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      American Outdoor Brands, Inc. Reports Second Quarter Fiscal 2023 Financial Results

      (PRNewsfoto/American Outdoor Brands, Inc.)

      News provided by

      American Outdoor Brands, Inc.

      Dec 01, 2022, 16:05 ET

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      • Net Sales $54.4 Million  
      • Gross Margin 47.7% (+ 100 Basis Points)
      • E-commerce Sales $22.7 Million -- Traditional Sales $31.7 Million
      • Direct-to-Consumer Sales Growth of 119.1%

      COLUMBIA, Mo., Dec. 1, 2022 /PRNewswire/ -- American Outdoor Brands, Inc. (NASDAQ Global Select: AOUT), an industry leading provider of products and accessories for rugged outdoor enthusiasts, today announced financial results for the second quarter of fiscal 2023 ended October 31, 2022.

      Second Quarter Fiscal 2023 Financial Highlights

      • Quarterly net sales were $54.4 million, a decrease of $16.3 million, or 23.1%, compared with net sales of $70.8 million for the comparable quarter last year. E-commerce channel net sales of $22.7 million declined 17.5% from the comparable quarter last year, resulting primarily from reduced demand in the shooting sports category, partially offset by a 119.1% increase in direct-to-consumer sales, which are primarily in the outdoor lifestyle category. Traditional channel net sales of $31.7 million declined 26.6% from the comparable quarter last year, reflecting the impact of lower foot traffic at retail and retailers' efforts to reduce their overall inventory levels, as well as lower shooting sports sales to OEM customers. Compared with pre-COVID levels in the second quarter of fiscal 2020, total net sales grew 14.0%, while e-commerce channel net sales grew by 171.3% and traditional channel net sales declined by 19.4%.
      • Quarterly gross margin was 47.7% compared with quarterly gross margin of 46.7% for the comparable quarter last year.
      • Quarterly GAAP net income was $370,000, or $0.03 per diluted share, compared with net income of $4.6 million, or $0.32 per diluted share, for the comparable quarter last year.
      • Quarterly non-GAAP net income was $4.0 million, or $0.29 per diluted share, compared with non-GAAP net income of $8.3 million, or $0.58 per diluted share, for the comparable quarter last year. GAAP to non-GAAP adjustments for net income exclude acquired intangible amortization, stock compensation, technology implementation, stockholder cooperation agreement costs, and facility consolidation costs. For a detailed reconciliation, see the schedules that follow in this release.
      • Quarterly Adjusted EBITDAS was $6.4 million, or 11.8% of net sales, compared with $11.7 million, or 16.5% of net sales, for the comparable quarter last year. For a detailed reconciliation, see the schedules that follow in this release.

      Brian Murphy, President and Chief Executive Officer, said, "Our second quarter performance demonstrates our ability to successfully navigate ongoing challenges in the macroenvironment while executing on our long-term strategy.  We achieved net sales growth of 14% above our pre-pandemic levels of fiscal 2020 and introduced several innovative new products, while strengthening our balance sheet and marking a number of achievements that support our strategic priorities and reflect our dedication to leveraging our culture of innovation to deliver solutions for consumers in the moments that matter." 

      "Our direct-to-consumer business, which is largely comprised of our outdoor lifestyle brands, remained strong in the second quarter, delivering year-over-year growth of over 119%.  We consider our direct-to-consumer sales to be one gauge of how well our brands are resonating with consumers, since those sales are not typically impacted by issues that have hindered retailers, such as inventory levels or limited open-to-buy dollars.  Our direct-to-consumer category also includes MEAT! Your Maker meat processing equipment and Grilla outdoor cooking products, which are sold exclusively, direct-to-consumer. Together, these two brands generated nearly 10% of our total net sales and helped our Outdoor Lifestyle category generate 55.6% of our total net sales in the second quarter.  We remain excited about growth opportunities in our Outdoor Lifestyle category, which consists of products related to hunting, fishing, camping, and rugged outdoor activities, and which delivered three-year growth of 22.5% over the pre-pandemic second quarter of fiscal 2020." 

