Stockholders' and Members' Equity

9 Months Ended

Jun. 30, 2022

Stockholders' and Members' Equity [Abstract]

Stockholders' and Members' Equity

9. Stockholders’ and Members’ Equity

Equity-Based Compensation

We maintain the OneWater Marine Inc. Omnibus Incentive Plan (the “LTIP”) to incentivize individuals providing services to OneWater Inc. and its subsidiaries and affiliates. The LTIP provides for the grant, from time to time, at the discretion of the board of directors of OneWater Marine Inc. (the “Board”) or a committee thereof, of (1) stock options, (2) stock appreciation rights, (3) restricted stock, (4) restricted stock units, (5) stock awards, (6) dividend equivalents, (7) other stock-based awards, (8) cash awards, (9) substitute awards and (10) performance awards. The total number of shares reserved for issuance under the LTIP that may be issued pursuant to incentive stock options (which generally are stock options that meet the requirements of Section 422 of the Code) is 1,556,307. The LTIP is and will continue to be administered by the Board, except to the extent the Board elects a committee of directors to administer the LTIP. Class A common stock subject to an award that expires or is cancelled, forfeited, exchanged, settled in cash or otherwise terminated without delivery of shares (including forfeiture of restricted stock awards) and shares withheld to pay the exercise price of, or to satisfy the withholding obligations with respect to, an award will again be available for delivery pursuant to other awards under the LTIP.

During the nine months ended June 30, 2022, the Board approved the grant of 52,227 performance-based restricted stock units, which represents 100% of the target award. Performance-based restricted stock units provide an opportunity for the recipient to receive a number of shares of our common stock based on our performance during fiscal year 2022 as measured against objective performance goals as determined by the Board. The actual number of units earned may range from 0% to 200% of the target number of units depending upon achievement of the performance goals. Performance-based restricted stock units vest in three equal annual installments, commencing on September 30, 2022. Upon vesting, each performance-based restricted stock unit equals one share of common stock of the Company. As of June 30, 2022, the Company estimated achievement of the performance targets at 200%.

During the nine months ended June 30, 2022, the Board approved the grant of 121,470 time-based restricted stock units. 14,186 restricted stock units fully vest on September 30, 2022, 12,000 restricted stock units fully vest on April 20, 2023 and the remaining 95,284 restricted stock units vest in three equal annual installments commencing on September 30, 2022.

  Compensation cost for time-based restricted stock units is based on the closing price of our common stock on the date immediately preceding the grant and is recognized on a graded basis over the applicable vesting periods. Compensation cost for performance share units is based on the closing price of our common stock on the date immediately preceding the grant and the ultimate performance level achieved and is recognized on a graded basis over the applicable vesting period. The Company recognized $2.5 million and $1.1 million of compensation expense for the three months ended June 30, 2022 and 2021, respectively, which includes $1.3 million and $0.6 million of compensation expense for the three months ended June 30, 2022 and 2021, respectively, for performance share units. The Company recognized $7.3 million and $3.3 million of compensation expense for the nine months ended June 30, 2022 and 2021, respectively, which includes $4.0 million and $1.3 million of compensation expense for the nine months ended June 30, 2022 and 2021, respectively, for performance share units.

The following table further summarizes activity related to restricted stock units for the nine months ended June 30, 2022:

	Restricted Stock Unit Awards
	Number of Units			Weighted Average Grant Date Fair Value ($)
Unvested at September 30, 2021		545,094		$	22.68
Awarded		173,697			39.95
Vested		(100,872	)		16.99
Forfeited		-			-
Unvested at June 30, 2022		617,919		$	28.46

As of June 30, 2022, the total unrecognized compensation expense related to outstanding equity awards was $8.8 million, which the Company expects to recognize over a weighted-average period of 1.4 years.     

We issue shares of our Class A common stock upon the vesting of performance-based restricted stock units and time-based restricted stock units. These shares are issued from our authorized and not outstanding common stock. In addition, in connection with the vesting of restricted stock units, we repurchase a portion of shares issued equal to the amount of employee income tax withholding.

Earnings Per Share

Basic and diluted earnings per share of Class A common stock is computed by dividing net income attributable to OneWater Inc. by the weighted-average number of Class A common stock outstanding during the period. Diluted earnings per share is computed by giving effect to all potentially dilutive shares.

