American Outdoor Brands(AOUT) - 2025 Q2 - Earnings Call Transcript

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]