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Risk Factors Dashboard

Once a year, publicly traded companies issue a comprehensive report of their business, called a 10-K. A component mandated in the 10-K is the ‘Risk Factors’ section, where companies disclose any major potential risks that they may face. This dashboard highlights all major changes and additions in new 10K reports, allowing investors to quickly identify new potential risks and opportunities.

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Risk Factors - ONEW

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Item 1A.

” Some of these risks include:

•General economic conditions and consumer spending patterns can have a material adverse effect on our business, financial condition and results of operations.

•The availability and costs of borrowed funds can adversely affect our ability to obtain adequate boat inventory, the ability and willingness of our customers to finance boat purchases and our ability to fund future acquisitions.

•Failure to implement strategies to enhance our performance could have a material adverse effect on our business and financial condition.

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•OneWater Inc. is a holding company. OneWater Inc.’s only material asset is its equity interest in OneWater LLC, and OneWater Inc.’s corporate and other overhead expenses.

•If we experience any material weaknesses in the future or otherwise fail to develop or maintain an effective system of internal controls in the future, we may not be able to accurately report our financial condition or results of operations, which may adversely affect investor confidence in us and, as a result, the value of our Class A common stock.

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• realizes in respect of the tax attributes subject to the Tax Receivable Agreement.

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Our business, financial condition and results of operations could be materially adversely affected by any of these risks or uncertainties discussed herein. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition, or future results. Certain statements made herein are forward-looking statements.

Risks Related to General Economic Conditions

General economic conditions and consumer spending patterns can have a material adverse effect on our business, financial condition and results of operations.

In response to these conditions we reduced our inventory purchases, closed certain dealerships and reduced headcount. Although we have expanded our operations and increased our focus on pre-owned sales, parts and repair services and finance & insurance products, during periods of stagnant or modestly declining industry trends, the cyclical nature of the retail marine industry or the lack of industry growth could lead to oversupply and weak demand, which could materially adversely affect our business, financial condition or results of operations in the future.

The inflationary pressure on labor costs could lead to a reduction in profitability, as we may face challenges in maintaining our margins on boats and other distributed products. Additionally, the increased costs in raw materials and transportation could further strain our supply chain, leading to higher operational expenses. Our suppliers may in turn pass such increases along to us by raising the cost of our inventories and/or we may not be able to fully pass along these increased costs onto our customers. These market dynamics may adversely impact our profitability.

Inflation, along with rising interest rates, translates into an increased cost of boat ownership, which can negatively impact our customers' ability or desire to purchase our products.

Since 2008, the U.S. Federal Reserve System has generally maintained policies producing a historically low-interest-rate environment. Interest rates rose throughout 2022 and 2023 and may rise in the future, and there can be no assurance as to what actions the Federal Reserve System will take in the future.

In addition, such an increase or adverse change could reduce the availability or increase the costs of obtaining new debt and refinancing existing indebtedness or negatively impact the market price of our Class A common stock.

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Risks Related to Our Industry and Competition

Our success depends to a significant extent on our manufacturers, and the loss of certain manufacturers could have an adverse effect on our business, financial condition, and results of operations.

Of this amount, Malibu Boats, Inc.

During the course of the pandemic, a number of our manufacturers faced inventory shortages due to a combination of these facts as well as high demand.

The continuation of our dealer agreements with most manufacturers depends upon, among other things, our achieving stated performance goals for customer satisfaction ratings and market share penetration in the market served by the applicable marine retailer. Failure to meet performance goals and other conditions set forth in any existing or new dealer agreement could have various consequences, including the following:

•the termination or nonrenewal of the dealer agreement;

•the imposition of additional conditions in subsequent dealer agreements;

•limitations on boat inventory allocations;

•reductions in reimbursement rates for warranty work performed by the dealer;

•loss of certain manufacturer-to-dealer incentives;

•denial of approval of future acquisitions; or

•the loss of exclusive rights to sell in the geographic territory.

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Our business, as well as the entire retail marine industry, is highly seasonal, with seasonality varying in different geographic markets.

We also have various dealerships in the Northeast and Midwest region of the United States, which typically experience colder temperatures in the winter months. The impact of seasonality on our results of operations could be materially impacted based on the location of our acquisitions.

Changing trends and attitudes toward large discretionary purchases on the part of younger consumers in particular, who may prefer to share or borrow a boat rather than incur the expense of ownership, may impact our future sales. Further, as a seller of high-end consumer products, we must compete for discretionary spending with a wide variety of other recreational activities and consumer purchases. In addition, perceived hassles of boat ownership and customer service and customer education throughout the retail boat industry, which has traditionally been perceived to be relatively poor, represent impediments to boat purchases.

We face intense competition.

We rely to a certain extent on boat shows to generate sales. Our inability to participate in boat shows in our existing or targeted markets, including due to cancellations of boat shows, could have a material adverse effect on our business, financial condition and results of operations.

We compete primarily with local marine retailers who own three or fewer stores, as well as with a limited number of larger operators. There is significant competition both within markets we currently serve and in new markets that we may enter. In addition, several of our competitors, especially those selling marine equipment and accessories, are large national or regional chains that have substantial financial, marketing, and other resources. Private sales of pre-owned boats represent an additional source of competition.

If any of our competitors successfully provides a broader, more efficient or attractive combination of services, protection plans, products and resources to our target customers, our business results could be materially adversely affected. Our inability to compete effectively with existing or potential competitors could have a material adverse effect on our business, financial condition and results of operations.

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Due to various matters, including environmental concerns, permitting and zoning requirements, and competition for waterfront real estate, some markets in the United States have experienced an increased waiting list for marina and storage availability. In general, the markets in which we currently operate are not experiencing any unusual difficulties. However, marine retail activity could be adversely affected in markets that do not have sufficient marina and storage availability to satisfy demand.

Risks Related to Our Acquisition and Growth Strategies

Failure to implement strategies to enhance our performance could have a material adverse effect on our business and financial condition.

These efforts are designed to increase our revenue and reduce our dependence on the sale of new and pre-owned boats. These business initiatives have required, and will continue to require, us to add personnel, invest capital, enter businesses or geographic regions in which we do not have extensive experience and encounter substantial competition. As a result, our strategies to enhance our performance may not be successful and we may increase our expenses or write off or impair such investments if not successful.

We continue to strategically evaluate and monitor our pipeline for potential acquisitions. Each acquired marine retailer operated independently prior to our acquisition. We may not be able to oversee the combined entity efficiently, realize anticipated synergies or effectively implement our growth and operating strategies. To the extent that we successfully pursue our acquisition strategy, our resulting growth will place significant additional demands on our management and infrastructure.

