American Outdoor Brands, Inc. Reports Third Quarter Fiscal 2022 Financial Results

American Outdoor Brands, Inc. (NASDAQ Global Select: AOUT), an industry leading provider of products and accessories for outdoor enthusiasts, has announced its financial results for the third quarter fiscal 2022 ended January 31, 2022.

Third Quarter Fiscal 2022 Financial Highlights

Net sales were $70.1 million for the third quarter of fiscal 2022, a decline from record net sales of $82.6 million for the third quarter of fiscal 2021, reflecting a decrease in traditional brick-and-mortar channel net sales. On a two-year basis, net sales grew 61.8 per cent over the third quarter of fiscal 2020, reflecting growth in the traditional sales channel of 26.6 per cent, and growth in the e-commerce channel of 122.4 per cent.

Gross margin of 45.8 per cent was an increase of 60 basis points over the comparable quarter last year. 

Net income was $3.8 million, or $0.27 per diluted share, compared with net income of $8.0 million, or $0.56 per diluted share, for the comparable quarter last year. 

·        Non-GAAP net income was $7.4 million, or $0.52 per diluted share, compared with non-GAAP net income of $11.8 million, or $0.82 per diluted share, for the comparable quarter last year.  GAAP to non-GAAP adjustments for net income exclude acquired intangible amortization, stock compensation, transition costs, COVID-19 expenses, technology implementation, and other costs. For a detailed reconciliation, see the schedules that follow in this release.

·        Adjusted EBITDAS was $10.5 million, or 15.0 per cent of net sales, compared with $15.8 million, or 19.1 per cent of net sales, for the comparable quarter last year. 

Brian Murphy, President and Chief Executive Officer, said, “Over the past two years, many consumers have discovered for the first time, or rediscovered, a passion for outdoor lifestyle activities, as well as for shooting sports and personal protection. This new, larger base of consumer participation has helped drive significant growth in our business and should fuel our future growth as well. During the third quarter, net sales of products in our outdoor lifestyle category, which consists of products primarily related to hunting, fishing, camping, and rugged outdoor activities, grew by more than 80% versus the pre-pandemic third quarter of fiscal 2020, and net sales of products in our firearm-related shooting sports category, which includes shooting accessories and products related to personal protection, grew by approximately 45 per cent versus the third quarter of fiscal 2020. 

“We believe that some of the gains experienced by us and throughout the industry over the past two years were propelled by the pandemic resulting in outsized growth last year. As a result, total net sales in our third quarter declined approximately 15 per cent, as the company lapped very strong growth of more than 90% in the comparable period last year. The decline was driven by lower net sales of products within our shooting sports category, particularly those products related to personal protection, but were partially offset by growth of the products product sales in our outdoor lifestyle category. We moved quickly to adjust to this change in the post-pandemic environment and worked closely with our firearm-related OEM customers and retailers as they addressed rapidly shifting consumer firearm purchasing activity.

“Importantly, we continued to execute on a number of exciting initiatives that support our long-term growth strategy. Our outdoor lifestyle category grew by 7% in the third quarter versus fiscal 2021. Growth in our outdoor lifestyle category is an important component of our long-term strategic plan, and today we are excited to announce that we will acquire Grilla Grills, a direct-to-consumer provider of high-quality grills, smokers, and accessories to the $7 billion, growing U.S. barbecue grill market. With the addition of Grilla to our brand portfolio, we gain an authentic brand with a loyal consumer following that is well-suited to benefit from our Dock-and-Unlock strategy and that will expand our direct-to-consumer revenue base. Both Grilla Grills and our existing MEAT! Your Maker brand are 100% direct-to-consumer brands that, when combined, are expected to generate nearly 10% of our total net sales. The acquisition of Grilla, which is expected to be immediately accretive and should close in the coming weeks, will also diversify our revenue mix further toward our outdoor lifestyle category, which we believe will generate nearly 50 per cent of our net sales beginning in the fourth quarter. We are excited to welcome Grilla Grills into the American Outdoor family of brands.

“Our Dock & Unlock process continues to fuel innovation, drive future growth, and support our objective to deliver compound annual organic growth of 8 per cent to 10 per cent over the next four to five years. During the third quarter, we unveiled a number of new products, including two new meat grinders from MEAT!, our organically developed, direct-to-consumer, brand of meat processing equipment, and the Claymore, a truly innovative clay target launcher from our Caldwell brand. Many of our new products reflect our intent to continue growing our outdoor lifestyle category, while sharpening our focus in shooting sports on those areas that represent large, long-term, and more stable markets, such as shotgun sports, targets, and scopes. With a robust new product pipeline in place, a portfolio of authentic outdoor brands in hand, and an energized outdoor consumer, we are excited about the future and look forward to sharing our progress as we take our brands from Niche to Known™.”

Andrew Fulmer, Chief Financial Officer, said, “We believe the strength of our balance sheet continues to provide us with multiple options to effectively deploy our capital to help drive growth, as demonstrated by our multiple new product launches in the third quarter and the planned acquisition of Grilla Grills in the fourth quarter. Grilla has delivered net sales growth of over 161 per cent over the last two years and a compound annual growth rate of approximately 50 per cent over the last five years. Our cash balance, combined with the expanded capacity on our line of credit, provided us with almost $90 million of available capital at the end of the third quarter. We believe that our solid financial position enables us to execute on our capital allocation priorities, including investing in organic growth and potential acquisitions, as well as opportunistically returning capital to our stockholders. Accordingly, our Board authorized a share repurchase program of up to $15 million of our common stock in December 2021, and as of the end of our third quarter, we had purchased $7 million of our common stock. We have since then completed the program with $8 million in common stock purchases during the fourth quarter.” 

“During the third quarter, we received data from our retail partners indicating that POS trends for products in our Shooting Sports and Personal Protection category that attach to firearms had declined. Based on this information, and our current visibility into the remainder of our fiscal year, we are adjusting our guidance range for fiscal year 2022 accordingly.”

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, and personal security and defense products, for rugged outdoor enthusiasts. The company produces innovative, top quality products under its brands Caldwell; Wheeler; Tipton; Frankford Arsenal; Hooyman; BOG; MEAT!; Uncle Henry; Old Timer; Imperial; Crimson Trace; LaserLyte; Lockdown; ust; BUBBA; and Schrade.