Financial Data and Key Metrics Changes - Net sales for Q3 were $56.6 million, down 3.3% year-over-year, but ahead of expectations [5][16] - Gross margin was 41%, down 370 basis points from the previous year, impacted by new tariffs and an inventory reserve of $1.2 million [17][18] - GAAP EPS for Q3 was a loss of $0.32 compared to a gain of $0.01 last year, while non-GAAP EPS was $0.12 compared to $0.21 last year [20] Business Line Data and Key Metrics Changes - Outdoor lifestyle category net sales increased 5.4% year-over-year to $35.3 million, driven by BOG and MEAT! Your Maker brands [16][8] - Shooting sports category net sales declined 15%, primarily due to softness in aiming solutions [16][8] - New products represented over 26% of net sales in the quarter, indicating strong innovation [9][10] Market Data and Key Metrics Changes - Domestic net sales decreased 3.4%, while international net sales remained flat compared to Q3 of last year [17] - Traditional channel net sales decreased by 2.1%, and e-commerce net sales decreased by 4.6% [17] Company Strategy and Development Direction - The company is focused on disciplined capital allocation and portfolio management, divesting the UST brand due to its inability to benefit from innovation capabilities [11][12] - The strategy emphasizes investing in high-growth brands and product categories, particularly those that combine innovative hardware with digital capabilities [10][15] - The company aims to maintain a strong operating model and navigate the current environment while building long-term value for shareholders [15] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in maintaining net sales and adjusted EBITDA guidance for fiscal 2026 despite ongoing uncertainties [5] - The company anticipates normalization in inventory levels and consumer demand, particularly in the shooting sports category [33][34] - Management noted that consumer spending remains bifurcated, with affluent consumers continuing to spend while lower-income consumers are more cautious [61] Other Important Information - The company ended the quarter with $10.4 million in cash and no debt, maintaining a strong balance sheet [21][24] - Capital expenditures for Q3 were $1.2 million, with a revised full-year CapEx expectation of $3.5 million to $4 million [24] Q&A Session Summary Question: Can you remind us what was pulled forward in the fourth quarter last year? - Retailers pulled in roughly $10 million in the last two weeks of Q4 [31] Question: What is the current state of retailer inventory levels? - Retailers are under-ordering relative to demand, and normalization is expected [33][34] Question: What is driving the increase in inventories? - The increase is primarily due to tariffs, particularly IEEPA and Section 232 tariffs [40] Question: Will there be continued gross margin pressure in the first half of 2027? - Yes, continued gross margin pressure is expected as capitalized tariffs flow through [46][47] Question: How is consumer spending trending? - There is a bifurcation in consumer spending, with affluent consumers continuing to spend while lower-income consumers are more cautious [61]

Financial Data and Key Metrics Changes - Net sales for Q3 were $56.6 million, down 3.3% year-over-year, but ahead of expectations [5][16] - Gross margin was 41%, down 370 basis points from the previous year, impacted by new tariffs and an inventory reserve of $1.2 million [17][18] - GAAP EPS for Q3 was a loss of $0.32 compared to a gain of $0.01 last year, while non-GAAP EPS was $0.12 compared to $0.21 last year [20] - Adjusted EBITDA for the quarter was $3.3 million, down from $4.7 million in the same quarter last year [21] Business Line Data and Key Metrics Changes - Outdoor lifestyle category net sales increased 5.4% year-over-year to $35.3 million, driven by BOG and MEAT! Your Maker brands [16][8] - Shooting sports category net sales declined 15%, primarily due to softness in aiming solutions [16][8] - New products represented over 26% of net sales in the quarter, indicating strong innovation [9][10] Market Data and Key Metrics Changes - Domestic net sales decreased 3.4%, while international net sales remained flat compared to last year [17] - Traditional channel net sales decreased by 2.1%, and e-commerce net sales decreased by 4.6% [17] Company Strategy and Development Direction - The company is focused on disciplined execution of its strategy, concentrating resources on brands and product categories that create the most value [5][10] - The decision to divest the UST brand reflects a commitment to capital allocation and portfolio management [11][12] - The company aims to build connected product ecosystems around select growth brands to enhance consumer engagement and create recurring revenue opportunities [10] Management's Comments on Operating Environment and Future Outlook - Management believes the underlying operating model remains intact despite ongoing uncertainties in the fiscal environment [5] - The company maintains its full-year guidance for net sales and adjusted EBITDA, expecting net sales in the range of $191 million to $193 million [25][26] - Management noted that consumer behavior remains uncertain, with affluent consumers continuing to spend while lower-income consumers are pulling back [56] Other Important Information - The company ended the quarter with $10.4 million in cash and no debt, maintaining a strong balance sheet [21][24] - Capital expenditures for Q3 were $1.2 million, with a revised full-year CapEx expectation of $3.5 million to $4 million [24] Q&A Session Summary Question: Can you remind us what was pulled forward in the fourth quarter last year? - Retailers pulled in roughly $10 million in the last two weeks of Q4 [31] Question: What are the current inventory levels of your retail customers? - Retailers are under-ordering relative to demand, but the majority of the business is performing well [33] Question: What was the reason for the increase in inventories? - The main driver for the increase in inventories was the rise in tariffs [40] Question: Should we expect continued gross margin pressure in the first half of 2027? - Yes, continued gross margin pressure is expected due to capitalized tariffs rolling into the P&L [44] Question: Did the third quarter sales borrow from the fourth quarter? - No, there was no shifting of orders; all sales came through as expected [48] Question: Was the impairment solely related to UST? - Yes, 100% of the impairment was related to UST [52]