Our growth strategy of acquiring additional marine businesses involves significant risks. We continue to integrate acquired marine businesses and these activities may require management to devote significant attention and resources to integrating acquired businesses with our business. Acquisitions also may become more difficult or less attractive in the future as we acquire more of the most attractive marine businesses that best align with our culture and focus on customer service. As part of our growth strategy, we generally retain existing key staff, including senior management, when we complete an acquisition.

Consequently, operating results for any quarter may not be indicative of the results that may be achieved for any subsequent quarter or for a full fiscal year.

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Our ability to continue to grow through the acquisition of additional marine businesses will depend upon various factors, including the following:

•the availability of suitable acquisition candidates at attractive purchase prices;

•the ability to compete effectively for available acquisition opportunities;

•the availability of cash on hand, borrowed funds, common stock with a sufficient market price or other sources of financing to complete the acquisitions;

•the ability to obtain any requisite manufacturer, governmental or other required approvals;

•the ability to obtain approval of our lenders under our current credit agreements; and

•the absence of one or more manufacturers attempting to impose unsatisfactory restrictions on us in connection with their approval of acquisitions.

Our ability to meet manufacturers’ requirements for approving future acquisitions will have a direct bearing on our ability to complete acquisitions and effect our growth strategy. There can be no assurance that a manufacturer will not terminate its dealer agreement, refuse to renew its dealer agreement, refuse to approve future acquisitions or take other action that could have a material adverse effect on our acquisition program.

The inability to expand our product lines and geographic scope by obtaining additional distribution rights could have a material adverse effect on the growth and profitability of our business.

Accomplishing these goals for expansion will depend upon a number of factors, including the following:

•our ability to identify new markets in which we can obtain distribution rights to sell our existing or additional product lines;

•our ability to lease or construct suitable facilities at a reasonable cost in existing or new markets;

•our ability to hire, train and retain qualified personnel;

•the timely and effective integration of new dealerships into existing operations;

•our ability to achieve adequate market penetration at favorable operating margins without the acquisition of existing marine retailers; and

•our financial resources.

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Our dealer agreements require manufacturer consent to open or change dealership locations that sell certain products. We may not be able to open and operate new dealership locations or introduce new product lines on a timely or profitable basis. Moreover, the costs associated with opening new dealership locations or introducing new product lines may adversely affect our profitability.

Our systems, procedures, controls, and financial resources may not be adequate to support expanding operations. The inability to manage our growth effectively could have a material adverse effect on our business, financial condition and results of operations.

If our cash flow from operations is insufficient to meet our debt service requirements, we could be required to sell additional equity securities, refinance our obligations or dispose of assets in order to meet our debt service requirements. In addition, our credit arrangements contain financial covenants and other restrictions with which we must comply, including limitations on the incurrence of additional indebtedness. The failure to obtain sufficient financing on favorable terms and conditions could have a material adverse effect on our growth prospects and our business, financial condition and results of operations. For additional information relating to our credit arrangements, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Debt Agreements” in this Form 10-K.

We import, assemble and/or manufacturer marine parts, products and accessories, which could expose us to potential increased costs and certain additional risks.

Our business includes the import, assembly, manufacture and sale of marine parts and accessories. We may invest considerable resources to develop, import, warehouse and distribute new and existing parts, products and accessories, and there is no assurance that they will be successful.

g., defending against counterfeit or otherwise unauthorized goods) and intellectual property rights; our ability to successfully navigate and avoid claims related to the proprietary rights of third parties; and our ability to successfully administer and comply with obligations under license agreements that we have with third-party licensors of certain brands.

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Risks Related to Our Operations

The availability and costs of borrowed funds can adversely affect our ability to obtain adequate boat inventory, the ability and willingness of our customers to finance boat purchases and our ability to fund future acquisitions.

OneWater LLC and certain of its subsidiaries are parties to the Inventory Financing Facility, which consists of uncommitted inventory floorplan financing of up to $595.0 million as of November 13, 2024. Failure to extend or source alternative financing arrangements could adversely impact our business. We rely on the Inventory Financing Facility to purchase and maintain our inventory of boats. For additional information relating to the terms of our Inventory Financing Facility including the entrance into the Consent, Waiver and Second Amendment to Eighth Amended and Restated Inventory Financing Agreement on November 14, 2023, please see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Debt Agreements—Inventory Financing Facility.”

Effective August 9, 2022, we entered into the A&R Credit Facility (together with the Inventory Financing Facility, the “Credit Facilities”), which provides for, among other things, (i) a single tranche of Revolving Commitments in an amount equal to $65.0 million (the “Revolving Facility”) and (ii) a single tranche of Initial Term Loans in an aggregate principal amount equal to $445.0 million (the “Term Facility”). As of September 30, 2024, we had $375.5 million outstanding under the Term Facility and $51.2 million outstanding under the Revolving Facility."

Our ability to borrow under the Credit Facilities depends on our ability to continue to satisfy our covenants and other obligations under the Credit Facilities. The aging of our inventory limits our borrowing capacity as defined curtailments under the Inventory Financing Facility reduce the allowable advance rate as our inventory ages. As of September 30, 2024, we were not in compliance with all of the covenants under our Credit Facilities; however, the covenant noncompliance was waived pursuant to Amendment No. 6. to the Amended and Restated Credit Agreement and Waiver and Amendment No. 1 to Pledge and Security Agreement ("Amendment No. 6") entered into on November 13, 2024 and the Consent, Waiver and Second Amendment to Eighth Amended and Restated Inventory Financing Agreement (the "November 2024 Inventory Financing Amendment") entered into on November 13, 2024. For additional information relating to Amendment No. 6 and the November 2024 Inventory Financing Amendment, please see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Debt Agreements.” Our additional available borrowings under the Credit Facilities as of September 30, 2024, prior to the 2024 Inventory Financing Amendment which decreased the capacity on the Inventory Financing Facility by $55.0 million, were approximately $218.9 million in the aggregate based upon the outstanding borrowings and maximum facility amounts.

The interest rates on the Credit Facilities are calculated using SOFR and Term SOFR (as further described in the Credit Facilities). SOFR and Term SOFR will fluctuate with changing market conditions and, as SOFR and Term SOFR increase, our interest expense will mechanically increase. Although we have entered into floating to fixed interest rate swap agreements with respect to the Credit Facilities, there can be no assurance that such agreements will be effective at reducing our exposure to risks caused by fluctuations in interest rates, and such agreements subject us to the risk that the counterparty to one or more of these arrangements may default on its performance under the terms of the agreement.

Similarly, decreases in the availability of credit and increases in the cost of credit could adversely affect the ability of our customers to purchase boats from us and thereby adversely affect our ability to sell our products and impact the profitability of our finance & insurance activities.

Consequently, a significant increase in the price or tax on the sale of fuel on a regional or national basis could have a material adverse effect on our sales and operating results. Increases in fuel prices may negatively impact boat sales. The price of or tax on fuels may significantly increase in the future, adversely affecting our business.

