[Q2 FY2025 Financial Results Announcement](index=1&type=section&id=American%20Outdoor%20Brands%2C%20Inc.%20Reports%20Second%20Quarter%20Fiscal%202025%20Financial%20Results) American Outdoor Brands reported strong Q2 FY2025 financial results, driven by innovation and growth across all sales channels, leading to increased fiscal year 2025 guidance [Q2 FY2025 Performance Highlights](index=1&type=section&id=Second%20Quarter%20Fiscal%202025%20Financial%20Highlights) American Outdoor Brands reported strong Q2 FY2025 results with a 4.0% year-over-year increase in net sales to $60.2 million, improved gross margin, and significant growth in Non-GAAP Adjusted EBITDAS and net income Q2 FY2025 Key Financial Metrics (Y/Y) | Metric | Q2 FY2025 (USD) | Q2 FY2024 (USD) | Change | | :--- | :--- | :--- | :--- | | **Net Sales** | $60.2 million | $57.9 million | +4.0% | | **Gross Margin** | 48.0% | 45.7% | +230 bps | | **GAAP Net Income** | $3.1 million | $77 thousand | +3940% | | **GAAP EPS (Diluted)** | $0.24 | $0.01 | +2300% | | **Non-GAAP Net Income** | $4.9 million | $3.3 million | +48.5% | | **Non-GAAP EPS (Diluted)** | $0.37 | $0.25 | +48.0% | | **Non-GAAP Adjusted EBITDAS** | $7.5 million | $5.2 million | +42.9% | - The company experienced growth across all sales channels in Q2 FY2025: - Traditional Channel Net Sales: Up **4.3%** - E-Commerce Channel Net Sales: Up **3.5%** - Domestic Channel Net Sales: Up **3.4%** - International Net Sales: Up **14.8%**[1](index=1&type=chunk)[3](index=3&type=chunk) [Management Commentary](index=2&type=section&id=Management%20Commentary) Management attributed the strong quarterly performance to successful innovation, driving growth in both Outdoor Lifestyle and Shooting Sports categories, supported by a robust new product pipeline and disciplined capital management - Quarterly growth was driven by a **5.4%** increase in the Outdoor Lifestyle category and a **1.9%** increase in the Shooting Sports category[3](index=3&type=chunk) - Strong performance was noted in specific brands: BOG, MEAT! Your Maker, and Grilla in Outdoor Lifestyle, and Caldwell Claymore and Tipton in Shooting Sports[4](index=4&type=chunk) - The company has a robust new product pipeline set to debut at SHOT Show in January 2025, which has received strong early order indications and commitments for expanded shelf space from retailers[5](index=5&type=chunk) - The company maintained a strong financial position, ending the quarter with **$14.2 million** in cash, no debt, and having repurchased approximately **$1.0 million** of its common stock[5](index=5&type=chunk) [Financial Outlook](index=2&type=section&id=Financial%20Outlook) Following strong Q2 results and positive retailer feedback, American Outdoor Brands increased its financial guidance for fiscal year 2025 and established its initial net sales outlook for fiscal year 2026 Updated FY2025 and Initial FY2026 Guidance | Fiscal Year | Metric | Low Range (USD) | High Range (USD) | | :--- | :--- | :--- | :--- | | **FY2025** | Net Sales | $205.0 million | $210.0 million | | **FY2025** | GAAP Loss per Share (Diluted) | ($0.36) | ($0.24) | | **FY2025** | Non-GAAP Adjusted EBITDAS | $13.5 million | $15.0 million | | **FY2026** | Net Sales | $220.0 million | $230.0 million | [Financial Statements](index=5&type=section&id=Financial%20Statements) The company's financial statements for Q2 FY2025 show increased assets and liabilities, significant net sales growth, and cash used in operations primarily due to inventory and receivables [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) As of October 31, 2024, total assets increased to $254.1 million from $240.6 million at April 30, 2024, driven by higher inventories and accounts receivable, while total liabilities rose to $75.3 million Selected Balance Sheet Data (in thousands) | Account | Oct 31, 2024 (in thousands) | Apr 30, 2024 (in thousands) | | :--- | :--- | :--- | | Cash and cash equivalents | $14,223 | $29,698 | | Accounts receivable, net | $43,259 | $25,728 | | Inventories | $111,566 | $93,315 | | **Total current assets** | **$174,222** | **$155,374** | | **Total assets** | **$254,125** | **$240,597** | | Accounts payable | $25,376 | $14,198 | | **Total liabilities** | **$75,271** | **$62,672** | | **Total equity** | **$178,854** | **$177,925** | [Consolidated Statements of Operations](index=6&type=section&id=Consolidated%20Statements%20of%20Operations) For the three months ended October 31, 2024, the company's net sales grew to $60.2 million, gross profit increased, and operating income significantly improved, leading to a surge in net income to $3.1 million Statement of Operations Highlights (in thousands, except per share data) | Metric | 3 Months Ended Oct 31, 2024 (in thousands) | 3 Months Ended Oct 31, 2023 (in thousands) | | :--- | :--- | :--- | | Net sales | $60,232 | $57,931 | | Gross profit | $28,907 | $26,490 | | Operating income/(loss) | $3,070 | ($22) | | Net income | $3,111 | $77 | | Diluted EPS | $0.24 | $0.01 | [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended October 31, 2024, net cash used in operating activities increased to $12.3 million, primarily due to higher inventories and accounts receivable, with the period ending with a cash balance of $14.2 million Cash Flow Summary (Six Months Ended Oct 31, in thousands) | Cash Flow Activity | 2024 (in thousands) | 2023 (in thousands) | | :--- | :--- | :--- | | Net cash used in operating activities | ($12,287) | ($3,215) | | Net cash used in investing activities | ($1,573) | ($1,581) | | Net cash used in financing activities | ($1,615) | ($8,775) | | **Net decrease in cash** | **($15,475)** | **($13,571)** | | **Cash at end of period** | **$14,223** | **$8,379** | [Reconciliation of GAAP to Non-GAAP Measures](index=8&type=section&id=Reconciliation%20of%20GAAP%20to%20Non-GAAP%20Measures) The company provides non-GAAP reconciliations to offer a clearer view of underlying performance, adjusting GAAP net income for non-cash and non-recurring items [Reconciliation of Key Metrics](index=8&type=section&id=Reconciliation%20of%20Key%20Metrics) The company provides non-GAAP financial measures to offer a clearer view of underlying performance trends, with Q2 FY2025 GAAP net income of $3.1 million adjusted to a non-GAAP net income of $4.9 million GAAP to Non-GAAP Net Income Reconciliation (Q2, in thousands) | Description | Q2 FY2025 (in thousands) | Q2 FY2024 (in thousands) | | :--- | :--- | :--- | | **GAAP net income/(loss)** | **$3,111** | **$77** | | Amortization of acquired intangible assets | $2,120 | $2,960 | | Stock compensation | $866 | $1,005 | | Other adjustments | $199 | $270 | | Income tax adjustments | ($1,439) | ($1,023) | | **Non-GAAP net income** | **$4,857** | **$3,289** | [Reconciliation to Adjusted EBITDAS](index=9&type=section&id=Reconciliation%20to%20Adjusted%20EBITDAS) Non-GAAP Adjusted EBITDAS for Q2 FY2025 was $7.5 million, a significant increase from $5.2 million in the prior-year quarter, derived from GAAP net income by adding back specific non-cash and non-recurring items GAAP Net Income to Non-GAAP Adjusted EBITDAS Reconciliation (Q2, in thousands) | Description | Q2 FY2025 (in thousands) | Q2 FY2024 (in thousands) | | :--- | :--- | :--- | | **GAAP net income/(loss)** | **$3,111** | **$77** | | Interest (income)/expense | $6 | ($6) | | Income tax expense/(benefit) | $12 | ($40) | | Depreciation and amortization | $3,293 | $3,935 | | Stock compensation | $866 | $1,005 | | Other adjustments | $199 | $270 | | **Non-GAAP Adjusted EBITDAS** | **$7,487** | **$5,241** | [Additional Information](index=3&type=section&id=Additional%20Information) This section provides details on the upcoming conference call and includes a safe harbor statement outlining risks associated with forward-looking statements [Conference Call and Webcast](index=3&type=section&id=Conference%20Call%20and%20Webcast) The company announced it will host a conference call and webcast on December 5, 2024, at 5:00 p.m. Eastern Time to discuss its second quarter