      "Innovation is a key element in our long-term strategy, and new products launched within the past two years generated 30% of our second quarter net sales.  During the quarter, we continued to leverage our Dock & Unlock™ process to deliver a steady flow of organically developed, exciting new products, including MEAT! Your Maker Dual Grind Grinders, and two new BOG® tripods, the Sherpa and the Infinite.  These innovative tripods deliver enhanced versatility, durability, and weight savings, and they expand our BOG® product offering, which is extremely popular with hunters.  During the quarter, we attended the National Association of Sporting Goods Wholesalers Expo, where our Caldwell Claymore Clay Target Thrower was recognized as 'Best New Accessory'."

      "Our long-term strategy also includes a focus on leveraging our business model.  We recently completed the consolidation of our Crimson Trace operations in Wilsonville, Oregon, as well as our Grilla operations in Holland, Michigan and Dallas, Texas, into our Missouri facility.  We estimate that these consolidations will yield a net cost savings of approximately $1.5 million per year, beginning in our fiscal fourth quarter, moving us closer to our long-term profitability objectives," concluded Murphy.

      Andrew Fulmer, Chief Financial Officer, said, "We continued to further fortify our balance sheet in the second quarter, demonstrating effective capital deployment.  We purchased over $750,000 of our common stock in the quarter. Nevertheless, positive operational cash flow, including a reduction in inventory of over $9.0 million, helped yield an ending cash balance of $16.4 million."  

      "Turning to our outlook, we believe that retailers and distributors remain cautious regarding their inventory levels, and that consumer spending patterns going forward are still undetermined.  That said, we believe our brands are performing consistently with long-term, positive consumer outdoor trends.  As a result, we continue to believe our net sales for fiscal 2023 could exceed pre-pandemic fiscal 2020 levels by as much as 25%. We believe our solid financial position enables us to continue executing on our long-term strategic plan, investing in our business, returning capital to shareholders, and addressing the exciting growth opportunities we have identified for our company in fiscal 2023 and beyond," concluded Fulmer.

      Conference Call and Webcast
      The Company will host a conference call and webcast today, December 1, 2022, to discuss its second quarter fiscal 2023 financial and operational results. Speakers on the conference call will include Brian Murphy, President and Chief Executive Officer, and Andrew Fulmer, Chief Financial Officer.  The conference call may include forward-looking statements and a discussion of non-GAAP financial measures. The conference call and webcast will begin at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time). Those interested in listening to the conference call via telephone may call directly at (833) 630-1956 and ask to join the American Outdoor Brands call.  No RSVP is necessary.  The conference call audio webcast can also be accessed live on the Company's website at www.aob.com, under the Investor Relations section.

      Reconciliation of U.S. GAAP to Non-GAAP Financial Measures
      In this press release, certain non-GAAP financial measures, including "non-GAAP net income," "non-GAAP income per share diluted," and "Adjusted EBITDAS" are presented. A reconciliation of these and other non-GAAP financial measures are contained at the end of this press release. From time-to-time, the Company considers and uses these non-GAAP financial measures as supplemental measures of operating performance in order to provide the reader with an improved understanding of underlying performance trends.  The Company believes it is useful for itself and the reader to review, as applicable, both (1) GAAP measures that include (i) amortization of acquired intangible assets, (ii) stock compensation, (iii) facility consolidation costs, (iv) technology implementation, (v) acquisition costs, (vi) stockholder cooperation agreement costs, (vii) income tax adjustments, (viii) interest expense, (ix) income tax expense, and (x) depreciation and amortization; and (2) the non-GAAP measures that exclude such information. The Company presents these non-GAAP measures because it considers them an important supplemental measure of its performance and believes the disclosure of such measures provides useful information to investors regarding the Company's financial condition and results of operations. The Company's definition of these adjusted financial measures may differ from similarly named measures used by others. The Company believes these measures facilitate operating performance comparisons from period to period by eliminating potential differences caused by the existence and timing of certain expense items that would not otherwise be apparent on a GAAP basis.  These non-GAAP measures have limitations as an analytical tool and should not be considered in isolation or as a substitute for the Company's GAAP measures.  The principal limitations of these measures are that they do not reflect the Company's actual expenses and may thus have the effect of inflating its financial measures on a GAAP basis.

