10-K: Off the Hook YS Inc. Reports 21% Revenue Growth in 2025

Off the Hook YS Inc. announced a 21.1% increase in total revenue to $119.9 million for fiscal year 2025, driven by higher floor plan utilization and strategic expansion, despite reporting a net loss.

Summary

• Total revenue increased by 21.1% to $119.9 million for the year ended December 31, 2025, up from $99.0 million in 2024.
• New boat sales rose by 32.0% to $14.5 million (21 units sold) in 2025, compared to $11.0 million (17 units sold) in 2024.
• Pre-owned boat sales increased by 20.0% to $101.7 million (426 units sold) in 2025, from $84.8 million (321 units sold) in 2024.
• Finance income (Azure Funding) decreased by 12.8% to $2.6 million in 2025, down from $3.0 million in 2024, attributed to a shift towards high-end cash buyers and higher marine loan rates.
• Gross profit increased by 30.6% to $11.5 million in 2025, compared to $8.8 million in 2024.
• The company reported a net loss of $(1.87) million in 2025, a significant decline from a net income of $0.99 million in 2024.
• Adjusted EBITDA decreased to $0.44 million in 2025 from $1.25 million in 2024, primarily due to increased operating expenses related to public company operations.
• Cash and cash equivalents increased to $12.4 million in 2025 from $2.9 million in 2024, largely due to $13.4 million in net proceeds from the initial public offering (IPO) in November 2025.
• Working capital improved significantly from $(0.44) million in 2024 to $9.41 million in 2025.
• Floorplan financing capacity was expanded to $60 million, with $25.3 million utilized as of December 31, 2025.
• The company acquired Boats and Buyers, Inc. for $632,911, including 100,000 shares of common stock, enhancing its digital platforms.
• A $1.0 million share repurchase program was authorized on January 8, 2026.
• A Membership Interest Purchase Agreement was entered into on February 13, 2026, to acquire APEX marine dealership, service, storage, and brokerage businesses for $5.5 million.

Sentiment

Score: 5

Explanation: StockSavvy.ai views this as a mixed report. While strong revenue growth and strategic expansion initiatives are positive, the shift to a net loss and decreased Adjusted EBITDA, coupled with identified material weaknesses in internal controls, present significant concerns that temper optimism.

Positives

• Total revenue increased significantly by 21.1% to $119.9 million in 2025, demonstrating strong top-line growth.
• New boat sales experienced robust growth, increasing by 32.0% to $14.5 million in 2025.
• Pre-owned boat sales, a core segment, grew by 20.0% to $101.7 million in 2025.
• Gross profit increased by 30.6% to $11.5 million in 2025, indicating effective cost management relative to sales.
• Liquidity improved substantially, with cash and cash equivalents rising to $12.4 million in 2025, bolstered by $13.4 million in net IPO proceeds.
• Working capital turned positive, increasing by $9.8 million from a deficit of $(0.44) million in 2024 to a surplus of $9.41 million in 2025.
• Expanded floorplan financing capacity to $60 million provides significant liquidity for larger inventory acquisitions and strategic expansion.
• Strategic acquisition of Boats and Buyers, Inc. enhances digital platforms and intellectual property.
• Authorization of a $1.0 million share repurchase program signals confidence in the company's valuation.
• Planned acquisition of APEX marine businesses for $5.5 million will expand dealership, service, storage, and brokerage operations.
• Launch of a premium yacht brokerage division in Q3 2025 targets a high-margin market segment.
• Investments in proprietary CRM and data analytics aim to optimize sales processes and operational efficiency.
• The marina division strategy targets high cap rates (12-20%) and provides strategic operational benefits.

