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COLUMBIA, Mo., Dec. 1, 2022 /PRNewswire/ -- American Outdoor Brands, Inc. (NASDAQ Global Select: AOUT), an industry leading provider of products and accessories for rugged outdoor enthusiasts, today announced financial results for the second quarter of fiscal 2023 ended October 31, 2022.
Second Quarter Fiscal 2023 Financial Highlights
Brian Murphy, President and Chief Executive Officer, said, "Our second quarter performance demonstrates our ability to successfully navigate ongoing challenges in the macroenvironment while executing on ""Our long-term strategy. We achieved net sales growth of 14% above our pre-pandemic levels of fiscal 2020 and introduced several innovative new products, while strengthening our balance sheet and marking a number of achievements that support our strategic priorities and reflect our dedication to leveraging our culture of innovation to deliver solutions for consumers in the moments that matter."
"Our direct-to-consumer business, which is largely comprised of our outdoor lifestyle brands, remained strong in the second quarter, delivering year-over-year growth of over 119%. We consider our direct-to-consumer sales to be one gauge of how well our brands are resonating with consumers, since those sales are not typically impacted by issues that have hindered retailers, such as inventory levels or limited open-to-buy dollars. Our direct-to-consumer category also includes MEAT! Your Maker meat processing equipment and Grilla outdoor cooking products, which are sold exclusively, direct-to-consumer. Together, these two brands generated nearly 10% of our total net sales and helped our Outdoor Lifestyle category generate 55.6% of our total net sales in the second quarter. We remain excited about growth opportunities in our Outdoor Lifestyle category, which consists of products related to hunting, fishing, camping, and rugged outdoor activities, and which delivered three-year growth of 22.5% over the pre-pandemic second quarter of fiscal 2020."
"Innovation is a key element in ""Our long-term strategy, and new products launched within the past two years generated 30% of our second quarter net sales. During the quarter, we continued to leverage our Dock & Unlock™ process to deliver a steady flow of organically developed, exciting new products, including MEAT! Your Maker Dual Grind Grinders, and two new BOG® tripods, the Sherpa and the Infinite. These innovative tripods deliver enhanced versatility, durability, and weight savings, and they expand our BOG® product offering, which is extremely popular with hunters. During the quarter, we attended the National Association of Sporting Goods Wholesalers Expo, where our Caldwell Claymore Clay Target Thrower was recognized as 'Best New Accessory'."
"Turning to our outlook, we believe that retailers and distributors remain cautious regarding their inventory levels, and that consumer spending patterns going forward are still undetermined. That said, we believe our brands are performing consistently with long-term, positive consumer outdoor trends. As a result, we continue to believe our net sales for fiscal 2023 could exceed pre-pandemic fiscal 2020 levels by as much as 25%. We believe our solid financial position enables us to continue executing on our long-term strategic plan, investing in our business, returning capital to shareholders, and addressing the exciting growth opportunities we have identified for our company in fiscal 2023 and beyond," concluded Fulmer.
Andrew Fulmer, Chief Financial Officer, said, "We continued to further fortify our balance sheet in the second quarter, demonstrating effective capital deployment. We purchased over $750,000 of our common stock in the quarter. Nevertheless, positive operational cash flow, including a reduction in inventory of over $9.0 million, helped yield an ending cash balance of $16.4 million."
About American Outdoor Brands, Inc.
American Outdoor Brands, Inc. (NASDAQ Global Select: AOUT) is an industry leading provider of outdoor products and accessories, including hunting, fishing, camping, shooting, outdoor cooking, and personal security and defense products, for rugged outdoor enthusiasts. The company produces innovative, top quality products under its brands BOG®; BUBBA®; Caldwell®; Crimson Trace®; Frankford Arsenal®; Grilla Grills®; Hooyman®; Imperial®; LaserLyte®; Lockdown®; MEAT!; Old Timer®; Schrade®; Tipton®; Uncle Henry®; ust®; and Wheeler®. For more information about all the brands and products from American Outdoor Brands, Inc., visit www.aob.com.