Historically, affordable boat insurance has been available. However, as a severe storm approaches land,

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insurance providers cease underwriting until the storm passes. This loss of insurance prevents or delays lenders from lending. Any difficulty of customers to obtain affordable boat insurance could impede boat sales and adversely affect our business.

The preferences of these consumers cannot be predicted with certainty and are subject to change. We typically order product several months in advance, although such orders are not binding until the merchandise is delivered to our locations.

Our future success depends in large part upon our ability to attract and retain customers for our boat sales, repair and maintenance services, parts and accessories and finance & insurance products. Any number of factors could affect our ability to grow and maintain our customer base. These factors include consumer preferences, the frequency with which customers utilize our products, repair and maintenance services and finance & insurance products, general economic conditions, our ability to maintain our dealership locations, weather conditions, the availability of alternative services, protection plans, products and resources, significant increases in gasoline prices, the disposable income of consumers available for discretionary expenditures and the external perception of our brands.

A portion of our income results from referral fees derived from the placement or marketing of various finance & insurance products, consisting of customer financing, insurance products and extended service contracts, the most significant component of which is the participation and other fees resulting from our sale of customer financing contracts.

Lenders may impose terms in their boat financing arrangements with us that may be unfavorable to us or our customers, resulting in reduced demand for our customer financing programs and lower participation and other fees. Laws or regulations may be enacted nationally or locally which could result in fees from lenders being eliminated or reduced, materially impacting our operating results. If customer financing becomes more difficult to secure, it may adversely impact our business.

Moreover, these products are subject to complex federal and state laws and regulations. There can be no assurance that regulatory authorities in the jurisdictions in which these products are offered will not seek to regulate or restrict these products. Failure to comply with applicable laws and regulations could result in fines or other penalties including orders by state regulators to discontinue sales of the warranty products in one or more jurisdictions.

Although boat dealers are generally excluded from regulatory oversight under the Dodd-Frank Wall Street Reform and Consumer Protection Act, future changes in law could lead to additional, indirect regulation of boat dealers through its regulation of other financial institutions which provide such financing to our customers.

If interest rates rise, the fees we receive in connection with the financing may be limited or reduced as customers become more interest rate sensitive and the spreads that we are able to charge are compressed. The reduction of profit margins on sales of finance & insurance products or the lack of demand for or the unavailability of these products could have a material adverse effect on our operating margins.

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Our operations are dependent upon key personnel and team members.

Expanding our operations may require us to add additional executive personnel and team members in the future. In addition, we likely will depend on the senior management of any significant businesses we acquire in the future.

We maintain third-party liability insurance with respect to the sale and servicing of boats and other watercrafts along with limited product liability insurance. We may therefore experience claims that are not covered by our insurance coverage. While we have not experienced material losses related to product liability, personal injury or property damage claims in the past, we could be exposed to such claims or losses in the future. The institution of any significant claims against us could subject us to damages, result in higher insurance costs and harm our business reputation with potential customers.

Instead, we sell these units through a wholesale process.

Our sales of products produced in Italy, France, Australia, China and the United Kingdom, as well as any other non-U.S. manufacturer whose products we may sell, expose us to international political, economic and other risks. We also import certain boat components from international suppliers which could further our exposure to such international risks.

Any of these restrictions could prevent or make it difficult or more costly for us to import boats and boat components from foreign suppliers under economically favorable terms and conditions.

The economic, political and other risks we face resulting from these foreign purchases include the following:

•compliance with U.S. and local laws and regulatory requirements as well as changes in those laws and requirements;

•transportation delays or interruptions and other effects of less developed infrastructures;

•limitations on imports and exports;

•foreign exchange rate fluctuations;

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•imposition of restrictions on currency conversion or the transfer of funds;

•imposition of tariffs;

•maintenance of quality standards;

•unexpected changes in regulatory requirements;

•differing labor regulations;

•potentially adverse tax consequences;

•possible employee turnover or labor unrest;

•the burdens and costs of compliance with a variety of foreign laws; and

•political or economic conflicts, instability or civil unrest.

Online marketplaces may also increase our access to sensitive, confidential or personal data or information that is subject to data privacy and information security laws and regulations. In addition, there is no guarantee that we will be able to successfully expand our online platforms. Our competitors may have e-commerce businesses that are substantially larger and more developed than ours, which could place us at a competitive disadvantage. If we are unable to expand our online platforms, our growth plans could suffer, and the price of our Class A common stock could decline.

If any of our or the marine retailers’ trademarks become generic, or if third parties adopt marks similar to such marks, we may need to devote additional resources to advertising and marketing.

Despite our best efforts to protect our intellectual property, it is possible that competitors or other third parties may attempt to unlawfully copy, obtain or otherwise use our trade names, trademarks, patents, or other intellectual property or proprietary information without our consent. We take commercially reasonable measures designed to identify and protect our intellectual property. However, monitoring unauthorized use of our intellectual property is difficult and costly, and the steps we have taken may not be sufficient to effectively prevent third parties from infringing, misappropriating, diluting or otherwise violating our intellectual property rights. From time to time, we may be compelled to protect our intellectual property, which may involve litigation. Such litigation may be time-consuming and expensive and could result in the impairment or loss of the involved intellectual property.

We cannot assure that our intellectual property rights will be effectively utilized, maintained, or, if necessary, successfully enforced against third parties. Our intellectual property rights, and any additional rights we may obtain in the future, may be invalidated, circumvented or challenged, and the legal costs necessary to protect our intellectual property rights could be significant.

We may also be subject to infringement, misappropriation, dilution, or other violation complaints from others asserting our use of intellectual property rights owned or alleged to be owned by third parties. Even if intellectual property claims do not result in litigation or are resolved in our favor, these claims, and the time and resources necessary to resolve them, could divert our resources and require significant expenditures. Any of the foregoing could prevent us from competing effectively and could have a material adverse effect on our business, operations, and financial condition.

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Changes in the assumptions used to calculate our acquisition related contingent consideration liabilities could have a material adverse impact on our financial results.

Our estimates of fair value are based upon assumptions believed to be reasonable but which are uncertain and involve significant judgments. These quarterly adjustments could have a material effect on our results of operations.

If such assets are considered to be impaired, the impairment to be recognized is measured as the amount by which the carrying amount of the asset exceeds its fair market value.

During the year ended September 30, 2024, we evaluated our operations and underwent a restructuring plan (the "2024 Restructuring"), which resulted in the reduction of headcount and retail locations, cancellation of certain dealer agreements, and the cancellation of certain in-process information and technology related projects. As a result of the 2024 Restructuring, we recognized $15.3 million of restructuring charges during the fiscal year ended September 30, 2024. If we undergo additional restructuring plans in the future, we may take additional, potentially material, restructuring charges related to, among other things, employee termination or exit costs, which could have a material negative impact on our operating results and related financial statements. In addition, workforce changes can also temporarily reduce workforce productivity. We may not achieve or sustain the expected cost savings or other benefits of the 2024 Restructuring, or do so in a timely manner.