Negatives

• Reported a net loss of $(1.87) million in 2025, a significant reversal from the $0.99 million net income in 2024.
• Adjusted EBITDA decreased by $0.81 million, or 65.0%, to $0.44 million in 2025, primarily due to increased operating expenses.
• Finance income from Azure Funding decreased by 12.8% to $2.6 million in 2025, indicating reduced profitability in this segment.
• Gross margins on new boat sales declined to 5.6% in 2025 from 6.4% in 2024, reflecting increased price sensitivity and industry-wide margin compression.
• Pre-owned boat gross profit margin increased modestly despite market softening, leading to sales at or near breakeven for some inventory to manage turnover and reduce interest expenses.
• Operating expenses, including selling, general and administrative, salaries and wages, and advertising and marketing, increased substantially, outpacing gross profit growth.
• Interest expense on floor plan increased by 68.2% to $1.9 million in 2025 due to higher utilization of the credit line.
• Identified material weaknesses in internal control over financial reporting, attributed to limited accounting staffing and lack of segregation of duties.
• Involved in several legal proceedings, including a $2.6 million fraudulent inducement claim and a $1.9 million claim for defaulted marine loans, which could incur significant costs and reputational damage.
• Robert Gonnelli resigned from the Board of Directors on January 29, 2026, reducing board size without an immediate replacement planned.

Risks

• Reliance on relationships with customers, financing partners, manufacturers, and employees to meet financial targets.
• Fluctuating interest rates may adversely impact the ability to procure financing for customers and affect loan approvals and affordability.
• Improper handling of inventory could lead to overstocking (tying up capital) or inventory shortages (limiting high-value acquisitions).
• Dependence on manufacturers for new boat sales, with the loss of a key manufacturing partner potentially having a substantial adverse impact.
• Manufacturer control over business through dealer agreements, including performance goals and approval rights, could lead to termination or nonrenewal of agreements.
• Failure to receive rebates and other manufacturer incentives on inventory purchases or retail sales could substantially reduce margins.
• Ability to attract and retain customers is crucial for future success, influenced by consumer preferences, economic conditions, and brand perception.
• Dependence on income from financing, insurance, and extended service contracts, which are subject to regulatory changes and interest rate sensitivity.
• Operations are dependent upon key personnel and team members; the loss of one or more key employees could adversely affect the business.
• Customer trust and reputation are crucial; negative experiences or disputes could harm the OTH brand.
• Inability to dispose of pre-owned boats acquired through trade-in or direct purchase processes at prices that allow cost recovery could adversely affect profitability.
• Heavy reliance on floorplan financing arrangements; any disruption, rising interest rates, or restrictive terms could impair inventory acquisition and profitability.
• The yacht and boat sales industry is highly sensitive to macroeconomic conditions, including GDP growth, interest rates, consumer confidence, and discretionary spending.
• The business is highly seasonal, with sales peaking during spring and summer, leading to variability in operational and financial performance.
• Intense competition from large national dealerships, independent brokers, online marketplaces, and direct-to-consumer manufacturers.
• Failure to implement strategies to enhance performance, such as growing distribution and service businesses or strategic acquisitions, could have a material adverse effect.
• Demand in the powerboat industry is highly volatile, with sales historically decreasing during economic downturns.
• Other recreational activities, poor industry perception, health/safety risks, changing consumer attitudes, and environmental conditions can adversely affect boat purchases.
• Policy changes affecting international trade, such as tariffs, could adversely impact demand for products and competitive position.
• Substantial supplier and inventory acquisition risks, including reliance on exclusive dealer agreements that are renewed annually and can be terminated.
• Marine asset and repossession risks, including changes in lender policies, consumer protection laws, or legal challenges from borrowers.
• Manufacturer recall campaigns could adversely affect new and pre-owned boat sales, customer trade-in valuations, and expose the company to litigation.
• Climatic events (e.g., hurricanes, floods) may adversely impact operations, disrupt third-party vendors, and may not be adequately covered by insurance.
• Increases in fuel prices may negatively impact boat sales and operating results.
• The availability of reasonably affordable boat insurance is critical to success; higher premiums or restrictive underwriting could reduce demand.
• Expansion and acquisition strategies introduce risks related to integration, unexpected costs, and challenges in scaling systems.
• Environmental and other regulatory issues, including emissions standards, waste disposal, and licensing requirements, impact operations and compliance costs.
• Exposure to lawsuits from time to time, including consumer protection, financing terms, repossession practices, or employment issues.
• A significant portion of intellectual property is not protected through patents or formal copyright registration, making it vulnerable to replication.
• Confidentiality agreements with employees and others may not adequately prevent disclosure of trade secrets and proprietary information.
• May need to defend against patent, copyright, or trademark infringement claims, which could be time-consuming and costly.
• Failure in online operations, security breaches, and cybersecurity risks could disrupt business, lead to financial losses, regulatory scrutiny, or reputational harm.