  On March 30, 2022, the Board approved an up to $50 million share repurchase program. As of June 30, 2022, no shares had been repurchased under the program. The repurchase program does not have a predetermined expiration date. 

The following table sets forth the calculation of earnings per share for the three months ended June 30, 2022 and 2021 (in thousands, except per share data):

Earnings per share:	Three Months Ended June 30, 2022		Three Months Ended June 30, 2021
Numerator:
Net income attributable to OneWater Inc.	$	55,977	$	34,503
Denominator:
Weighted-average number of unrestricted outstanding common shares used to calculate basic net income per share		14,133		10,976
Effect of dilutive securities:
Restricted stock units		379		365
Diluted weighted-average shares of Class A common stock outstanding used to calculate diluted earnings per share		14,512		11,341
Earnings per share of Class A common stock – basic	$	3.96	$	3.14
Earnings per share of Class A common stock – diluted	$	3.86	$	3.04

The following table sets forth the calculation of earnings per share for the nine months ended June 30, 2022 and 2021 (in thousands, except per share data):

Earnings per share:	Nine Months Ended June 30, 2022		Nine Months Ended June 30, 2021
Numerator:
Net income attributable to OneWater Inc.	$	112,293	$	62,765
Denominator:
Weighted-average number of unrestricted outstanding common shares used to calculate basic net income per share		13,791		10,884
Effect of dilutive securities:
Restricted stock units		414		259
Diluted weighted-average shares of Class A common stock outstanding used to calculate diluted earnings per share		14,205		11,143
Earnings per share of Class A common stock – basic	$	8.14	$	5.77
Earnings per share of Class A common stock – diluted	$	7.90	$	5.63

Shares of Class B common stock and unvested restricted stock units do not share in the income (losses) of the Company and are therefore not participating securities. As such, separate presentation of basic and diluted earnings per share under the two-class method has not been presented.

The following number of weighted-average potentially dilutive shares were excluded from the calculation of diluted earnings per share because the effect of including such potentially dilutive shares would have been antidilutive upon conversion (in thousands):

	Three Months Ended June 30, 2022		Three Months Ended June 30, 2021
Class B common stock		1,430		4,063
Restricted Stock Units		256		201
		1,686		4,264

	Nine Months Ended June 30, 2022		Nine Months Ended   June 30, 2021
Class B common stock		1,560		4,124
Restricted Stock Units		233		221
		1,793		4,345

Employee Stock Purchase Plan

At the Company’s 2021 Annual Meeting of Stockholders (the “Annual Meeting”), held on February 23, 2021, the Company’s stockholders approved the OneWater Marine Inc. 2021 Employee Stock Purchase Plan (the “ESPP”), which was approved and adopted by the Board as of January 13, 2021 (the “Adoption Date”), subject to stockholder approval at the Annual Meeting. The effective date of the ESPP is February 23, 2021, and, unless earlier terminated, the ESPP will expire on the twentieth anniversary of the Adoption Date. The ESPP will be administered by the Board or by one or more committees to which the Board delegates such administration.

The ESPP enables eligible employees to purchase shares of the Company’s Class A common stock at a discount through participation in discrete offering periods. The ESPP is intended to qualify as an employee stock purchase plan under section 423 of the Internal Revenue Code of 1986, as amended. Up to a maximum of 299,505 shares of the Company’s Class A common stock may be issued under the ESPP, subject to certain adjustments as set forth in the ESPP. On the first day of each fiscal year during the term of the ESPP, beginning on October 1, and ending on (and including) September 30, the number of shares of Class A common stock that may be issued under the ESPP will increase by a number of shares equal to the least of (i) 1% of the outstanding shares on the Adoption Date, or (ii) such lesser number of shares (including zero) that the administrator determines for purposes of the annual increase for that fiscal year. The number of shares of Class A common stock that may be granted to any single participant in any single option period will be subject to certain limitations set forth in the plan. As of June 30, 2022, there has not yet been an offering period under the ESPP. The first offering period under the ESPP began on July 1, 2022.

Distributions

During the nine months ended June 30, 2022 and 2021, the Company made distributions to OneWater Unit Holders for certain permitted tax payments.