      About American Outdoor Brands, Inc.
      American Outdoor Brands, Inc. (NASDAQ Global Select: AOUT) is an industry leading provider of outdoor products and accessories, including hunting, fishing, camping, shooting, outdoor cooking, and personal security and defense products, for rugged outdoor enthusiasts.  The company produces innovative, top quality products under its brands BOG®; BUBBA®; Caldwell®; Crimson Trace®; Frankford Arsenal®; Grilla Grills®; Hooyman®; Imperial®; LaserLyte®; Lockdown®; MEAT!; Old Timer®; Schrade®; Tipton®; Uncle Henry®; ust®; and Wheeler®.  For more information about all the brands and products from American Outdoor Brands, Inc., visit www.aob.com.

      Safe Harbor Statement
      Certain statements contained in this press release may be deemed to be forward-looking statements under federal securities laws, and we intend that such forward-looking statements be subject to the safe harbor created thereby. All statements other than statements of historical facts contained or incorporated herein by reference in this press release, including statements regarding our future operating results, future financial position, business strategy, objectives, goals, plans, prospects, markets, and plans and objectives for future operations, are forward-looking statements. In some cases, you can identify forward-looking statements by terms such as "anticipates," "believes," "estimates," "expects," "intends," "targets," "contemplates," "projects," "predicts," "may," "might," "plan," "would," "should," "could," "may," "can," "potential," "continue," "objective," or the negative of those terms, or similar expressions intended to identify forward-looking statements. However, not all forward-looking statements contain these identifying words. Specific forward-looking statements in this press release include our belief that our second quarter performance demonstrates our ability to successfully navigate ongoing challenges in the macroenvironment while executing on our long-term strategy; our direct-to-consumer sales is one gauge of how well our brands are resonating with consumers; our excitement about growth opportunities in our Outdoor Lifestyle category; our estimate that the consolidations of our operations in Wilsonville, Oregon and Holland, Michigan, and Dallas, Texas into our Missouri facility will yield a significant cost savings of approximately $1.5 million per year, beginning in our fiscal fourth quarter; our belief that retailers and distributors remain cautious regarding their inventory levels, and that consumer spending patterns going forward are still undetermined; our belief that our brands are performing consistently with long-term, positive consumer outdoor trends; our belief that our net sales for fiscal 2023 could exceed pre-pandemic fiscal 2020 levels by as much as 25%; and our belief that our solid financial position enables us to continue executing on our long-term strategic plan, investing in our business, and addressing the exciting growth opportunities we have identified for fiscal 2023 and beyond; and our outlook for fiscal 2023. We caution that these statements are qualified by important risks, uncertainties, and other factors that could cause actual results to differ materially from those reflected by such forward-looking statements. Such factors include, among others, the effects of the COVID-19, pandemic, including potential disruptions in our ability to source the materials necessary for the production of our products, disruptions and delays in the manufacture of our products, and difficulties encountered by retailers and other components of the distribution channel for our products; economic, social, political, legislative, and regulatory factors; lawsuits and their effect on us; inventory levels, both internally and in the distribution channel, in excess of demand; natural disasters, pandemics, seasonality, news events, political events, and consumer tastes; future investments for capital expenditures; future products and product development; the features, quality, and performance of our products; the success of our strategies and marketing programs; our market share and factors that affect our market share; liquidity and anticipated cash needs and availability; the supply, availability, and costs of materials and components and related tariffs; our ability to maintain and enhance brand recognition and reputation; risks associated with the distribution of our products and overall availability of labor; and, other factors detailed from time to time in our reports filed with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the fiscal year ended April 30, 2022.