Financial Data and Key Metrics Changes - Net sales for Q3 were $56.6 million, down 3.3% year-over-year, but ahead of expectations [5][15] - Gross margin was 41%, down 370 basis points from the previous year, impacted by new tariffs and an inventory reserve of $1.2 million [16][17] - GAAP EPS for Q3 was a loss of $0.32 compared to a gain of $0.01 last year, while non-GAAP EPS was $0.12 compared to $0.21 last year [19] Business Line Data and Key Metrics Changes - Outdoor lifestyle category net sales increased 5.4% year-over-year to $35.3 million, driven by BOG and MEAT! Your Maker brands [15][7] - Shooting sports category net sales declined 15%, primarily due to softness in aiming solutions [15][7] - New products represented over 26% of net sales in the quarter, indicating strong innovation [9][10] Market Data and Key Metrics Changes - Domestic net sales decreased 3.4%, while international net sales remained flat compared to last year [16] - Traditional channel net sales decreased by 2.1%, and e-commerce net sales decreased by 4.6% [16] Company Strategy and Development Direction - The company is focused on disciplined execution of its strategy, managing its portfolio to concentrate resources on high-value brands and product categories [5][10] - The decision to divest the UST brand reflects a commitment to invest in areas where innovation can drive long-term growth [11][12] - The company aims to build connected product ecosystems around select growth brands to enhance consumer engagement and create recurring revenue opportunities [10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in maintaining net sales and adjusted EBITDA guidance for fiscal 2026 despite ongoing uncertainties [5] - The company anticipates normalization in inventory levels and consumer demand in the near future [31][32] - Management expects continued gross margin pressure in the first half of 2027 due to capitalized tariffs [45] Other Important Information - The company ended the quarter with $10.4 million in cash and no debt, maintaining a strong balance sheet [20][22] - Capital expenditures for the fiscal year are expected to be lower, now projected between $3.5 million and $4 million [22] Q&A Session Summary Question: Can you remind us what was pulled forward in the fourth quarter last year? - Retailers pulled in roughly $10 million in the last two weeks of Q4 [28] Question: What is the current state of retailer inventory levels? - Retailers are under-ordering relative to demand, but the majority of the business is performing well [31][32] Question: What was the reason for the increase in inventories? - The main driver for the increase in inventories was the impact of tariffs [39] Question: Should we expect continued gross margin pressure in the first half of 2027? - Yes, continued gross margin pressure is expected due to capitalized tariffs [45] Question: Did the third quarter sales borrow from the fourth quarter? - No, there was no shifting of orders; all sales came through as expected [51]

Company Overview & Strategy - American Outdoor Brands (AOB) leverages innovation to widen distribution, expand brand awareness, and increase profitability [11] - AOB operates in two categories: Outdoor Lifestyle ($118.1 million TTM net sales) and Shooting Sports ($89.3 million TTM net sales) [14] - The company targets resilient consumer activities with approximately 175 million Americans participating in outdoor recreation [15] - AOB aims for $400 million in future net sales, approximately 2x larger than current sales, driven by innovation and new customers [60] Financial Performance & Model - In Q2 FY26, new products accounted for 31.4% of net sales [74] - The company's operating model is highly accretive, with a track record of delivering incremental margin on revenue growth above $200 million in net sales [61] - AOB expects EBITDA to exceed $70 million at $400 million in net sales [61] - The company has a debt-free balance sheet with $3.1 million cash on hand as of October 31, 2025 [67] Innovation & Growth - AOB's innovation platform has yielded $93 million+ of incremental organic revenue compared to five years ago [46] - The company has secured 170 new patents, protecting future revenue potential [46] - MEAT! Your Maker brand reached $18.4 million in fiscal 2025 sales, up 33% year-over-year [42]