fiscal 2025 financial results - A conference call and webcast were scheduled for December 5, 2024, to discuss the financial and operational results with CEO Brian Murphy and CFO Andrew Fulmer[6](index=6&type=chunk) [Safe Harbor Statement](index=3&type=section&id=Safe%20Harbor%20Statement) This press release includes forward-looking statements regarding future operating results, business strategy, and financial outlook, cautioning that these statements are subject to significant risks and uncertainties that could cause actual results to differ materially - The report contains forward-looking statements concerning future financial position, business strategy, and operational plans, including expectations for new product reception and achieving financial guidance[9](index=9&type=chunk)[10](index=10&type=chunk) - Key risks that could affect actual results include supply chain disruptions, economic and political factors, inventory levels, consumer tastes, and other factors detailed in SEC filings[10](index=10&type=chunk)

Financial Data and Key Metrics Changes - Net sales for Q2 were $60.2 million, a 4% increase from $57.9 million in Q2 last year [28] - Adjusted EBITDAS grew by 43% year-over-year, reaching $7.5 million compared to $5.2 million last year [10][37] - Gross margin for Q2 was 48%, up 230 basis points from 45.7% in Q2 last year [33] - GAAP EPS was $0.24 for Q2, compared to $0.01 for the same quarter last year, while non-GAAP EPS was $0.37 compared to $0.25 [36] Business Line Data and Key Metrics Changes - Outdoor Lifestyle category net sales grew by 5.4%, driven by strong performance from MEAT, BOG, and Grilla brands [29] - Shooting Sports category net sales increased by nearly 2%, with strength in shooting accessories offsetting a slight decline in personal protection products [30] - Positive growth was reported across all sales channels, including traditional, e-commerce, domestic, and international [11] Market Data and Key Metrics Changes - International net sales reached $3.4 million, representing nearly 15% year-over-year growth and comprising roughly 6% of total net sales [32] - The company noted a 1% increase in adjusted NICS background check results, which aligns with the performance in the shooting sports category [31] Company Strategy and Development Direction - The company aims to leverage its innovation advantage to widen distribution, expand brand awareness, and enhance profitability while remaining agile and asset-light [9][25] - Strategic investments in product development and distinctive merchandising solutions are key components of the company's long-term strategy [12][14] - The company plans to showcase new products at the SHOT Show, emphasizing its role as a cross-category innovation partner [17][18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term sales outlook due to positive retailer reception and strong early order indications for new products [55][86] - The company increased its net sales guidance for FY'25 to a range of $205 million to $210 million, reflecting a growth expectation of 3.2% at the midpoint [45] - For FY'26, the company anticipates net sales between $220 million and $230 million, representing growth of 8.4% at the midpoint [49] Other Important Information - The company ended Q2 with cash of $14.2 million and no debt, having repurchased approximately $1 million of common stock [38] - A new $10 million share repurchase program was approved, effective from October 2024 through September 2025 [44] Q&A Session Summary Question: Insight into the purchasing timeline for retailers - Management noted that purchasing decisions typically occur around Q2 and extend into early February, with retailers eager to increase foot traffic through innovative products [53][55] Question: Performance of products in the shooting sports market - Management highlighted that while there was softness in personal protection products, the shotgun sports category has shown strong growth, diversifying revenue streams [58][61] Question: Changes in capital allocation philosophy regarding investments and M&A - The company maintains a three-pronged capital allocation strategy focusing on organic growth, M&A opportunities, and share buybacks, with a disciplined approach to capital allocation [65][66] Question: Acceleration in sales outlook for fiscal '25 - Management indicated that the acceleration in sales is driven by a broad willingness among retailers to adopt innovative products across the entire portfolio [76][80] Question: Gross margin headwinds and tariff exposure - Management discussed expected headwinds from tariff amortization and the fluid situation regarding tariffs, emphasizing a focus on innovation and agility [89][92] Question: M&A opportunities and activity - Management noted a slowdown in M&A activity in the shooting sports sector but identified more opportunities in the outdoor lifestyle segment, including adjacent markets [106][110]

Company Performance - American Outdoor Brands, Inc. (AOUT) reported quarterly earnings of $0.37 per share, exceeding the Zacks Consensus Estimate of $0.22 per share, and up from $0.25 per share a year ago, representing an earnings surprise of 68.18% [1] - The company posted revenues of $60.23 million for the quarter ended October 2024, surpassing the Zacks Consensus Estimate by 13.01%, compared to year-ago revenues of $57.93 million [2] - Over the last four quarters, the company has surpassed consensus EPS estimates three times and topped consensus revenue estimates four times [2] Stock Performance and Outlook - American Outdoor Brands shares have increased approximately 19.1% since the beginning of the year, while the S&P 500 has gained 27.6% [3] - The current consensus EPS estimate for the upcoming quarter is $0.18 on revenues of $55.8 million, and for the current fiscal year, it is $0.51 on revenues of $200.6 million [7] - The estimate revisions trend for American Outdoor Brands is mixed, resulting in a Zacks Rank 3 (Hold), indicating expected performance in line with the market in the near future [6] Industry Context - The Leisure and Recreation Products industry, to which American Outdoor Brands belongs, is currently in the bottom 30% of over 250 Zacks industries, which may impact stock performance [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, suggesting that industry outlook can materially affect stock performance [5][8]

Financial Performance - Net sales for the three months ended October 31, 2024, were $60.2 million, an increase of $2.3 million or 4.0% compared to the same quarter last year, driven primarily by increased sales in the outdoor lifestyle category [74]. - Gross margin for the same period was 48.0%, an increase of 230 basis points year-over-year [74]. - Net income for the three months ended October 31, 2024, was $3.1 million, or $0.24 per diluted share, compared to net income of $77,000, or $0.01 per diluted share for the same quarter last year [74]. - For the six months ended October 31, 2024, net sales were $101.9 million, an increase of $499,000 or 0.5% over the prior year [75]. - Gross margin for the six months ended October 31, 2024, was 47.0%, an increase of 140 basis points compared to the prior year [75]. - Operating income for the three months ended October 31, 2024, was $3.1 million, a significant increase of $3.1 million compared to a loss of $22,000 in the same quarter last year, resulting in an operating margin of 5.1% [92]. - Net income for the six months ended October 31, 2024, was $746,000, compared to a net loss of $4.0 million in the prior year, marking an increase of $4.78 million [98]. - Adjusted EBITDAS for the three months ended October 31, 2024, was $7.49 million, compared to $5.24 million for the same period last year [102]. Sales Channels - E-commerce channel net sales for the three months ended October 31, 2024, increased by $820,000, or 3.5% year-over-year [80]. - International net sales for the three months ended October 31, 2024, increased by $436,000, or 14.8%, primarily due to