Future Outlook

The company anticipates a return to growth in the recreational boat industry in 2025, driven by innovative new products, changes in U.S. economic policies, and consistent consumer demand. The expanded floorplan financing capacity to $60 million is expected to be a key catalyst for unlocking the next phase of scalable growth and market leadership. Plans include scaling operations to 100 brokers and wholesalers by the end of 2026, expanding the physical footprint with new locations, acquiring a new boat dealership generating $65-75 million annually, and launching new high-margin services like warranty sales and auction services. The marina division intends to make strategic marina purchases across the country, aiming for 12-20% cap rates without boat sales.

Management Comments

• "OTH has grown into one of the largest marine wholesaler in the industry, recognized for its innovation, expertise, and expansive operations."
• "The company has been named one of the 500 fastest-growing companies in the United States by Inc. 500 and is consistently ranked as a Top 100 Dealer in the USA by Boating Industry."
• "The company's success is built on a commitment to excellence, emphasizing the hiring of highly skilled professionals who embody integrity and a passion for the boating industry."
• "By prioritizing relationship-building and ensuring client satisfaction, OTH has established itself as a trusted leader in the market."
• "We believe OTH and WeBuyBoats.com are positioned to become the Carvana of the used boat industry."
• "Our research indicates that buyers are taking a more deliberate, research-driven approach, engagement remains strong as consumers recognize the lasting value of pre-owned boats compared to new models."
• "As the price maker in our markets, we can respond to changes in pre-owned boat pricing, and we are able to quickly capitalize on the changing market conditions, providing for consistency and predictability in our margins."
• "Our investment in innovative technology and customer engagement tools allows us to connect with new audiences, nurture relationships, and deliver an exceptional ownership experience that builds long-term loyalty."
• "Looking ahead, our strong market presence and forward-thinking approach, our company stands ready to lead the way in shaping the future of the pre-owned boating in 2026 and beyond."

Industry Context

StockSavvy.ai notes that the recreational boating industry experienced a notable softening in 2024, with new powerboat retail unit sales declining by 9.1% year-over-year to approximately 231,576 units, driven by macroeconomic pressures like high interest rates and cautious consumer spending. Despite this, pre-owned boat sales consistently outpaced new sales, accounting for 78.3% of total boat sales in 2024, totaling 858,798 units. This trend favors OTH's specialization in the pre-owned market. The industry anticipates a return to growth in 2025, fueled by new products and economic policy changes, which aligns with OTH's strategic expansions and acquisitions.

Comparison to Industry Standards

• The company has been recognized as one of the 500 fastest-growing companies in the United States by Inc. 500, indicating superior growth compared to many peers.
• Consistently ranked as a Top 100 Dealer in the USA by Boating Industry, demonstrating industry leadership and operational excellence.
• Jason Ruegg's leadership has facilitated nearly 10,000 transactions and acquired close to $1 billion in used boats and yachts since 2012, showcasing significant market presence and transaction volume.
• Azure Funding has grown to over $100 million in annual loans, indicating a strong position in marine financing.
• The global recreational boating market is projected to grow at a CAGR of 3.40% from 2024 to 2034, while OTH's 21.1% revenue growth in 2025 significantly outpaces this industry average.
• The company aspires to become the 'Carvana of the used boat industry,' aiming to replicate a successful, high-volume, digital-first model in the marine sector.
• The marina division's target of 12-20% cap rates without boat sales suggests a strong return on investment, potentially outperforming typical real estate ventures.

Management Changes

Corporate Governance

Legal Proceedings

• Carl Austin Rosen v. Off The Hook Yacht Sales NC LLC: Plaintiff alleges fraudulent inducement in a $2.6 million yacht purchase due to undisclosed damage. Defendants deny wrongdoing, asserting repairs and seaworthy delivery.
• Republic Bank & Trust Company v. Azure Funding LLC: Republic Bank seeks $1.9 million for three defaulted marine loans. Azure denies wrongdoing, citing good faith and reliance on borrower information. A settlement of $400,000 was accrued in 2025 financials and settled on March 12, 2026.
• Reistad Employment Matter: Three former employees filed a civil action in March 2026, claiming breach of employment agreements and Stock Purchase Agreement, seeking lost compensation, severance, and 100,000 shares of common stock. The company recognized the obligation for 100,000 shares but intends to vigorously defend against other claims.

