American Outdoor Brands Inc. reported sales declined 10.5 percent in the second quarter ended October 31.
Net sales were $70.8 million for the second quarter of fiscal 2022, compared with net sales of $79.1 million for the second quarter of fiscal 2021, reflecting a decrease in traditional channel net sales, offset by increased e-commerce channel net sales. On a two-year basis, net sales grew 48.2 percent compared with the second quarter of fiscal 2020, reflecting growth in the traditional sales channel of 9.8 percent, and growth in the e-commerce channel of 228.9 percent.
Gross margin of 46.7 percent was a decrease of 20 basis points from the comparable quarter last year.
Net income was $4.6 million, or $0.32 per diluted share, compared with net income of $7.3 million, or $0.52 per diluted share, for the comparable quarter last year.
Non-GAAP net income was $8.3 million, or $0.58 per diluted share, compared with non-GAAP net income of $11.0 million, or $0.77 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 $11.7 million, or 16.5 percent of net sales, compared with $15.8 million, or 19.9 percent of net sales, for the comparable quarter last year.
Brian Murphy, President and CEO, said, “During our second fiscal quarter, our e-commerce net sales grew nearly 5 percent year over year, and over 228 percent on a two-year basis, including a meaningful increase in our direct-to-consumer business. While our total net sales declined in the quarter, we believe this primarily reflects the timing of orders from our traditional channel customers. In our second quarter last year, certain customers increased their orders to address depleted inventories following COVID-related closures. This year, many of our largest customers indicated that they accelerated their orders into our first quarter to mitigate supply chain concerns. As a result, we view our six-month performance as a more meaningful comparison. In the first half of fiscal 2022, we delivered net sales growth of 1.5 percent versus the year-ago period, and net sales growth of over 62 percent versus the first half of fiscal 2020, reflecting our dedication to building authentic, lifestyle brands that help consumers make the most out of the moments that matter. We believe our ability to successfully navigate supply chain challenges, provide our retail customers with brands that resonate with their customers, and lead with innovation, continues to position us to achieve our fiscal 2022 and longer-term strategic objectives.”
“Our Dock & Unlock process continues to fuel innovation, drive future growth and support our objective to deliver compound annual organic growth of 8 percent to 10 percent over the next four to five years. During the second quarter, we benefited from a strong consumer preference for a number of brands across our portfolio, most notably the hunting-related brands in our Harvester brand lane, in anticipation of the fall hunting season. This includes MEAT!, our organically developed, direct-to-consumer brand of meat processing equipment, which delivered growth of over 125 percent. Additionally, BUBBA, our fishing lifestyle brand known for its high-quality angling equipment and apparel, entered an entirely new product category by launching its latest product line, the Kitchen Series, a collection of high-end chef knives designed to complement the Water to Plate lifestyle. Our Dock & Unlock strategy delivers results, and in the second quarter, new products comprised over 25 percent of our net sales. With a robust new product pipeline in place, a portfolio of authentic outdoor brands in hand, and an energized outdoor consumer, we are excited about the future, and look forward to sharing our progress as we take our brands from Niche to Known.”
Andrew Fulmer, CFO, said, “During the quarter, our operations teams’ strong capabilities helped ensure that supply chain issues did not impact our ability to fulfill orders. Additionally, they continued to successfully position us for upcoming product launches in fiscal 22, as well as the fall hunting and holiday shopping seasons that occur in our third fiscal quarter, by strategically building up our internal inventory. We continued to invest in our technology during the quarter, allowing us to achieve a significant milestone in November with our successful migration to an independent IT infrastructure. We remain solidly on track to implement our fully independent ERP platform by August 2022.
“We believe the strength of our balance sheet provides us with multiple options to effectively deploy our capital to help drive growth. Our cash balance, combined with the capacity on our line of credit, provided us with almost $100 million of available capital at the end of the second quarter. Looking ahead, we expect our normal, seasonal cash build to occur in the second half of the year, further strengthening our balance sheet. We believe that our solid financial position enables us to execute on our capital allocation priorities, including investing in organic growth and potential acquisitions, as well as opportunistically returning capital to our shareholders. As a result, today we announced that our Board has authorized a share repurchase program of up to $15 million through December 2023.”
“As we exited the second quarter, we were pleased to receive data from our retail partners indicating that POS trends for our products remain strong. Based on our first-half results, combined with what we believe is the consumer’s preference for our strong portfolio of brands, and our current visibility into the second half of the year, we are narrowing our guidance range for fiscal year 2022, which represents net sales growth of 2 percent over fiscal year 2021, and net sales growth of 69 percent over fiscal 2020.”
American Outdoor Brands makes accessories for hunting, fishing, camping, shooting, and personal security and defense products. Brands include Caldwell, Wheeler, Tipton, Frankford Arsenal, Hooyman, BOG, MEAT!, Uncle Henry, Old Timer, Imperial, Crimson Trace, LaserLyte, Lockdown, just, BUBBA, and Schrade.