Safe Harbor Statement
Certain statements contained in this press release may be deemed to be forward-looking statements under federal securities laws, and we intend that such forward-looking statements be subject to the safe harbor created thereby. All statements other than statements of historical facts contained or incorporated herein by reference in this press release, including statements regarding our future operating results, future financial position, business strategy, objectives, goals, plans, prospects, markets, and plans and objectives for future operations, are forward-looking statements. In some cases, you can identify forward-looking statements by terms such as "anticipates," "believes," "estimates," "expects," "intends," "targets," "contemplates," "projects," "predicts," "may," "might," "plan," "would," "should," "could," "may," "can," "potential," "continue," "objective," or the negative of those terms, or similar expressions intended to identify forward-looking statements. However, not all forward-looking statements contain these identifying words. Specific forward-looking statements in this press release include our belief that our second quarter performance demonstrates our ability to successfully navigate ongoing challenges in the macroenvironment while executing on our long-term strategy; our direct-to-consumer sales is one gauge of how well our brands are resonating with consumers; our excitement about growth opportunities in our Outdoor Lifestyle category; our estimate that the consolidations of our operations in Wilsonville, Oregon and Holland, Michigan, and Dallas, Texas into our Missouri facility will yield a significant cost savings of approximately $1.5 million per year, beginning in our fiscal fourth quarter; our belief that retailers and distributors remain cautious regarding their inventory levels, and that consumer spending patterns going forward are still undetermined; our belief that our brands are performing consistently with long-term, positive consumer outdoor trends; our belief that our net sales for fiscal 2023 could exceed pre-pandemic fiscal 2020 levels by as much as 25%; and our belief that our solid financial position enables us to continue executing on our long-term strategic plan, investing in our business, and addressing the exciting growth opportunities we have identified for fiscal 2023 and beyond; and our outlook for fiscal 2023. We caution that these statements are qualified by important risks, uncertainties, and other factors that could cause actual results to differ materially from those reflected by such forward-looking statements. Such factors include, among others, the effects of the COVID-19, pandemic, including potential disruptions in our ability to source the materials necessary for the production of our products, disruptions and delays in the manufacture of our products, and difficulties encountered by retailers and other components of the distribution channel for our products; economic, social, political, legislative, and regulatory factors; lawsuits and their effect on us; inventory levels, both internally and in the distribution channel, in excess of demand; natural disasters, pandemics, seasonality, news events, political events, and consumer tastes; future investments for capital expenditures; future products and product development; the features, quality, and performance of our products; the success of our strategies and marketing programs; our market share and factors that affect our market share; liquidity and anticipated cash needs and availability; the supply, availability, and costs of materials and components and related tariffs; our ability to maintain and enhance brand recognition and reputation; risks associated with the distribution of our products and overall availability of labor; and, other factors detailed from time to time in our reports filed with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the fiscal year ended April 30, 2022.
Reconciliation of U.S. GAAP to Non-GAAP Financial Measures
In this press release, certain non-GAAP financial measures, including "non-GAAP net income," "non-GAAP income per share diluted," and "Adjusted EBITDAS" are presented. A reconciliation of these and other non-GAAP financial measures are contained at the end of this press release. From time-to-time, the Company considers and uses these non-GAAP financial measures as supplemental measures of operating performance in order to provide the reader with an improved understanding of underlying performance trends. The Company believes it is useful for itself and the reader to review, as applicable, both (1) GAAP measures that include (i) amortization of acquired intangible assets, (ii) stock compensation, (iii) facility consolidation costs, (iv) technology implementation, (v) acquisition costs, (vi) stockholder cooperation agreement costs, (vii) income tax adjustments, (viii) interest expense, (ix) income tax expense, and (x) depreciation and amortization; and (2) the non-GAAP measures that exclude such information. The Company presents these non-GAAP measures because it considers them an important supplemental measure of its performance and believes the disclosure of such measures provides useful information to investors regarding the Company's financial condition and results of operations. The Company's definition of these adjusted financial measures may differ from similarly named measures used by others. The Company believes these measures facilitate operating performance comparisons from period to period by eliminating potential differences caused by the existence and timing of certain expense items that would not otherwise be apparent on a GAAP basis. These non-GAAP measures have limitations as an analytical tool and should not be considered in isolation or as a substitute for the Company's GAAP measures. The principal limitations of these measures are that they do not reflect the Company's actual expenses and may thus have the effect of inflating its financial measures on a GAAP basis.