If we are unable to maintain those leases or locate alternative sites for our locations in our target markets and on terms that are acceptable to us, our revenues and profitability could be adversely affected.

Most locations operate under long-term leases with an initial term of at least 10 years and one or more renewal options for an additional 5 to 10 years. Additionally, we have entered into location leases with certain related parties for which we incurred $2.5 million in lease expense in the fiscal year ended September 30, 2024. There can be no assurance that we will be able to maintain our existing locations as leases expire, extend the leases or be able to locate alternative sites in our target markets and on favorable terms.

These hazards can cause personal injury and loss of life, severe damage to, or destruction of, property and equipment and business interruption and could adversely affect our financial condition.

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Risks Related to Environmental and Geographic Factors

Climatic events may adversely impact our operations, disrupt the business of our third party vendors on whom we rely upon for products and services, and may not be adequately covered by our insurance.

Climatic events in the areas where we operate have caused, and future climatic events may cause, disruptions and in some cases delays or suspensions in our operations that adversely impacted our business. For example, the physical effects of unseasonably wet weather, drought conditions, extended periods of below freezing weather, tropical storms, hurricanes, flooding, or other natural disasters have forced and may in the future force boating areas to close or render boating dangerous. This has resulted in and, in the future, could result in reduced customer demand for our products and services. Concerns regarding global changes in climate could also adversely affect the levels of boat purchases.

In addition, the physical effects of climatic events, including wintry conditions, increased frequency and severity of tropical storms or hurricanes, tornadoes, fires, floods and other natural disasters, as well as sea level rise, could result in the disruption of our operations and/or third party supply chain vendors on whom we rely upon for products and services, including boat deliveries from manufacturers, damage to or inadvertent releases from fueling stations, or damage to or the loss of our boat inventories and facilities as has been the case when the Southeast and Gulf Coast regions and other markets have been affected by hurricanes such as Hurricane Helene, and Hurricane Milton in 2024. Such disruptions in our supply chain could damage our on-site inventory at our locations, result in remedial liability or administrative penalties, or cause serious limitations or delays in the operations of our locations.

Environmental and other regulatory issues impact our operations from time to time.

Our operations are subject to stringent federal, state and local laws and regulations governing such matters as finance & insurance, consumer protection, consumer privacy, escheatment, anti-money laundering, releases, discharges and emissions or other releases into the environment and environmental protection, human health and safety, and employment practices, including wage and hour and anti-discrimination legal requirements. In addition, failure to comply with those and other legal requirements, or with U.S. trade sanctions, the U.S. Foreign Corrupt Practices Act and other applicable laws or regulations could result in the assessment of damages, the imposition of sanctions including monetary penalties, changes to our processes, or a delay, suspension or cessation of our operations, as well as damage to our image and reputation, all of which could have a material adverse effect on our business, results of operations and financial condition.

Marine engine manufacturers are subject to emissions standards imposed under the CAA, and the EPA has enacted a number of legal requirements imposing more stringent emissions standards for two-cycle, gasoline outboard marine engines.

Laws and regulations

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regarding the prevention of pollution or remediation of environmental contamination generally apply regardless of whether we lease or purchase the land and facilities. Additionally, certain of our locations and/or repair facilities utilize USTs and ASTs, primarily for storing and dispensing petroleum-based products.

Certain of our locations and/or repair facility properties have been operated in the past by third parties whose use, handling and disposal of petroleum-based products or wastes were not under our control. Given the strict liability nature of environmental laws, we may be liable for the remediation of such past releases notwithstanding that our operations did not cause or contribute to the contamination.

In particular, CERCLA, also known as the Superfund law, and analogous state laws, impose strict joint and several liability on generators, transporters, disposers and arrangers of hazardous substances at sites where hazardous substance releases have occurred or are threatening to occur.

In addition, claims alleging personal injury or property damage may be brought against us as a result of alleged exposure to hazardous substances resulting from our operations.

For example, we are performing soil and groundwater monitoring activities as required by applicable state and federal standards. We may also be required in the future to remove USTs, ASTs and inground lifts containing petroleum-based products and hazardous or toxic substances or wastes should they represent a risk of release or threatened release into the environment. Historically, our costs of compliance with these investigatory, remedial and monitoring requirements have not had a material adverse effect on our results of operations; however, there can be no assurance that such costs will not be material in the future or that such future compliance will not have a material adverse effect on our business, results of operation and financial condition. Environmental laws and regulations are comprehensive and subject to frequent change.

These requirements could discourage potential buyers of recreational boats, thereby limiting future sales and adversely affecting our business, financial condition, and results of operations.

Governmental and public concern arising from GHG emissions has resulted in increasing regulatory, political, financial and litigation risks in the United States and globally that target predominantly fossil fuel-related energy entities or their operations, which may have indirect adverse effects on other companies

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or industries, such as the retail recreational boat industry, for example, whose services or products generate GHGs or rely upon motor fuels refined from fossil fuels, which effects could be material.

With the U.S. Supreme Court finding that GHG emissions constitute a pollutant under the CAA, the EPA has adopted rules that, among other things, establish permit reviews for GHG emissions from certain large stationary sources, require the monitoring and annual reporting of GHG emissions from specified sources in the United States, implement standards reducing emissions of methane, a form of GHG, from specified oil and gas sectors, and together with the U.S. Department of Transportation, implement GHG emissions limits on vehicles manufactured for operation in the United States. Relatedly, the United States and European Union jointly announced at COP26 the launch of the Global Methane Pledge, an initiative committing to a collective goal of reducing global methane emissions by at least 30 percent from 2020 levels by 2030. However, the incoming United States presidential administration may make changes to the United States’ participation in such initiatives or seek other legislative or regulatory changes related to climate change, but we cannot predict what, when or how the new Administration may take actions to exit, rollback or otherwise revise existing climate change-related agreements, orders, laws, or regulations or the ultimate impact such changes may have on our business or results of operations.

There is also the possibility that financial institutions will be required to adopt policies that limit funding for companies producing, developing or bolstering the use of fossil fuels. Such ratings are used by some investors to inform their investment and voting decisions. Unfavorable ESG ratings and recent activism directed at shifting funding away from companies with fossil fuel-related assets could lead to increased negative investor sentiment toward us and our industry and to the diversion of investment to other, non-fossil fuel markets, which could have a negative impact on our access to and costs of capital.