      Contact: 
      Liz Sharp, VP, Investor Relations
      [email protected]
      (573) 303-4620





      AMERICAN OUTDOOR BRANDS, INC. AND SUBSIDIARIES

      CONSOLIDATED BALANCE SHEETS


      As of:


      October 31, 2022


      April 30, 2022


      (Unaudited)




      (In thousands, except par value and share data)

       ASSETS


       Current assets:




      Cash and cash equivalents

      $                 16,355


      $                 19,521

      Accounts receivable, net of allowance for credit losses of $146 on
         October 31, 2022 and $129 on April 30, 2022

      32,557


      28,879

      Inventories

      111,444


      121,683

      Prepaid expenses and other current assets

      11,292


      8,491

      Income tax receivable 

      1,286


      1,231

            Total current assets

      172,934


      179,805

      Property, plant, and equipment, net

      10,168


      10,621

      Intangible assets, net

      58,067


      63,194

      Right-of-use assets

      24,975


      23,884

      Other assets

      328


      336

            Total assets

      $               266,472


      $               277,840

       LIABILITIES AND EQUITY


      Current liabilities:




      Accounts payable

      $                   8,765


      $                 13,563

      Accrued expenses

      10,869


      7,853

      Accrued payroll, incentives, and profit sharing

      2,593


      3,786

      Lease liabilities, current

      1,342


      1,803

            Total current liabilities

      23,569


      27,005

      Notes and loans payable, net of current portion

      19,575


      24,697

      Lease liabilities, net of current portion

      24,520


      23,076

      Other non-current liabilities

      31


      31

            Total liabilities

      67,695


      74,809

      Equity:




      Preferred stock, $0.001 par value, 20,000,000 shares authorized, no
         shares issued or outstanding

      —


      —

      Common stock, $0.001 par value, 100,000,000 shares authorized,
         14,353,170 shares issued and 13,432,177 shares outstanding on
         October 31, 2022 and 14,240,290 shares issued and 13,403,326
         outstanding on April 30, 2022

      14


      14

      Additional paid in capital

      270,220


      268,393

      Retained deficit

      (55,676)


      (50,351)

      Treasury stock, at cost (920,993 shares on October 31, 2022
         and 836,964 shares on April 30, 2022)

      (15,781)


      (15,025)

            Total equity

      198,777


      203,031

            Total liabilities and equity

      $               266,472


      $               277,840










      AMERICAN OUTDOOR BRANDS, INC. AND SUBSIDIARIES

      CONSOLIDATED STATEMENTS OF OPERATIONS

      (In thousands, except per share data)

      (Unaudited)












      For the Three Months Ended October 31, 


      For the Six Months Ended October 31,



      2022


      2021


      2022


      2021

      Net sales 


      $                  54,436


      $                  70,760


      $                  98,112


      $                131,528

      Cost of sales


      28,474


      37,723


      53,111


      69,508

      Gross profit


      25,962


      33,037


      45,001


      62,020

      Operating expenses:









      Research and development


      1,557


      1,457


      3,313


      2,977

      Selling, marketing, and distribution


      13,924


      15,664


      25,704


      28,864

      General and administrative


      10,615


      10,615


      21,679


      20,654

      Total operating expenses


      26,096


      27,736


      50,696


      52,495

      Operating (loss)/income


      (134)


      5,301


      (5,695)


      9,525

      Other income, net:









      Other income, net


      585


      619


      826


      747

      Interest expense, net


      (242)


      (53)


      (428)


      (99)

      Total other income, net


      343


      566


      398


      648

      Income/(loss) from operations before income taxes


      209


      5,867


      (5,297)


