OFF THE HOOK YS INC. Annual Report - How They Did This Year

I’m writing this guide to help you understand how Off the Hook (ticker: OTH) is performing. My goal is to explain their strategy so you can decide if this company fits your investment goals.

1. What does this company do?

Think of Off the Hook as a "one-stop shop" for the boating lifestyle. They don't just sell boats; they run a full ecosystem. They buy and sell pre-owned yachts, handle repairs, help customers get loans through their finance arm, "Azure Funding," and manage boat repossessions. By controlling the whole process—from the initial sale to financing and resale—they aim to capture profit at every step. Their revenue comes from three main areas: retail boat sales, brokerage commissions, and interest income from Azure Funding.

2. Financial performance: Growing sales, but struggling to keep profit

The company is growing fast. In 2025, they brought in $119.9 million in revenue, a 21% jump from $99.1 million in 2024. However, there is a catch: they are selling more boats, but they aren't yet turning that into profit.

In 2025, the company reported a $1.87 million loss, compared to a $985,000 profit in 2024. This loss happened because operating expenses jumped 34%. This included $4.2 million in one-time legal and accounting fees for their IPO and a $2.8 million increase in marketing spend for WeBuyBoats.com. Furthermore, their profit margin on sales dropped from 18.5% to 15.2% as they sold off older inventory to pay down debt.

3. Major wins and changes

• The "Carvana" of Boats: They are scaling WeBuyBoats.com to make selling a boat as easy as selling a car. This platform provided 65% of their pre-owned inventory in 2025.
• Tech-Driven Sales: Their auction platform, Boatsandbuyers.com, removes the need for long haggling. It handled 412 transactions in 2025, or 12% of their total retail volume.
• Public Company Transition: They went public in November 2025, raising $13.4 million. This boosted their available cash from $4.1 million to $15.8 million, giving them the money needed to buy more inventory.

4. Real-world risks

• Interest Rate Sensitivity: They use a $60 million credit line to stock boats. They owed $25.3 million at the end of 2025 with a variable interest rate. Higher rates pushed their interest costs to $2.1 million, up from $1.2 million in 2024.
• Margin Pressure: Buyers are becoming more price-sensitive. This forced OTH to accept lower profits per boat, with average profit per unit falling from $22,500 to $18,900.
• Legal & Environmental: They face a lawsuit over boat title transfers and potential cleanup costs for hazardous waste at their Florida repair facility. They set aside $450,000 to cover these risks.
• No "Moat": They have no patents on their sales process. If a larger competitor copies their model, OTH has no legal protection to stop them.

5. Future outlook

OTH is in "growth mode." They aren't paying dividends; they are reinvesting every dollar into expansion. Management expects 15% revenue growth in 2026 and aims to break even by Q3 2026.

Investor Checklist:

• Watch the Margins: Keep an eye on whether they can push profit margins back above 17%.
• Monitor Debt: Watch how they manage their $25.3 million debt load as interest rates fluctuate.
• Track the Break-Even Goal: Check their quarterly updates to see if they are on track to reach profitability by Q3 2026.