increased sales in Canada [81]. - Traditional channel net sales increased by $1.6 million, or 2.6%, over the prior year comparable period, driven by higher sales of shooting accessories and hunting products [87]. - New products represented 21.5% of net sales for the three months ended October 31, 2024 [82]. - For the six months ended October 31, 2024, new products accounted for 22.7% of net sales [88]. Expenses and Cost Management - Research and development expenses increased by $191,000 (11.4%) for the three months ended October 31, 2024, compared to the same period last year, primarily due to higher consulting and third-party service expenses [90]. - Total operating expenses decreased by $675,000 (2.5%) for the three months ended October 31, 2024, with operating expenses as a percentage of net sales improving to 42.9% from 45.8% [90]. - For the six months ended October 31, 2024, total operating expenses decreased by $2.98 million (5.9%), with operating expenses as a percentage of net sales improving to 46.5% from 49.6% [91]. - Selling, marketing, and distribution expenses decreased by $441,000 (2.9%) for the three months ended October 31, 2024, primarily due to lower advertising expenses [90]. Cash Flow and Capital Expenditures - Cash used in operating activities was $12.3 million for the six months ended October 31, 2024, compared to $3.2 million for the same period in 2023, reflecting a 282.2% increase [107]. - Cash used in investing activities was $1.6 million during the six months ended October 31, 2024, unchanged from the prior year [108]. - Cash used in financing activities was $1.6 million for the six months ended October 31, 2024, primarily due to $1.4 million used to repurchase 153,497 shares of common stock [109]. - The company expects to spend approximately $3.5 million to $4.5 million on capital expenditures in fiscal 2025, a decrease of $1.5 million to $2.5 million from the $6.0 million spent in fiscal 2024 [108]. - As of October 31, 2024, the company had $14.2 million in cash equivalents, down from $29.7 million as of April 30, 2024 [111]. Future Outlook and Risks - The company plans to utilize cash flows for business investments, including research and development for new product initiatives and potential acquisitions [103]. - The company anticipates that future capital requirements will depend on various factors, including net sales and product development efforts [110]. - The company may face limitations in taking advantage of business opportunities if sufficient funds are not available on acceptable terms [110].

Core Viewpoint - American Outdoor Brands, Inc. (AOUT) is expected to report second-quarter fiscal 2025 results on December 5, with earnings anticipated to decline year-over-year due to market challenges in the firearms and outdoor products sectors [1][2][4]. Group 1: Earnings Estimates - The Zacks Consensus Estimate for AOUT's second-quarter fiscal 2025 earnings is 22 cents per share, reflecting a 12% year-over-year decline [2]. - Revenue estimates for the same quarter are pegged at $53.3 million, indicating an 8% year-over-year decrease [2]. Group 2: Market Challenges - AOUT's performance is likely to be negatively impacted by ongoing headwinds in the shooting sports category and reduced consumer demand for firearms and related accessories [4]. - A cautious consumer spending environment is expected to affect sales in outdoor cooking and rugged outdoor products [4]. Group 3: Operating Expenses and Profitability - Operating expenses are projected to have increased slightly due to higher selling and distribution costs related to seasonal inventory builds, which may have pressured profitability [5]. - The competitive retail landscape and inventory imbalances among partners may have led AOUT to engage in promotions, potentially affecting profit margins [5]. Group 4: Earnings Prediction Model - The current model does not predict an earnings beat for AOUT, as it has an Earnings ESP of 0.00% and a Zacks Rank of 3 (Hold) [6][7].

