American Outdoor Brands, Inc. reported sales were down 28 percent in the first quarter that ended July 31.

First Quarter Fiscal 2023 Financial Highlights

  • Quarterly net sales were $43.7 million, a decrease of $17.1 million, or 28.1 percent, compared with net sales of $60.8 million for the comparable quarter last year. E-commerce net sales of $20.5 million, which were driven by increased DTC net sales, grew by 23.7 percent, while traditional net sales of $23.1 million, which were impacted by lower foot traffic at retail and lower shooting sports sales to OEM customers, declined by 47.6 percent. Compared with pre-COVID levels in the first quarter of fiscal 2020, total net sales grew 31.5 percent, while e-commerce net sales grew by 92.2 percent and traditional net sales grew by 2.7 percent.
  • Quarterly gross margin was 43.6 percent, compared with quarterly gross margin of 47.7 percent for the comparable quarter last year, a decrease driven primarily by lower sales volumes and increased freight expenses.
  • Quarterly GAAP net loss was $5.7 million, or ($0.42) per diluted share, compared with net income of $3.5 million, or $0.24 per diluted share, for the comparable quarter last year.
  • Quarterly non-GAAP net income was $84,000, or $0.01 per diluted share, compared with non-GAAP net income of $6.8 million, or $0.48 per diluted share, for the comparable quarter last year. GAAP to non-GAAP adjustments for net income excludes acquired intangible amortization, stock compensation, technology implementation, stockholder cooperation agreement costs, and acquisition costs.
  • Quarterly Adjusted EBITDAS was $1.4 million, or 3.2 percent of net sales, compared with $9.6 million, or 15.7 percent of net sales, for the comparable quarter last year.

Brian Murphy, president and CEO, said, “Given recent industry and economic conditions, I am pleased with our first quarter results, which reflect our ability to deliver net sales growth of over 31 percent above our pre-pandemic levels of fiscal 2020 while marking a number of achievements that support our strategic priorities and which reflect our dedication to building authentic, lifestyle brands that help consumers make the most out of the moments that matter.”

“During the quarter, our e-commerce net sales grew nearly 24 percent year over year, supported by strength in our direct-to-consumer business, which includes Meat! Your Maker meat processing equipment and Grilla grills. Together, these two brands generated over 15 percent of our net sales in Q1 and helped our Outdoor Lifestyle category generate over 53 percent of our total net sales in the quarter. 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 impacted by retailer issues, such as inventory levels or limited open-to-buy. We remain excited about growth opportunities within our Outdoor Lifestyle category, which consists of products related to hunting, fishing, camping, and rugged outdoor activities, and which delivered two-year growth of 26.5 percent over the first quarter of fiscal 2021 and three-year growth of 54.2 percent over the pre-pandemic first quarter of fiscal 2020.”

“We continued to leverage our Dock & Unlock strategy to deliver a steady flow of organically developed, exciting new products that generated nearly 26 percent of our first quarter revenue. We also attended ICAST 2022, the fishing industry’s premier tradeshow, where our Bubba fishing lifestyle brand received the award for ‘Best Cutlery, Hand Pliers and Tools” for our innovative Multi-Flex Interchangeable Knife Sets.  This marks the third consecutive year that Bubba has taken home the award in this category.  While at ICAST, we launched the Bubba Voyager Gear Box, our first entry into waterproof storage, and we unveiled and previewed our proprietary Bubba Electric Fish Scale, an exciting new product that truly energized and excited our core fishing retailers, distributors, and consumers, ahead of the full launch and shipping of initial inventory in Spring of 2023.”

“A key part of our long-term strategy includes growing the brands in our portfolio by plugging them into our Dock & Unlock process and utilizing our leverageable business model. During the first quarter, we amended our Columbia, Missouri facility lease agreement to add 35,000 square feet of space which provides us the opportunity to increase our operational efficiency and leverage our Missouri facility. We then commenced plans to consolidate our Crimson Trace operations in Wilsonville, OR, as well as our Grilla operations in Holland, Michigan and Dallas, TX into the Missouri facility. We estimate that these consolidations will yield a net cost savings of approximately $1.5 million per year, beginning in our fiscal fourth quarter. We look forward to completing the consolidations in the next three months, bringing our teams together and moving us closer to our long-term profitability objectives,” concluded Murphy.

Andrew Fulmer, CFO, said, “Our strong balance sheet has provided us with both the resources and the flexibility to pursue important growth opportunities, and we continued to fortify that balance sheet in the first quarter, demonstrating effective capital deployment.  Cash from operations exceeded $5.0 million, allowing us to reduce the outstanding balance on our line of credit.  Our cash balance of $17.5 million, combined with the capacity on our line of credit, provided us with up to $72.0 million of available capital at the end of the first quarter, and a net debt leverage ratio of less than 0.1 times our trailing 12-month Adjusted EBITDAS.

“While we are not giving specific guidance today, we are providing a framework for our revenue outlook for fiscal 2023.  Consumer spending patterns over the balance of our fiscal year have yet to be determined, and we believe that retailers and distributors continue to be extremely cautious with regard to their inventory levels. That said, we also believe our brands are performing well and in alignment with recent consumer outdoor participation trends. As a result, we believe our revenue for fiscal 2023 could exceed pre-pandemic fiscal 2020 revenue by as much as 25 percent. We believe 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.”

American Outdoor Brands’ makes hunting, fishing, camping, shooting, personal security, and defense products. Brands include Bog, Bubba, Caldwell, Crimson Trace, Frankford Arsenal, Grilla Grills, Hooyman, Imperial, LaserLyte, Lockdown, Meat!, Old Timer, Schrade, Tipton, Uncle Henry, ust, and Wheeler.