American Outdoor Brands, Inc. Q3 FY2025 earnings call

• Leveraging innovation advantage: New products like Bubba's SFS Lite and Caldwell's Clay Copter were highlighted. Bubba's SFS Lite brings fishing gamification to a larger market, while Caldwell's Clay Copter revolutionizes shotgun sports with a new target system.
• Widening distribution and expanding brand awareness: Secured new and expanded retail placement for brands like BOG, Caldwell, Grilla, and Meet Your Makeup, proving value as a cross-category innovation partner.
• Focus on profitability and agility: Embracing long-term model for net sales and profitability, with new products helping maintain and strengthen margin profile, healthy direct-to-consumer business, flexible product sourcing due to owning designs and tooling, and strong balance sheet providing agility.

The outdoor lifestyle category, consisting of products related to hunting, fishing, outdoor cooking, and rugged outdoor activities, had net sales growth of 15.1%, driven mainly by sales in the Meet Your Maker and BOG brands, as well as knife and tool brands. The shooting sports category, which includes solutions for target shooting, aiming solutions, safe storage, cleaning and maintenance, and personal protection, had nearly 3% growth compared to the third quarter last year. Within the shooting sports category, shooting accessory sales increased due in part to promotional sales of slower-moving inventory, while personal protection product sales were down slightly consistent with the decrease in adjusted NICS checks. Net sales for Q3 were $58.5 million, a 9.5% increase over Q3 last year, with growth in both categories and benefit from timing of orders originally slated for fourth quarter. Revenue contribution: Outdoor lifestyle category saw 15.1% growth, shooting sports nearly 3% growth.

• Fiscal 2025 net sales expected in range of $207 million to $210 million, midpoint implying 3.7% growth. GAAP gross margins expected to be approximately 45% for full year. Adjusted EBITDAS expected between $14.5 million and $15.5 million, midpoint representing almost 54% year-over-year growth.
• Fiscal 2026 net sales expected between $220 million and $230 million, representing 7.9% growth from midpoint of fiscal 2025 to midpoint of fiscal 2026, reinforced by positive feedback at Shot Show.

• Tariffs: Continuing to change rapidly, requiring nimble response and long-term decision-making considering factors like quality and supply chain changes. Fluctuating tariffs on Chinese goods, Canada, Mexico, etc., impactful on business.
• Consumer behavior: Consumers remain cautious in purchases, but higher price point products (premium) have some resiliency with affluent consumers.

Q: Mark Smith asked about new products' mix, impact on sales, pipeline, and long-term planning.

A: New products historically represent 20%-25% of net sales, pipeline is major contributor, moving towards outdoor lifestyle while expanding into sustainable categories.

Q: Mark Smith asked about tariffs, expected exposure, and strategies.

A: Tariffs are fast-evolving, company remains nimble with strong balance sheet, making long-term decisions considering quality, supply chain, and levers to pull.

Q: Joseph with Roth Capital asked about guidance, quarter-to-date trends, retail partners' order books, and M&A funnel.

A: Net sales guidance narrowed to $207-$210M, midpoint up, adjusted EBITDA guidance increased. Retail partners showing commitment to bring in innovation products for FY 2026. M&A is disciplined, looking for deals with recurring revenue, seeing some stutter step in M&A market due to tariffs but remaining ready to pursue best interest deals for AOB.