AMERICAN OUTDOOR BRANDS, INC. AND SUBSIDIARIES | |||
CONSOLIDATED BALANCE SHEETS | |||
As of: | |||
October 31, 2022 | April 30, 2022 | ||
(Unaudited) | |||
(In thousands, except par value and share data) | |||
ASSETS | |||
Current assets: | |||
Cash and cash equivalents | $ 16,355 | $ 19,521 | |
Accounts receivable, net of allowance for credit losses of $146 on | 32,557 | 28,879 | |
Inventories | 111,444 | 121,683 | |
Prepaid expenses and other current assets | 11,292 | 8,491 | |
Income tax receivable | 1,286 | 1,231 | |
Total current assets | 172,934 | 179,805 | |
Property, plant, and equipment, net | 10,168 | 10,621 | |
Intangible assets, net | 58,067 | 63,194 | |
Right-of-use assets | 24,975 | 23,884 | |
Other assets | 328 | 336 | |
Total assets | $ 266,472 | $ 277,840 | |
LIABILITIES AND EQUITY | |||
Current liabilities: | |||
Accounts payable | $ 8,765 | $ 13,563 | |
Accrued expenses | 10,869 | 7,853 | |
Accrued payroll, incentives, and profit sharing | 2,593 | 3,786 | |
Lease liabilities, current | 1,342 | 1,803 | |
Total current liabilities | 23,569 | 27,005 | |
Notes and loans payable, net of current portion | 19,575 | 24,697 | |
Lease liabilities, net of current portion | 24,520 | 23,076 | |
Other non-current liabilities | 31 | 31 | |
Total liabilities | 67,695 | 74,809 | |
Equity: | |||
Preferred stock, $0.001 par value, 20,000,000 shares authorized, no | — | — | |
Common stock, $0.001 par value, 100,000,000 shares authorized, | 14 | 14 | |
Additional paid in capital | 270,220 | 268,393 | |
Retained deficit | (55,676) | (50,351) | |
Treasury stock, at cost (920,993 shares on October 31, 2022 | (15,781) | (15,025) | |
Total equity | 198,777 | 203,031 | |
Total liabilities and equity | $ 266,472 | $ 277,840 |
AMERICAN OUTDOOR BRANDS, INC. AND SUBSIDIARIES | ||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||
(In thousands, except per share data) | ||||||||
(Unaudited) | ||||||||
For the Three Months Ended October 31, | For the Six Months Ended October 31, | |||||||
2022 | 2021 | 2022 | 2021 | |||||
Net sales | $ 54,436 | $ 70,760 | $ 98,112 | $ 131,528 | ||||
Cost of sales | 28,474 | 37,723 | 53,111 | 69,508 | ||||
Gross profit | 25,962 | 33,037 | 45,001 | 62,020 | ||||
Operating expenses: | ||||||||
Research and development | 1,557 | 1,457 | 3,313 | 2,977 | ||||
Selling, marketing, and distribution | 13,924 | 15,664 | 25,704 | 28,864 | ||||
General and administrative | 10,615 | 10,615 | 21,679 | 20,654 | ||||
Total operating expenses | 26,096 | 27,736 | 50,696 | 52,495 | ||||
Operating (loss)/income | (134) | 5,301 | (5,695) | 9,525 | ||||
Other income, net: | ||||||||
Other income, net | 585 | 619 | 826 | 747 | ||||
Interest expense, net | (242) | (53) | (428) | (99) | ||||
Total other income, net | 343 | 566 | 398 | 648 | ||||
Income/(loss) from operations before income taxes | 209 | 5,867 | (5,297) | 10,173 | ||||
Income tax (benefit)/expense | (161) | 1,284 | 28 | 2,133 | ||||
Net income/(loss) | $ 370 | $ 4,583 | $ (5,325) | $ 8,040 | ||||
