American Outdoor Brands(US:AOUT)2021-12-10 00:16Financial Data and Key Metrics Changes - Net sales for Q2 were $70.8 million, a decrease of 10.5% compared to $79.1 million in the prior year [22] - Net sales for the first six months of fiscal 2022 were $131.5 million, representing a 1.5% increase over fiscal 2021 and over 62% increase compared to fiscal 2020 [23] - Gross margins in Q2 were 46.7%, a reduction of just 20 basis points from the previous year [24] - GAAP EPS for Q2 was $0.32 compared to $0.52 last year, while Non-GAAP EPS was $0.58 compared to $0.77 last year [25] Business Line Data and Key Metrics Changes - E-commerce net sales grew nearly 5% year over year and over 228% on a two-year basis, with a significant increase in direct-to-consumer business [8] - New products accounted for over 25% of revenue in Q2, driven by the Dock & Unlock strategy [16] - The MEAT! brand achieved trailing twelve-month net sales of just over $6 million, showcasing strong growth since its launch [12] Market Data and Key Metrics Changes - The outdoor market has seen increased participation in fishing, camping, hunting, and shooting sports, contributing to a broader consumer base [9] - Retail partners indicated strong point-of-sale (POS) trends, with positive year-over-year comparisons [34] Company Strategy and Development Direction - The company aims for a compound annual organic growth rate of 8% to 10% over the next four to five years, primarily driven by new products and distribution [11] - The Dock & Unlock strategy is central to the company's innovation and growth, allowing for the development of new brands and products [11][13] - The company is actively seeking acquisition targets that complement its current brand portfolio while maintaining a disciplined approach [32] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating supply chain challenges and maintaining inventory levels to support customer demand [21] - The company anticipates a seasonal cash build in the second half of the year, strengthening its balance sheet [33] - Management expects net sales growth in the second half of fiscal 2022 to be approximately 15% over the first half [36] Other Important Information - The company completed a major milestone in migrating to its own independent IT infrastructure, which is crucial for future operations [29] - A share repurchase program of up to $15 million has been authorized by the Board through December 2023 [33] Q&A Session Summary Question: Can you help bridge your expectations for growth from 2% this year to 8-10% in the coming years? - Management stated that growth is not dependent on M&A but rather on organic growth driven by new products and distribution [40] Question: Where are you with retail inventory levels? - Management indicated that retailers accelerated purchases to mitigate supply chain challenges, leading to a mixed inventory situation [44] Question: Are POS trends positive year-over-year? - Management confirmed that POS trends were strong and positive compared to the previous year [46] Question: How do you see e-commerce contributing to future growth? - Management expects e-commerce to continue growing as a larger share of overall revenues, with direct-to-consumer sales playing a significant role [50] Question: What new products should we look out for in the back half of the year? - Management highlighted new product launches, particularly in the BUBBA brand, as exciting developments to watch [53] Question: How is the M&A environment looking? - Management noted that the M&A landscape remains active, with ongoing engagement with several targets [61]