Core Viewpoint - The sustainability of a trend is crucial for successful short-term investing, and confirming fundamental factors is essential to maintain momentum in stocks [1][2]. Group 1: Trend Analysis - Timing entries into a trend significantly impacts investment success, as trends can reverse unexpectedly, leading to potential losses [1][2]. - A predefined "Recent Price Strength" screen helps identify stocks with strong fundamentals that can sustain their upward trends, focusing on those trading in the upper portion of their 52-week high-low range [3]. Group 2: Company Spotlight - American Outdoor Brands, Inc. (AOUT) - AOUT has shown a solid price increase of 7.6% over the past 12 weeks, indicating investor confidence in its potential upside [4]. - The stock has maintained a price increase of 2.1% over the last four weeks, suggesting that the upward trend is still intact [5]. - AOUT is currently trading at 81.2% of its 52-week high-low range, indicating a potential breakout [5]. Group 3: Fundamental Strength - AOUT holds a Zacks Rank 1 (Strong Buy), placing it in the top 5% of over 4,000 ranked stocks based on earnings estimate revisions and EPS surprises, which are critical for near-term price movements [6]. - The stock's Average Broker Recommendation is also 1 (Strong Buy), reflecting strong optimism from the brokerage community regarding its near-term performance [7]. - Historically, Zacks Rank 1 stocks have generated an average annual return of +25% since 1988, underscoring the effectiveness of this ranking system [7]. Group 4: Investment Strategy - In addition to AOUT, there are other stocks that meet the criteria of the "Recent Price Strength" screen, providing additional investment opportunities [8]. - The Zacks Research Wizard can assist in backtesting stock-picking strategies, enhancing the likelihood of selecting profitable investments [9].

The Zacks Leisure and Recreation Products industry benefits from macroeconomic tailwinds, particularly the Federal Reserve's interest rate reduction. A positive fitness product sales trend, driven by growing health and fitness awareness and strong boat sales, has also been witnessed. Industry participants, who design, market, retail and distribute products for the outdoor and recreation market, are witnessing solid demand. Stocks like Peloton Interactive, Inc. (PTON) , Malibu Boats, Inc. (MBUU) and American ...

Investors interested in Consumer Discretionary stocks should always be looking to find the best-performing companies in the group. Has American Outdoor Brands, Inc. (AOUT) been one of those stocks this year? A quick glance at the company's year-to-date performance in comparison to the rest of the Consumer Discretionary sector should help us answer this question.American Outdoor Brands, Inc. is one of 272 companies in the Consumer Discretionary group. The Consumer Discretionary group currently sits at #9 wit ...

Core Viewpoint - U.S. consumer confidence has significantly increased due to a recent jumbo rate cut by the Federal Reserve and optimism about future interest rate cuts, indicating a positive outlook on the economy's health [1][3][5]. Consumer Confidence - The consumer confidence index rose to 108.7 in October from 99.2 in September, marking the highest level in nine months [3]. - The Present Situation Index increased by 14.2 points to 138, while the Expectations Index rose by 6.3 points to 89.1, well above the recession threshold of 80 [4]. Economic Context - Despite a cooling job market, consumer perceptions improved, contributing to the rise in confidence [5]. - The Federal Reserve's recent 50 basis point rate cut and indications of potential further cuts have bolstered consumer optimism [6][7]. Investment Opportunities - Given the positive consumer sentiment, investing in discretionary stocks is recommended, including: - **American Outdoor Brands, Inc. (AOUT)**: Expected earnings growth rate of 59.4% with a Zacks Rank 1 [8][9]. - **Crocs, Inc. (CROX)**: Expected earnings growth rate of 7.3% with a Zacks Rank 2 [11]. - **Norwegian Cruise Line Holdings Ltd. (NCLH)**: Expected earnings growth rate of over 100% with a Zacks Rank 2 [14]. - **Netflix, Inc. (NFLX)**: Expected earnings growth rate of 64.4% with a Zacks Rank 2 [17]. - **Mattel, Inc. (MAT)**: Expected earnings growth rate of 20.3% with a Zacks Rank 2 [19].

The Consumer Discretionary group has plenty of great stocks, but investors should always be looking for companies that are outperforming their peers. Has American Outdoor Brands, Inc. (AOUT) been one of those stocks this year? A quick glance at the company's year-to-date performance in comparison to the rest of the Consumer Discretionary sector should help us answer this question. American Outdoor Brands, Inc. is one of 272 individual stocks in the Consumer Discretionary sector. Collectively, these companie ...