Net income/(loss) per share: | ||||||||
Basic | $ 0.03 | $ 0.32 | $ (0.40) | $ 0.57 | ||||
Diluted | $ 0.03 | $ 0.32 | $ (0.40) | $ 0.56 | ||||
Weighted average number of common shares outstanding: | ||||||||
Basic | 13,465 | 14,135 | 13,454 | 14,109 | ||||
Diluted | 13,589 | 14,348 | 13,454 | 14,369 |
AMERICAN OUTDOOR BRANDS, INC. AND SUBSIDIARIES | |||
CONSOLIDATED STATEMENTS OF CASH FLOWS | |||
(Unaudited) | |||
For the Six Months Ended October 31, | |||
2022 | 2021 | ||
(In thousands) | |||
Cash flows from operating activities: | |||
Net (loss)/income | $ (5,325) | $ 8,040 | |
Adjustments to reconcile net income to net cash provided by/ | |||
Depreciation and amortization | 8,272 | 8,386 | |
(Gain)/loss on sale/disposition of assets | (5) | 127 | |
Provision for credit losses on accounts receivable | 16 | 38 | |
Deferred income taxes | — | (403) | |
Stock-based compensation expense | 1,835 | 1,416 | |
Changes in operating assets and liabilities: | |||
Accounts receivable | (3,694) | (12,195) | |
Inventories | 10,239 | (30,677) | |
Accounts payable | (4,058) | 3,632 | |
Accrued liabilities | 1,823 | 660 | |
Other | (2,936) | (4,298) | |
Net cash provided by/(used in) operating activities | 6,167 | (25,274) | |
Cash flows from investing activities: | |||
Payments to acquire patents and software | (2,495) | (1,124) | |
Payments to acquire property and equipment | (816) | (1,708) | |
Net cash used in investing activities | (3,311) | (2,832) | |
Cash flows from financing activities: | |||
Payments on notes and loans payable | (5,170) | — | |
Payments to acquire treasury stock | (756) | — | |
Cash paid for debt issuance costs | (88) | — | |
Proceeds from exercise of options to acquire common stock, | 287 | 413 | |
Payment of employee withholding tax related to restricted | (295) | (505) | |
Net cash used in financing activities | (6,022) | (92) | |
Net decrease in cash and cash equivalents | (3,166) | (28,198) | |
Cash and cash equivalents, beginning of period | 19,521 | 60,801 | |
Cash and cash equivalents, end of period | $ 16,355 | $ 32,603 | |
Supplemental disclosure of cash flow information | |||
Cash paid for: | |||
Interest | $ 393 | $ 76 | |
Income taxes | $ 86 | $ 2,500 |
AMERICAN OUTDOOR BRANDS, INC. AND SUBSIDIARIES | ||||||||
For the Three Months Ended October 31, | For the Six Months Ended October 31, | |||||||
2022 | 2021 | 2022 | 2021 | |||||
GAAP gross profit | $ 25,962 | $ 33,037 | $ 45,001 | $ 62,020 | ||||
Facility consolidation costs | 158 | — | 158 | — | ||||
Non-GAAP gross profit | $ 26,120 | $ 33,037 | $ 45,159 | $ 62,020 | ||||
GAAP operating expenses | $ 26,096 | $ 27,736 | $ 50,696 | $ 52,495 | ||||
Amortization of acquired intangible assets | (3,074) | (3,428) | (6,150) | (6,856) | ||||
Stock compensation | (1,121) | (664) | (1,835) | (1,416) | ||||
Facility consolidation costs | (134) | — | (134) | — | ||||
Technology implementation | (273) | (887) | (1,042) | (1,159) | ||||
Acquisition costs | — | — | (47) | — | ||||
Stockholder cooperation agreement costs | (167) | — | (1,177) | — | ||||
