying there are synergies between owning both the store and the parts? Is it just that this is a structurally higher margin?

It’s a higher margin but thinking about a business being able to scale it, if I can sell to a dealer at my cost, because I’m the supplier of the part and I’m not buying it through a distributor where there are already a couple of margins that have been found there, before it gets to OneWater, if I can own if from the point of origin – which is, typically, a factory overseas – I can really dial in my cost of goods sold.

This is a snippet of the transcript, sign up to read more.

Who would be the other T-H competitors?

I would say the biggest in the distributor and manufactured components would be Patrick Industries. They are heavily RV but they have gone a lot deeper in marine, over the last five to seven years, just because they found that some of the companies they were buying could make parts for both RV and marine. Then Lippert components, as well. I live in Indiana and the joke is, you are either a Patrick company or a Lippert company, just because they have got the stickiness with RV and marine. They are buying companies, via acquisition; that’s their model, similar to where OneWater T-H is looking.

This is a snippet of the transcript, sign up to read more.