Increasingly, various jurisdictions are considering or implementing increased disclosure data for companies related to climate change and GHG emissions. In March of 2024, the SEC released a rule establishing a framework for reporting of climate risks, targets, and metrics. However, the rule is currently paused pending litigation and we cannot predict the final outcome. In addition, the incoming presidential administration is expected to repeal the SEC climate rule; however, the timeline for any repeal is subject to a number of uncertainties and likely could face legal challenges that would further delay the implementation of any repeal. Further, in October 2023 California passed climate disclosure laws that, among other requirements, will require public and private companies that do business in

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California with total annual revenues exceeding certain thresholds to make disclosures including GHG emission data and climate-related financial risks. The implementing regulations for the law have not yet been drafted and the requirements are currently set to begin taking effect in 2026, with additional requirements phasing in through 2030. Moreover, some other states in which we operate, such as Illinois and New York, are considering adopting climate disclosure laws. While the laws have been subject to legal challenges and we are still assessing the impact of these requirements, additional reporting obligations could cause us to incur increased costs.

Increased focus on ESG matters could impact our operations and expose us to additional risks.

Increasing attention to, and societal expectations on companies to address, climate change and other environmental and social impacts, investor, regulatory and societal expectations regarding voluntary and mandatory ESG-related disclosures may result in increased costs, reduced profits, increased investigations and litigation, negative impacts on our stock price and reduced access to capital.

Furthermore, public statements with respect to ESG matters, such as emissions reduction goals or progress, other environmental targets or other commitments addressing certain social issues, are becoming increasingly subject to heightened scrutiny from public and governmental authorities related to the risk of potential “greenwashing,” i.e., misleading information or false claims overstating potential ESG benefits. Certain regulators, such as the SEC and various state agencies, as well as nongovernmental organizations and other private actors have filed lawsuits under various securities and consumer protection laws alleging that certain ESG statements, goals or standards were misleading, false or otherwise deceptive. As a result, we may face increased litigation risks from private parties and regulatory enforcement from governmental authorities related to our real or perceived ESG efforts or lack thereof. Additionally, we could face increasing costs as we attempt to comply with and navigate further regulatory focus and scrutiny. Furthermore, we could be criticized by various anti-ESG stakeholders for the scope of our climate or ESG related goals or policies, our strategic choices regarding ESG matters as they may impact our operations now or in the future, or for any revisions to the same, as well as initiatives we may pursue or any public statements we may make. We could be subjected to negative responses by governmental actors (such as anti-ESG legislation or retaliatory legislative or administrative treatment) or consumers (such as boycotts or negative publicity campaigns), which could adversely affect our reputation, business, financial performance, market access and growth.

Risks Related to Our Class A Common Stock

OneWater Inc. is a holding company. OneWater Inc.’s corporate and other overhead expenses.

OneWater Inc. OneWater Inc. has no independent means of generating revenue., in an amount sufficient to allow OneWater Inc. to pay its taxes and to make payments under the Tax Receivable Agreement. In addition, the OneWater LLC Agreement requires OneWater LLC to make non-pro rata payments to OneWater Inc. To the extent that OneWater Inc.

has no independent means of generating revenue, OneWater Inc.’s ability to make tax payments and payments under the Tax Receivable Agreement is dependent on the ability of OneWater LLC to make distributions to OneWater Inc. and/or its direct and/or indirect subsidiaries that are OneWater Unit Holders in an amount sufficient to cover OneWater Inc.’s tax obligations and obligations under the Tax Receivable Agreement.'s direct and/or indirect subsidiaries that are OneWater Unit Holders ability to make ultimate distributions to OneWater Marine Inc. The ability of OneWater Inc.'s direct and/or indirect subsidiaries that are OneWater Unit Holders or OneWater LLC or its subsidiaries and other entities in which it directly or indirectly holds an equity interest. To the extent that OneWater Inc. is unable to make payments under the Tax Receivable Agreement for any reason, such payments will be deferred and will accrue interest until paid.

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If we experience any material weaknesses in the future or otherwise fail to develop or maintain an effective system of internal controls in the future, we may not be able to accurately report our financial condition or results of operations, which may adversely affect investor confidence in us and, as a result, the value of our Class A common stock.

As a result of being a public company, we are required, under Section 404 of the Sarbanes-Oxley Act, to furnish a report by management on, among other things, the effectiveness of our internal control over financial reporting. This assessment must include disclosure of any material weaknesses in our internal control over financial reporting identified by our management or our independent registered public accounting firm. For additional information, please see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Internal Controls and Procedures.”

Our independent registered public accounting firm is required to express an opinion on the effectiveness of our internal controls. We cannot assure you that there will not be material weaknesses or significant deficiencies in our disclosure controls or our internal controls over financial reporting in the future.

You may not be able to resell your Class A common stock at or above the price at which you purchased it. Additionally, lack of liquidity may result in wide bid-ask spreads, contribute to significant fluctuations and volatility in the market price of the Class A common stock and limit the number of investors who are able to buy the Class A common stock.

You may not be able to sell shares of our Class A common stock at prices equal to or greater than the price paid by you.

The following factors could affect our stock price:

•quarterly variations in our financial and operating results;

•the public reaction to our press releases, our other public announcements and our filings with the SEC;

•strategic actions by our competitors or suppliers;

•changes in revenue, Dealership same-store sales or earnings estimates, or changes in recommendations or withdrawal of research coverage, by equity research analysts;

•acquisitions or integration of acquired marine retailers or other businesses;

•the failure of our operating results to meet the expectations of equity research analysts and investors;

•speculation in the press or investment community;

•the failure of research analysts to continue to cover our Class A common stock;

•sales of our Class A common stock by us or our stockholders, or the perception that such sales may occur;

•changes in accounting principles, policies, guidance, interpretations or standards;

•additions or departures of key management personnel;

•actions by our stockholders;

•general market conditions, including fluctuations in commodity prices;

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•the publication of boating industry sales data or new boat registration data;

•domestic and international economic, legal and regulatory factors unrelated to our performance; and

•the realization of any risks described under this “Risk Factors” section.

These broad market fluctuations may adversely affect the trading price of our Class A common stock. Such litigation, if instituted against us, could result in very substantial costs, divert our management’s attention and resources and materially harm our business, operating results and financial condition.

This concentration of ownership makes it unlikely that any other holder or group of holders of our Class A common stock will be able to affect the way we are managed or the direction of our business. The interests of the Legacy Owners with respect to matters potentially or actually involving or affecting us, such as future acquisitions, financings and other corporate opportunities and attempts to acquire us, may conflict with the interests of our other stockholders.

Please read “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Tax Receivable Agreement” in this Form 10-K.

These executive officers and directors may become aware of business opportunities that may be appropriate for presentation to us as well as to the other entities with which they are or may become affiliated. These conflicts may not be resolved in our favor.