      10,173

      Income tax (benefit)/expense


      (161)


      1,284


      28


      2,133

      Net income/(loss)


      $                       370


      $                    4,583


      $                   (5,325)


      $                    8,040

      Net income/(loss) per share:









      Basic


      $                      0.03


      $                      0.32


      $                     (0.40)


      $                      0.57

      Diluted


      $                      0.03


      $                      0.32


      $                     (0.40)


      $                      0.56

      Weighted average number of common shares outstanding:









      Basic


      13,465


      14,135


      13,454


      14,109

      Diluted


      13,589


      14,348


      13,454


      14,369





      AMERICAN OUTDOOR BRANDS, INC. AND SUBSIDIARIES

      CONSOLIDATED STATEMENTS OF CASH FLOWS

      (Unaudited)






      For the Six Months Ended October 31,


      2022


      2021


      (In thousands)

      Cash flows from operating activities:




      Net (loss)/income

      $                  (5,325)


      $                   8,040

      Adjustments to reconcile net income to net cash provided by/
         (used in) operating activities:




      Depreciation and amortization

      8,272


      8,386

      (Gain)/loss on sale/disposition of assets

      (5)


      127

      Provision for credit losses on accounts receivable

      16


      38

      Deferred income taxes

      —


      (403)

      Stock-based compensation expense

      1,835


      1,416

      Changes in operating assets and liabilities:




      Accounts receivable

      (3,694)


      (12,195)

      Inventories

      10,239


      (30,677)

      Accounts payable

      (4,058)


      3,632

      Accrued liabilities

      1,823


      660

      Other

      (2,936)


      (4,298)

           Net cash provided by/(used in) operating activities

      6,167


      (25,274)

      Cash flows from investing activities:




      Payments to acquire patents and software

      (2,495)


      (1,124)

      Payments to acquire property and equipment

      (816)


      (1,708)

           Net cash used in investing activities

      (3,311)


      (2,832)

      Cash flows from financing activities:




      Payments on notes and loans payable

      (5,170)


      —

      Payments to acquire treasury stock

      (756)


      —

      Cash paid for debt issuance costs

      (88)


      —

      Proceeds from exercise of options to acquire common stock,
         including employee stock purchase plan

      287


      413

      Payment of employee withholding tax related to restricted
         stock units

      (295)


      (505)

           Net cash used in financing activities

      (6,022)


      (92)

      Net decrease in cash and cash equivalents

      (3,166)


      (28,198)

      Cash and cash equivalents, beginning of period

      19,521


      60,801

      Cash and cash equivalents, end of period

      $                 16,355


      $                 32,603

      Supplemental disclosure of cash flow information




             Cash paid for:




      Interest

      $                      393


      $                        76

      Income taxes

      $                        86


      $                   2,500










      AMERICAN OUTDOOR BRANDS, INC. AND SUBSIDIARIES
      RECONCILIATION OF GAAP FINANCIAL MEASURES TO NON-GAAP FINANCIAL MEASURES
      (In thousands, except per share data)
      (Unaudited)



      For the Three Months Ended October 31,


      For the Six Months Ended October 31, 



      2022


      2021


      2022


      2021


      GAAP gross profit

      $                           25,962


      $                           33,037


      $                           45,001


      $                           62,020


      Facility consolidation costs

      158


      —


      158


      —


      Non-GAAP gross profit

      $                           26,120


      $                           33,037


      $                           45,159


      $                           62,020











      GAAP operating expenses

      $                           26,096


      $                           27,736


      $                           50,696


      $                           52,495


      Amortization of acquired intangible assets

      (3,074)


      (3,428)


      (6,150)


      (6,856)


      Stock compensation

      (1,121)


      (664)


      (1,835)


      (1,416)


      Facility consolidation costs

      (134)


      —


      (134)


      —


      Technology implementation

      (273)


      (887)


      (1,042)


      (1,159)