Related Party Transactions

• A loan agreement with Dan and Diane Ruegg (parents of Jason Ruegg, President) for up to $1.0 million, unsecured, 7.00% annual interest, was fully paid in 2025.
• An operating loan from Tom Ruegg (uncle of Jason Ruegg) for $500,000, unsecured, 7.00% annual interest, matures July 1, 2027, with an outstanding principal balance of $0.3 million as of December 31, 2025.
• A working capital loan from Ruegg Capital Group for $0.6 million (originated November 1, 2022) with 0% stated interest (imputed at 7.5%) was fully paid as of March 31, 2025.
• Member contributions included $0.9 million in 2024 for related party loan forgiveness and $2,644 in cash in 2025.
• Member distributions totaled $2.8 million in 2025 and $0.7 million in 2024; all 2025 distributions occurred prior to the IPO closing date of November 24, 2025.

Stakeholder Impact

• Shareholders: IPO provided capital and liquidity, but the net loss and decreased Adjusted EBITDA may impact investor confidence. The share repurchase program could offer some price support. Legal proceedings and internal control weaknesses pose risks.
• Employees: Significant increases in salaries and wages, along with stock-based compensation, indicate efforts to attract and retain talent. However, the Reistad Employment Matter highlights potential disputes over compensation and severance.
• Customers: Expanded inventory, new boat sales, and planned warranty/auction services aim to enhance customer experience and choice. The decrease in finance income suggests some high-end customers are less reliant on financing, potentially impacting Azure Funding's growth.
• Suppliers/Manufacturers: Strong relationships are crucial for inventory sourcing, with reliance on exclusive dealer agreements. Disruptions in supply channels or the loss of key manufacturers could negatively impact operations.
• Creditors/Lenders: Increased utilization and capacity of floorplan financing indicate growing debt. Legal proceedings related to defaulted loans (Azure Funding) are a concern for lenders, although a settlement was reached for one case.

Next Steps

• Remediate material weaknesses in internal control over financial reporting by expanding the finance and accounting department and engaging outside consultants.
• Provide a full assessment of the effectiveness of internal control over financial reporting in the Annual Report on Form 10-K for the fiscal year ending December 31, 2026.
• Continue to pursue larger inventory acquisitions and strategic expansion using the expanded $60 million floorplan financing capacity.
• Close the acquisition of APEX marine dealership, service, storage, and brokerage businesses within approximately sixty days following February 13, 2026.
• Scale operations to 100 brokers and wholesalers by the end of 2026.
• Expand physical footprint with new locations in high-demand regions.
• Acquire a new boat dealership generating $65-75 million annually (no definitive agreements yet).
• Launch new high-margin services, including warranty sales and auction services.
• Make strategic marina purchases across the country, aiming for 12-20% cap rates.
• Actively defend against ongoing legal proceedings, including the Carl Austin Rosen v. Off The Hook Yacht Sales NC LLC and the Reistad Employment Matter.
• Implement the $1.0 million share repurchase program authorized on January 8, 2026.

Key Dates

Recommendation

The company demonstrates strong revenue growth and strategic expansion initiatives, including increased floorplan capacity and planned acquisitions, which are positive for long-term potential. However, the shift to a net loss, decreased Adjusted EBITDA, and identified material weaknesses in internal controls introduce significant short-term uncertainties and operational risks. The share repurchase program offers some support, but the overall financial performance and governance issues warrant a cautious 'Hold' recommendation until the company demonstrates consistent profitability and resolves its internal control deficiencies.

Keywords

Yacht sales, Boat dealership, Marine industry, Pre-owned boats, New boat sales, Boat financing, Azure Funding, WeBuyBoats.com, Marine asset recovery, IPO, SEC filing, 10-K, Recreational boating, Corporate governance, Financial performance, Inventory management, Stock repurchase, Acquisition, Floorplan financing, Cybersecurity, Legal proceedings