In addition, some provisions of our certificate of incorporation and bylaws could make it more difficult for a third party to acquire control of us, even if the change of control would be beneficial to our stockholders. These provisions include:

•providing that all vacancies, including newly created directorships, may, except as otherwise required by law or, if applicable, the rights of holders of a series of preferred stock, only be filled by the affirmative vote of a majority of directors then in office, even if less than a quorum;

•permitting any action by stockholders to be taken only at an annual meeting or special meeting rather than by a written consent of the stockholders, subject to the rights of any series of preferred stock with respect to such rights;

•permitting special meetings of our stockholders to be called only by our Chief Executive Officer, the chairman of our Board of Directors and our Board of Directors pursuant to a resolution adopted by the affirmative vote of a majority of the total number of authorized directors whether or not there exist any vacancies in previously authorized directorships;

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•subject to the rights of the holders of shares of any series of our preferred stock, requiring the affirmative vote of the holders of at least a majority in voting power of all then outstanding common stock entitled to vote generally in the election of directors, voting together as a single class, to remove any of all of the directors from office at any time;

•prohibiting cumulative voting in the election of directors;

•establishing advance notice provisions for stockholder proposals and nominations for elections to the Board of Directors to be acted upon at meetings of stockholders; and

•providing that the Board of Directors is expressly authorized to adopt, or to alter or repeal our bylaws.

Please see “— realizes in respect of the tax attributes subject to the Tax Receivable Agreement.”

Our certificate of incorporation designates the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders and our bylaws designate the federal district courts of the United States shall be the sole and exclusive forum for the resolution of causes of action arising under the Securities Act of 1933. These designations could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, employees or agents.

Notwithstanding the foregoing, the exclusive forum provision will not apply to suits brought to enforce any liability or duty created by the Exchange Act, the Securities Act or any other claim for which the federal courts have exclusive jurisdiction. Further, our bylaws also provide that the federal district courts of the United States shall be the sole and exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act. Although our bylaws provide for an exclusive forum for causes of action under the Securities Act, its stockholders will not be deemed to have waived compliance with the federal securities laws and the rules and regulations thereunder. Any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock will be deemed to have notice of, and consented to, the provisions of our certificate of incorporation and bylaws described herein.

We do not intend to pay cash dividends on our Class A common stock, and our Credit Facilities place certain restrictions on our ability to do so. Consequently, your only opportunity to achieve a return on your investment is if the price of our Class A common stock appreciates.

Additionally, the Credit Facilities place certain restrictions on our ability to pay cash dividends. Consequently, your only opportunity, while such dividend restrictions remain in place, to achieve a return on your investment in us may be to sell your Class A common stock at a price greater than you paid for it. There is no guarantee that the price of our Class A common stock that will prevail in the market will ever exceed the price that you paid.

We may also issue additional shares of Class A common stock or convertible securities.

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On February 11, 2020, we filed a registration statement with the SEC on Form S-8 providing for the registration of 1,600,533 shares of our Class A common stock issued or reserved for issuance under our long term incentive plan (the “LTIP”). 2021 Employee Stock Purchase Plan.

On September 7, 2021, we filed a registration statement with the SEC on Form S-3 providing for, among other things, the registration of 375,000 shares of Class A common stock that may be sold in one or more secondary offerings by the selling stockholders named therein.

On September 6, 2024, we filed a registration statement with the SEC on Form S-3 providing for the registration of an indeterminate number of shares of Class A common stock to be offered, on a primary basis, at indeterminate prices with an aggregate offering price not to exceed $250,000,000.

On July 1, 2022, the first offering period began under the 2021 Employee Stock Purchase Plan (the “ESPP”). As of September 30, 2024, the ESPP provides for a maximum issuance of 453,870 shares of Class A common stock, subject to certain adjustments set forth in the ESPP.

Sales of substantial amounts of our Class A common stock (including shares issued in connection with an acquisition), or the perception that such sales could occur, may adversely affect prevailing market prices of our Class A common stock.

OneWater Inc. is required to make payments under the Tax Receivable Agreement for certain tax benefits that it may claim, and the amounts of such payments could be significant.

to each TRA Holder of 85% of the net cash savings, if any, in U.S. federal, state and local income tax and franchise tax (computed using simplifying assumptions to address the 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 increases in tax basis available to OneWater Inc. as a result of the exercise of the Redemption Right or pursuant to our Call Right or that relate to prior transfers of such OneWater LLC Units that will be available to OneWater Inc. OneWater Inc.

exercises its right to terminate the Tax Receivable Agreement (or the Tax Receivable Agreement is terminated due to other circumstances, including OneWater Inc.’s breach of a material obligation thereunder or certain mergers or other changes of control), and OneWater Inc. makes the termination payment specified in the Tax Receivable Agreement. In addition, payments OneWater Inc. makes under the Tax Receivable Agreement will be increased by any interest accrued from the due date (without extensions) of the corresponding tax return.

’s obligations and not obligations of OneWater LLC, and we expect that the payments OneWater Inc. Estimating the amount and timing of OneWater Inc.’s realization of tax benefits subject to the Tax Receivable Agreement is by its nature imprecise.’s ability to use any deductions (or decreases in gain or increases in loss) arising from such increases in tax basis, are dependent upon significant future events, including but not limited to the timing of the redemptions of OneWater LLC Units, the price of OneWater Inc. may have made under the Tax Receivable Agreement, the U.S. federal income tax rate then applicable, and the portion of OneWater Inc. Accordingly, estimating the amount and timing of payments that may become due under the Tax Receivable Agreement is also by its nature imprecise.’s actual tax liability (determined by using the actual applicable U.S. federal income tax rate and an assumed combined state and local income tax rate) to the amount OneWater Inc. would have been required to pay had it not been able to utilize any of the tax benefits subject to the Tax Receivable Agreement.’s realization of tax benefits. Any distributions made by OneWater LLC to OneWater Inc. to make payments under the Tax Receivable Agreement, as well as any corresponding pro rata distributions made to the other OneWater Unit Holders could have an adverse impact on our liquidity.

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The payments under the Tax Receivable Agreement are not conditioned upon a TRA Holder's having a continued ownership interest in OneWater Inc. or OneWater LLC.’s consent (not to be unreasonably withheld, conditioned, or delayed), after the corresponding OneWater LLC Units have been acquired pursuant to the Redemption Right or Call Right.

realizes in respect of the tax attributes subject to the Tax Receivable Agreement.

If OneWater Inc. experiences a change of control (as defined under the Tax Receivable Agreement, which includes certain mergers, asset sales and other forms of business combinations) or the Tax Receivable Agreement terminates early (at OneWater Inc.’s election or as a result of OneWater Inc.’s breach), OneWater Inc. has sufficient taxable income to fully utilize the tax benefits covered by the Tax Receivable Agreement, and (ii) that any OneWater LLC Units (other than those held by OneWater Inc.) outstanding on the termination date are deemed to be redeemed on the termination date.