      Acquisition costs

      —


      —


      (47)


      —


      Stockholder cooperation agreement costs

      (167)


      —


      (1,177)


      —


      Other

      —


      (18)


      —


      (18)


      Non-GAAP operating expenses

      $                           21,327


      $                           22,739


      $                           40,311


      $                           43,046











      GAAP operating (loss)/income

      $                              (134)


      $                             5,301


      $                           (5,695)


      $                             9,525


      Amortization of acquired intangible assets

      3,074


      3,428


      6,150


      6,856


      Stock compensation

      1,121


      664


      1,835


      1,416


      Facility consolidation costs

      292


      —


      292


      —


      Technology implementation

      273


      887


      1,042


      1,159


      Acquisition costs

      —


      —


      47


      —


      Stockholder cooperation agreement costs

      167


      —


      1,177


      —


      Other

      —


      18


      —


      18


      Non-GAAP operating income

      $                             4,793


      $                           10,298


      $                             4,848


      $                           18,974











      GAAP net income/(loss)

      $                                370


      $                             4,583


      $                           (5,325)


      $                             8,040


      Amortization of acquired intangible assets

      3,074


      3,428


      6,150


      6,856


      Stock compensation

      1,121


      664


      1,835


      1,416


      Facility consolidation costs

      292


      —


      292


      —


      Technology implementation

      273


      887


      1,042


      1,159


      Acquisition costs

      —


      —


      47


      —


      Stockholder cooperation agreement costs

      167


      —


      1,177


      —


      Other

      —


      18


      —


      18


      Income tax adjustments

      (1,342)


      (1,249)


      (1,178)


      (2,362)


      Non-GAAP net income

      $                             3,955


      $                             8,331


      $                             4,040


      $                           15,127











      GAAP net income/(loss) per share - diluted

      $                               0.03


      $                               0.32


      $                             (0.40)


      $                               0.56


      Amortization of acquired intangible assets

      0.23


      0.24


      0.46


      0.48


      Stock compensation

      0.08


      0.05


      0.14


      0.10


      Facility consolidation costs

      0.02


      —


      0.02


      —


      Technology implementation

      0.02


      0.06


      0.08


      0.08


      Acquisition costs

      —


      —


      —


      —


      Stockholder cooperation agreement costs

      0.01


      —


      0.09


      —


      Other

      —


      —


      —


      —


      Income tax adjustments

      (0.10)


      (0.09)


      (0.09)


      (0.16)


      Non-GAAP net income per share - diluted

      $                               0.29


      $                               0.58


      $                               0.30


      $                               1.05

      (a)

      (a) Non-GAAP net income per share does not foot due to rounding. 


















      AMERICAN OUTDOOR BRANDS, INC. AND SUBSIDIARIES

      RECONCILIATION OF GAAP NET INCOME/(LOSS) TO NON-GAAP ADJUSTED EBITDAS
      (In thousands)
      (Unaudited)














      For the Three Months Ended October 31, 


      For the Six Months Ended October 31,



      2022


      2021


      2022


      2021

      GAAP net income/(loss)

      $

      370


      $

      4,583


      $

      (5,325)


      $

      8,040

      Interest expense


      242



      53



      428



      99

      Income tax (benefit)/expense


      (161)



      1,284



      28



      2,133

      Depreciation and amortization


      4,110



      4,207



      8,272



      8,386

      Stock compensation


      1,121



      664



      1,835



      1,416

      Technology implementation


      273



      887



      1,042



      1,159

      Acquisition costs


      —



      —



      47



      —

      Facility consolidation costs


      292



      —



      292



      —

      Stockholder cooperation agreement costs


      167



      —



      1,177



      —

      Other


      —



      18



      —



      18

      Non-GAAP Adjusted EBITDAS

      $

      6,414


      $

      11,696



      $                       7,796



      $                     21,251













      SOURCE American Outdoor Brands, Inc.

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