American Outdoor Brands, Inc. (AOUT) Q1 2025 Earnings Conference Call Transcript

Core Viewpoint - American Outdoor Brands, Inc. reported a solid performance in Q1 2025, showcasing significant profitability increases despite a slight decline in net sales year-over-year. The company attributes its success to product innovation and expanded distribution opportunities, which are central to its long-term growth strategy [5][9][15]. Financial Performance - Net sales for Q1 2025 were $41.6 million, a decrease of 4.1% from $43.4 million in Q1 2024. The decline was primarily due to a 7% drop in the shooting sports category and a 1.7% decrease in the outdoor lifestyle category [15][23]. - Adjusted EBITDAs increased by over 76%, reaching approximately $2 million for the quarter, contributing to a trailing 12-month adjusted EBITDA of $10.6 million [9][18]. - GAAP gross margin for Q1 was 45.4%, consistent with the previous year, driven by lower amortization of tariff and freight variances [16][24]. Product Innovation and Market Strategy - New products accounted for about 23% of net sales in Q1, with strong performances from brands like MEAT! and Bubba, which helped offset declines in other areas [13][29]. - The company has generated over $60 million in incremental organic revenue from new products since its spinoff in 2020, reflecting a robust innovation pipeline [9][29]. - The four-pillar growth strategy includes gaining market share, entering new product categories, expanding consumer markets, and increasing distribution channels [8][12]. Distribution and International Growth - The company expanded its distribution channels, introducing products to new retail locations and increasing international sales, which reached $4.4 million, representing over 10% of net sales and a growth of over 21% [12][19]. - The Canadian market is seen as a significant opportunity for growth, with plans to leverage social media and influencer marketing to reach consumers effectively [49]. Outlook and Expectations - For fiscal 2025, the company anticipates net sales growth of up to 2.5%, despite expected declines in Q2 driven by the shooting sports category [22][23]. - Gross margins are expected to remain around 45% for the full year, with fluctuations anticipated based on inventory purchases and amortization of freight costs [24][58]. - The company plans to continue returning capital to shareholders through its share repurchase program, having repurchased approximately 42,000 shares at an average price of $9.06 per share in Q1 [22][19].