Other | — | (18) | — | (18) | ||||
Non-GAAP operating expenses | $ 21,327 | $ 22,739 | $ 40,311 | $ 43,046 | ||||
GAAP operating (loss)/income | $ (134) | $ 5,301 | $ (5,695) | $ 9,525 | ||||
Amortization of acquired intangible assets | 3,074 | 3,428 | 6,150 | 6,856 | ||||
Stock compensation | 1,121 | 664 | 1,835 | 1,416 | ||||
Facility consolidation costs | 292 | — | 292 | — | ||||
Technology implementation | 273 | 887 | 1,042 | 1,159 | ||||
Acquisition costs | — | — | 47 | — | ||||
Stockholder cooperation agreement costs | 167 | — | 1,177 | — | ||||
Other | — | 18 | — | 18 | ||||
Non-GAAP operating income | $ 4,793 | $ 10,298 | $ 4,848 | $ 18,974 | ||||
GAAP net income/(loss) | $ 370 | $ 4,583 | $ (5,325) | $ 8,040 | ||||
Amortization of acquired intangible assets | 3,074 | 3,428 | 6,150 | 6,856 | ||||
Stock compensation | 1,121 | 664 | 1,835 | 1,416 | ||||
Facility consolidation costs | 292 | — | 292 | — | ||||
Technology implementation | 273 | 887 | 1,042 | 1,159 | ||||
Acquisition costs | — | — | 47 | — | ||||
Stockholder cooperation agreement costs | 167 | — | 1,177 | — | ||||
Other | — | 18 | — | 18 | ||||
Income tax adjustments | (1,342) | (1,249) | (1,178) | (2,362) | ||||
Non-GAAP net income | $ 3,955 | $ 8,331 | $ 4,040 | $ 15,127 | ||||
GAAP net income/(loss) per share - diluted | $ 0.03 | $ 0.32 | $ (0.40) | $ 0.56 | ||||
Amortization of acquired intangible assets | 0.23 | 0.24 | 0.46 | 0.48 | ||||
Stock compensation | 0.08 | 0.05 | 0.14 | 0.10 | ||||
Facility consolidation costs | 0.02 | — | 0.02 | — | ||||
Technology implementation | 0.02 | 0.06 | 0.08 | 0.08 | ||||
Acquisition costs | — | — | — | — | ||||
Stockholder cooperation agreement costs | 0.01 | — | 0.09 | — | ||||
Other | — | — | — | — | ||||
Income tax adjustments | (0.10) | (0.09) | (0.09) | (0.16) | ||||
Non-GAAP net income per share - diluted | $ 0.29 | $ 0.58 | $ 0.30 | $ 1.05 | (a) | |||
(a) Non-GAAP net income per share does not foot due to rounding. |
AMERICAN OUTDOOR BRANDS, INC. AND SUBSIDIARIES | |||||||||||
RECONCILIATION OF GAAP NET INCOME/(LOSS) TO NON-GAAP ADJUSTED EBITDAS | |||||||||||
For the Three Months Ended October 31, | For the Six Months Ended October 31, | ||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||
GAAP net income/(loss) | $ | 370 | $ | 4,583 | $ | (5,325) | $ | 8,040 | |||
Interest expense | 242 | 53 | 428 | 99 | |||||||
Income tax (benefit)/expense | (161) | 1,284 | 28 | 2,133 | |||||||
Depreciation and amortization | 4,110 | 4,207 | 8,272 | 8,386 | |||||||
Stock compensation | 1,121 | 664 | 1,835 | 1,416 | |||||||
Technology implementation | 273 | 887 | 1,042 | 1,159 | |||||||
Acquisition costs | — | — | 47 | — | |||||||
Facility consolidation costs | 292 | — | 292 | — | |||||||
Stockholder cooperation agreement costs | 167 | — | 1,177 | — | |||||||
Other | — | 18 | — | 18 | |||||||
Non-GAAP Adjusted EBITDAS | $ | 6,414 | $ | 11,696 | $ 7,796 | $ 21,251 | |||||
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SOURCE American Outdoor Brands, Inc.