Profits at American Outdoor Brands grew 94.4 percent in the first quarter ended July 31 as sales grew 20.4 percent and gross margins improved 70 basis points.
Net sales of $60.8 million for the first quarter of fiscal 2022 grew 20.4 percent compared with the first quarter of fiscal 2021 and grew 82.9 percent compared with the first quarter of fiscal 2020, reflecting increased net sales in traditional sales channels and increased international net sales.
Gross margin of 47.7 percent increased 70 basis points over the comparable quarter last year.
Net income of $3.5 million, or 24 cents per diluted share, compared with net income of $1.8 million, or 13 cents per diluted share, for the comparable quarter last year.
Non-GAAP net income of $6.8 million, or $0.48 per diluted share, compared with non-GAAP net income of $5.0 million, or $0.36 per diluted share, for the comparable quarter last year. GAAP to non-GAAP adjustments for net income excludes acquired intangible amortization, stock compensation, transition costs, COVID-19 expenses, technology implementation, and other costs.
Adjusted EBITDAS was $9.6 million, or 15.7 percent of net sales, compared with $8.7 million, or 17.3 percent of net sales, for the comparable quarter last year. Concurrent with the company’s spin-off in fiscal 2021, the accounting treatment of its headquarters facility changed from a finance lease to an operating lease. Excluding that change, Adjusted EBITDAS margins in the first quarter of fiscal 2022 were relatively flat year over year.
Brian Murphy, president and CEO, said, “I am extremely pleased with our strong start to the new fiscal year. We delivered first-quarter growth in net sales and profitability, results that reflect our dedication to building authentic, lifestyle brands that help consumers make the most out of the moments that matter. We believe that quarterly net sales growth of more than 20 percent over fiscal 2021, and nearly 83 percent over fiscal 2020, demonstrated the alignment of our brands with strong consumer trends in personal protection and the outdoor lifestyle activities we serve.”
“Our Dock & Unlock process continued to fuel innovation and drive future growth. During the first quarter, we attended ICast, the fishing industry’s premier tradeshow, where we proudly received a best in category award for “Best Cutlery, Hand Pliers and Tools” for our new Bubba Pro Series Electric Fillet Knife, and introduced a number of new Bubba products, a lifestyle brand known for its high-quality fishing equipment designed for Water to Plate anglers. We also announced Bubba’s entry into the $700 million retail market for saltwater fishing rods, reels,and components, and unveiled our first rods featuring the proprietary Bubba red grip handle, which we anticipate will be available to consumers in February 2022.”
Murphy concluded, “Our entry into fishing rods is the direct result, and just one example, of employing our Dock & Unlock strategy to drive innovation and provide entry into new markets. With an outdoor industry that has experienced unprecedented levels of consumer participation over the past year, our unique Dock & Unlock strategy in place and a strong first quarter under our belts, we are excited about our opportunities, and we look forward to sharing our progress as we take our brands from Niche to Known.”
Andrew Fulmer, CFO, said, “Our strong financial performance, combined with our robust balance sheet, allowed us to invest in our business during the first quarter. Our teams did an outstanding job building up our internal inventory levels over the quarter to support upcoming product launches and to mitigate supply chain risk, particularly for our high-volume products. Even with this strategic buildup of inventory, which we plan to continue in our second quarter, we ended the first quarter with cash of $56.3 million and no borrowings on our $50.0 million senior secured credit facility, which is expandable by an additional $15.0 million under certain conditions. This means that we have over $120.0 million in available capital to support our organic growth initiatives and potential future acquisitions. We believe that our strong balance sheet, combined with a consumer preference for our brands, positions us well for future growth. Consequently, today we are reaffirming our outlook for fiscal 2022, which, at the midpoint, would represent net sales growth of roughly 4 percent over fiscal 2021, and net sales growth of nearly 72 percent over fiscal 2020.”
Outlook
The company did not change its guidance for the year. Sales are expected in the range of $280 million to $295 million. Net earnings are expected in the range of $1.00 to $1.24. Pro-forma earnings are projected in the range of $2.02 to $2.26.
