American Outdoor Brands(US:AOUT)2021-09-10 00:37Financial Data and Key Metrics Changes - The company reported Q1 net sales of $60.8 million, a 20% increase compared to $50.5 million in the prior year and an 83% increase over Q1 of fiscal 2020 [20] - Q1 gross margins were 47.7%, reflecting a 70 basis point increase over the prior year, driven by improved manufacturing efficiencies and favorable inventory adjustments [21] - GAAP EPS for Q1 was $0.24 compared to $0.13 last year, while non-GAAP EPS was $0.48 compared to $0.36 last year [23] Business Line Data and Key Metrics Changes - The company has four distinct brand lines: Defender, Marksman, Harvester, and Adventurer, with 16 of 20 brands showing growth over the same period in fiscal 2021 [8] - The top-selling products came from each brand line, indicating a diverse brand portfolio and strong performance across multiple consumer activity-driven markets [9] Market Data and Key Metrics Changes - International sales grew from 4% of Q1 net sales last year to 7% this year, with a remarkable growth of nearly 239% over two years [15] - The company noted a significant increase in participation in markets such as personal protection, shooting sports, camping, hunting, and fishing, contributing to an expanded consumer base [8] Company Strategy and Development Direction - The company aims to place its brands wherever consumers shop, whether online or in physical stores, which has proven effective as net sales in traditional channels grew 70% over the prior year [14] - The company is focused on expanding into larger addressable markets and leveraging its Dock & Unlock strategy to drive innovation and new product entries [19][11] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about future opportunities, citing a strong first quarter and the ongoing consumer interest in outdoor activities [19] - The company reaffirmed its fiscal '22 guidance, estimating net sales between $280 million and $295 million, representing growth of roughly 4% over the prior year [27] Other Important Information - The company ended the quarter with $56.3 million in cash and no borrowings, allowing for strategic investments in inventory to mitigate supply chain risks [24] - The company is actively seeking acquisition targets that can supplement organic growth and align with its strategic goals [27] Q&A Session Summary Question: Can you talk to the top line guidance embedded for the rest of the year? - Management indicated that the guidance reflects nearly 70% growth over a two-year period, with a mix of international and e-commerce contributing to this outlook [34] Question: What is the incremental headwind from supply chain for the remainder of the year? - Management acknowledged increased freight costs and emphasized their internal team's efforts to maximize profitability through various freight options [38] Question: Can you provide more detail on gross margin comparisons for the next couple of quarters? - Management expects year-over-year gross margin pressure, with Q2 likely lower than 47% and Q3 and Q4 around 44% to 45% [40] Question: What is your expectation for market share in the fishing equipment market? - Management expressed optimism about capturing market share, emphasizing the distinctive product design and strategic entry into the market [44] Question: Are you seeing conversion from new firearm owners to avid users? - Management confirmed that new customers are increasingly interested in accessories and higher-priced products, indicating a shift in consumer behavior [66]