Company: ONEW
Filing Date: 2025-01-31
Form Type: 10-Q
Source: 0001772921-25-000013
Chunk: 160

Company: OneWater Marine Inc.
Filing Date: 2025-01-31
Form: 10-Q
Item: Part I, Item 2
Chunk 160
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 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. 

Recent Accounting Pronouncements 

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

Item 3.    Quantitative and Qualitative Disclosure about Market Risk

Interest Rate Risk 

Our Inventory Financing Facility exposes us to risks caused by fluctuations in interest rates. The interest rate on our Inventory Financing Facility for major unit inventory is calculated using SOFR plus an applicable margin. Based on the $290.1 million balance under the Inventory Financing Facility that is not covered by interest rate swaps as of December 31, 2024, a change of 100 basis points in the underlying interest rate would cause a change in interest expense of approximately $2.9 million. This hypothetical increase does not take into account a corresponding increase to the programs that we may receive from our manufacturers or management’s ability to curtail inventory and related floor plan balances, both of which would reduce the impact of the interest rate increase.

Our A&R Credit Facility exposes us to risks caused by fluctuations in interest rates. The interest rate on our A&R Credit Facility is calculated using Term SOFR (with a 0.00% floor) plus an applicable margin. Based on the $233.5 million outstanding balance that is not covered by interest rate swaps as of December 31, 2024, a change of 100 basis points in the underlying interest rate would cause a change in interest expense of approximately