If OneWater Inc. experiences a change of control (as defined under the Tax Receivable Agreement) or the Tax Receivable Agreement otherwise terminates early (at OneWater Inc.’s election or as a result of OneWater Inc.’s breach), OneWater Inc.’s obligations under the Tax Receivable Agreement could have a substantial negative impact on our liquidity and could have the effect of delaying, deferring or preventing certain mergers, asset sales, or other forms of business combinations or changes of control. For example, if the Tax Receivable Agreement were terminated immediately after the date hereof, and taking into account any redemptions that occurred prior thereto, the estimated early termination payment would, in the aggregate, be approximately $29.0 million (determined by applying a discount rate equal to the twelve-month SOFR published by CME Group Benchmark Administration Limited plus 171.513 basis points, applied against an undiscounted liability of $42.7 million calculated based on certain assumptions, including but not limited to a $23.91 per share price, an estimated blended statutory U.S. federal, state and local corporate income tax rate of 24.8%, no material change in U.S. federal income tax law, and that OneWater Inc. The foregoing number is merely an estimate and the actual payment could differ materially. However, OneWater Inc. may be required to fund such payment from other sources, and as a result, any early termination of the Tax Receivable Agreement could have a substantial negative impact on our liquidity.’s breach, and we do not currently expect that OneWater Inc. would elect to terminate the Tax Receivable Agreement early, except in cases where the early termination payment would not be material. will be able to meet its obligations under the Tax Receivable Agreement. Please read “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Tax Receivable Agreement” in this Form 10-K.

’s payment obligations under the Tax Receivable Agreement are accelerated upon certain mergers, other forms of business combinations or other changes of control, the consideration payable to holders of OneWater Inc.’s Class A common stock could be substantially reduced.

If OneWater Inc. experiences a change of control (as defined under the Tax Receivable Agreement, which includes certain mergers, asset sales and other forms of business combinations), OneWater Inc. As a result of this payment obligation, holders of OneWater Inc.’s Class A common stock could receive substantially less consideration in connection with a change of control transaction than they would receive in the absence of such obligation. Further, OneWater Inc. or OneWater LLC.’s Class A common stock. Please read “— realizes in respect of the tax attributes subject to the Tax Receivable Agreement.”

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OneWater Inc. will not be reimbursed for any payments made under the Tax Receivable Agreement in the event that any tax benefits are subsequently disallowed.

determines and the IRS or another tax authority may challenge all or part of the tax basis increase, as well as other related tax positions OneWater Inc. takes, and a court could sustain such challenge. The TRA Holders will not reimburse OneWater Inc.’s determination of such excess (which determination may be made a number of years following the initial payment and after future payments have been made). As a result, in such circumstances, OneWater Inc.

If OneWater LLC were to become a publicly traded partnership taxable as a corporation for U.S. federal income tax purposes, OneWater Inc. would not be able to recover payments previously made by it under the Tax Receivable Agreement even if the corresponding tax benefits were subsequently determined to have been unavailable due to such status.

We intend to operate such that OneWater LLC does not become a publicly traded partnership taxable as a corporation for U.S. federal income tax purposes. Applicable U.S. Treasury regulations provide for certain safe harbors from treatment as a publicly traded partnership, and we intend to operate such that redemptions or other transfers of OneWater LLC Units qualify for one or more such safe harbors. believes it is necessary to ensure that OneWater LLC will continue to be treated as a partnership for U.S. federal income tax purposes.

If OneWater LLC were to become a publicly traded partnership taxable as a corporation for U.S. federal income tax purposes, significant tax inefficiencies might result for OneWater Inc. In addition, OneWater Inc. may not be able to realize tax benefits covered under the Tax Receivable Agreement, and OneWater Inc.

Changes to applicable tax laws and regulations or exposure to additional income tax liabilities could affect our business and future profitability.

We are subject to various complex and evolving U.S. federal, state and local taxes. U.S. federal, state and local tax laws, policies, statutes, rules, regulations or ordinances could be interpreted, changed, modified or applied adversely to us, in each case, possibly with retroactive effect, and may have an adverse effect on our business and future profitability.

In addition, we may be subject to audits of our income, sales and other taxes by U.S. federal, state, and local taxing authorities. Outcomes from these audits could have an adverse effect on our operating results and financial condition.

The terms of one or more classes or series of preferred stock could adversely impact the voting power or value of our Class A common stock. For example, we might grant holders of preferred stock the right to elect some number of our directors in all events or on the happening of specified events or the right to veto specified transactions.

Under Sections 3(a)(1)(A) and (C) of the 1940 Act, a company generally will be deemed to be an “investment company” for purposes of the 1940 Act if (i) it is, or holds itself out as being, engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting or trading in securities or (ii) it engages, or proposes to engage, in the business of investing, reinvesting, owning, holding or

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trading in securities and it owns or proposes to acquire investment securities having a value exceeding 40% of the value of its total assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis.

On that basis, we believe that our interest in OneWater LLC is not an “investment security” as that term is used in the 1940 Act.

General Risk Factors

Our business operations could be negatively impacted by an outage or breach of our informational technology systems or a cybersecurity event.

Our business is dependent upon the successful operation of our information technology systems. Our information technology systems enhance cross-selling opportunities and integrate each level of operations on a company-wide basis, including but not limited to purchasing, inventory, receivables, payables, financial reporting, budgeting, marketing and sales management. Our information systems are also used to prepare our consolidated financial and operating data.

Increased global cybersecurity vulnerabilities and cyber-related attacks pose a risk to the security of our and our customers’, suppliers’ and third-party service providers’ products, systems and networks and the confidentiality, availability and integrity of our data. While no instances of unauthorized access have been material to date, we continue to attempt to mitigate these risks by employing a number of measures, including employee training, systems and maintenance of protective systems. We remain potentially vulnerable to known or unknown threats.

We collect and store personal data through the ordinary course of our business that is subject to data privacy and information security laws and regulations. We also work with third-party partners that may in the course of their business relationship with us, collect, store, process and transmit sensitive data on our behalf and in connection with our products and services offerings. While no system failures, cyberattacks or security breaches have been material to date, we may be, unable to anticipate, detect or prevent such events. Despite ongoing efforts to improve our ability to protect our information technology systems and data stored thereon or transmitted thereby from compromise, we may not be able to protect all of our information technology systems or data.

Any unauthorized access to or material failure of our information technology systems, or systems used by our third-party suppliers or service providers, could result in negative consequences, including damage to our reputation or competitiveness, remediation or increased protection costs, or litigation or regulatory action, all of which could have a material and adverse effect on our business, financial condition, operations, or cash flows.

Certain of our employees work remotely. Remote working has increased our vulnerability to risks related to our computer and communications hardware and software systems and exacerbated certain related risks, including risks of phishing and other cybersecurity

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attacks.

The regulatory framework for data privacy and security worldwide is continuously evolving and developing and, as a result, interpretation and implementation standards and enforcement practices are likely to remain uncertain for the foreseeable future. These laws also are not uniform, as certain laws may be more stringent or broader in scope, or offer greater individual rights, with respect to sensitive and personal information, and such laws may differ from each other, which may complicate compliance efforts.

Our growing use of artificial intelligence systems in our operations poses inherent risks and could adversely affect our results of operations.

We have and are continuing to incorporate artificial intelligence, including machine learning, in certain of our operations with the intent to enhance efficiency and effectiveness. For example, we have incorporated artificial intelligence and/or generative artificial intelligence to manage inventory and assist in creating boat listings. Flaws, breaches or malfunctions in these systems could lead to operational disruptions, data loss, or erroneous decision-making, impacting our operations, financial condition and reputation. Legal challenges may arise, including cybersecurity incidents, non-compliance with data protection regulations, and lack of transparency. The legal and regulatory landscape and industry standards surrounding artificial intelligence technologies is rapidly evolving and remains uncertain, and compliance may impose significant operational costs and may limit our ability to develop, deploy or use artificial intelligence technologies. Furthermore, the deployment of artificial intelligence systems could expose us to increased cybersecurity threats, such as data breaches and unauthorized access leading to financial losses, legal liabilities, and reputational damage. We also face competitive risks if we fail to adopt artificial intelligence or other machine-learning technologies in a timely manner.

Risks associated with legal liability often are difficult to assess or quantify and their existence and magnitude can remain unknown for significant periods of time. While we maintain insurance of the types and in the amounts that we believe are customary and adequate, the amount of insurance coverage may not be sufficient to cover a claim and the continued availability of certain insurance cannot be assured. Negative publicity from litigation, whether or not resulting in a substantial cost, could materially damage our reputation. Costs, harm to our reputation and diversion could have a material adverse effect on our business, results of operations and financial condition.

Changes resulting from these new standards may result in materially different financial results and may require that we change how we process, analyze and report financial information and that we change financial reporting controls. Such changes in accounting standards may have an adverse effect on our business, financial position, and income, which may negatively impact our financial results.

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Adverse federal or state tax policies or changes in law could have a negative effect on us.

Our business could be materially adversely impacted by the widespread outbreak of a contagious disease.

Organizations and individuals may take additional steps to avoid or reduce infection, including limiting travel, staying home, working from home and limiting participation in certain activities, or other measures, which may also affect our ability to operate our marine retailer locations or our manufacturing facilities.

If the negative economic effects of a widespread contagious disease continue for a prolonged period of time, it could lead to a reduction in demand for our products, which would adversely affect our results of operations. A similar contagious disease outbreak could have a similar effect on our supply chain that could adversely affect our results of operations.

None.

Cybersecurity.

Description of Processes for Assessing, Identifying, and Managing Cybersecurity Risks

We seek to assess, identify and manage cybersecurity risks through the processes described below:

•Risk Assessment: A multi-layered system designed to protect and monitor data and cybersecurity risk has been implemented. Assessments of our cybersecurity safeguards are conducted by independent cybersecurity vendors. Our internal Information Systems team conducts regular evaluations designed to assess, identify and manage material cybersecurity risks, and we endeavor to update cybersecurity infrastructure, procedures, policies, and education programs in response. We use firewalls and cyber security software protection, and we additionally rely on a third-party vendor for alerts regarding suspicious activity.

•Incident Identification and Response: A monitoring and detection system has been implemented to help promptly identify cybersecurity incidents. In the event of any breach or cybersecurity incident, we have an incident response plan that is designed to provide for action to contain the incident, mitigate the impact, and restore normal operations efficiently.

•Cybersecurity Training and Awareness: All employees and contractors are required to receive semi-annual cybersecurity awareness training. Employees also receive training in response to drills and simulated attacks.

•Access Controls: Users are provided with access consistent with the principle of least privilege, which requires that users be given no more access than necessary to complete their job functions. A multi-factor authentication process has been implemented for employees accessing company information.

•Encryption and Data Protection: Encryption methods are used to protect sensitive data in transit and at rest. This includes the encryption of customer data, financial information, and other confidential data. We also have programs in place to monitor our retained data with the goal of identifying personal identifiable information and taking appropriate actions to secure the data.

We incorporate external expertise and reviews as part of our cybersecurity program. For example, we have engaged an independent cybersecurity advisor to review, assess, and make recommendations regarding our information security program and information technology strategic plan. We recognize that third-party service providers introduce cybersecurity risks. In an effort to mitigate these risks, before engaging with any third-party service provider, we conduct due diligence to evaluate their cybersecurity capabilities. Additionally, we endeavor to include cybersecurity requirements in our contracts with these providers and endeavor to require them to adhere to security standards and protocols. Further, we request that third-party service providers with access to personally identifiable information enter into data processing services agreements and adhere to our policies and standards.

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The above cybersecurity risk management processes are integrated into the Company’s overall enterprise risk management program. Cybersecurity risks are understood to be significant business risks, and as such, are considered an important component of our enterprise-wide risk management approach.

Impact of Risks from Cybersecurity Threats

As of the date of this report, though the Company and its third-party service providers have experienced certain cybersecurity incidents, we are not aware of any previous cybersecurity threats that have materially affected or are reasonably likely to materially affect our business, financial condition, results of operations or cash flows. However, we acknowledge that cybersecurity threats are continually evolving, and the possibility of future cybersecurity incidents remains. Despite the implementation of our cybersecurity processes, our security measures cannot guarantee that a significant cyberattack will not occur. A successful attack on our information technology (“IT”) systems could have significant consequences to the business. While we devote resources to our security measures to protect our systems and information, these measures cannot provide absolute security. No security measure is infallible. See “Risk Factors” for additional information about the risks to our business associated with a breach or compromise to our IT systems.

Board of Directors’ Oversight and Management’s Role

Through the Company’s enterprise risk management program, the Board of Directors is responsible for overseeing cybersecurity, information security, and information technology risks, as well as management’s actions to identify, assess, mitigate, and remediate those risks. As part of its program of regular risk oversight, the Audit Committee assists the Board in exercising oversight of the Company’s cybersecurity, information security, and information technology risks. The Board or Audit Committee regularly reviews and discusses with management the Company’s policies, procedures and practices with respect to cybersecurity, information security and information and operational technology, including related risks. In addition, the Company’s Director of Information Systems is responsible for upward reporting of emerging cybersecurity incidents.

Recognizing the importance of cybersecurity to the success and resilience of our business, the Board considers cybersecurity to be a vital aspect of corporate governance. To facilitate effective oversight, our cybersecurity leadership team holds discussions on cybersecurity risks, incident trends, and the effectiveness of cybersecurity measures as necessitated by emerging material cyber risks.

Our cybersecurity leadership team is made up of highly experienced professionals with a background in information security, risk management, and incident response. This background includes leading and developing cyber security operations and incident response programs for business organizations, developing comprehensive cyber security strategies, and managing complex cybersecurity projects across various industries.

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