Benefiting from a strong interest in camping, hunting and fishing during the pandemic, American Outdoor Brands reported sales soared 65.7 percent in its second quarter ended October 31. Brian Murphy, president and CEO, said he expects many Americans to continue to pursue their newfound outdoor interests despite a vaccine’s arrival.

“In general, we believe we are witnessing a new higher foundational level of consumer participation in outdoor activities responsible firearms ownership and adjacent home-based hobbies that surround outdoor adventure,” Murphy told analysts on a conference call. “What do I mean by that? Put simply, because of restrictions surrounding COVID-19, more people have been going outside.”

He noted that participation has been on the rise in the Camping category in recent years and saw a further acceleration in 2020.

According to a KOA study released in October, nearly 50 percent of campers surveyed indicated they went camping for the first time in 2020 or for the first time in recent years. And a separate study by the Outdoor Industry Association (OIA) in 2019 estimated that there were 42 million campers in the U.S.

Murphy said the combination of the KOA and OIA studies show new camper trends in 2020 and “suggest that overall participation this year has been extraordinary compared to prior years.” He further noted that KOA estimates that 82 percent of first-time campers have children in their household, which data suggests increases the likelihood that these young entrants will be in the market for some time to come.

In Firearms, Murphy noted that the FBI’s background check data indicates that a record number of firearms have been purchased in the calendar year 2020, with background checks through November 30 numbering 19 million. The National Shooting Sports Foundation (NSSF) estimates that 40 percent of those checks represent individuals who purchased a firearm for the first time suggesting about 8 million new consumers entered the market this year. Murphy added, “This new and larger installed base of owners suggests strong future participation in shooting sports and the need for accessories.”

Murphy also noted that hunting license sales are up more than 12 percent nationwide from last year, according to the NSSF. If the trend continues through the end of the year, 1 million more hunters will enter the category this year. Murphy stated, “Michigan alone has seen a 67 percent year-over-year increase in new hunters through the end of November, with hunters under the age of 17 increasing nearly 100 percent during the same period. The introduction of new hunters is critical to the long-term growth and participation of hunting.”

Finally, Murphy noted that fishing had seen similar trends. The Recreational Boating And Fishing Foundation has reported 3 million more licenses were sold nationwide this year than last, a 40 percent increase. In Louisiana alone, between March and July, the Louisiana Department of Wildlife and Fisheries sold approximately 60 percent more basic fishing and saltwater licenses versus the prior year. Murphy added, “In addition to creating a larger market for many of our brands, growth in hunting and fishing also have the benefit of generating more money for efficient wildlife agencies in support of wildlife management and sustainability, creating a more sustainable future for hunting and fishing as participants return to these activities year after year.”

He added that individuals might head back to the movie theater or sporting events that they haven’t been able to participate in during the pandemic once a vaccine is widely distributed but noted that youth’s trial in many outdoor activities bodes well for participation growth in the future. He pointed out a survey that found 91 percent of adults who fish started fishing before 12 years of age. Murphy said, “You can see there is a very sticky component to a lot of these activities that makes us very excited about the long-term growth in a new baseline.”

Sales Jump 66 Percent
In the quarter, sales climbed 65.7 percent to $79.1 million, accelerating on the gain of 51.9 percent seen in the first quarter. Sales across e-commerce channels grew 213 percent, with a notable increase in direct-to-consumer sales. Sales in traditional channels grew over 30 percent year-over-year.

Growth occurred across nearly all of the company’s 20 brands, with almost half experiencing triple-digit sales growth in the quarter. Said Murphy, “Furthermore, of our top four selling products in the quarter, each came from one of our four brand lanes demonstrating the diversity that we have built across our business.”

The company’s brands include Caldwell, Crimson Trace, Wheeler, Tipton, Frankford Arsenal, Lockdown, BOG, Hooyman, Smith & Wesson Accessories, M&P Accessories, Thompson/Center Arms Accessories, Performance Center Accessories, Schrade, Old Timer, Uncle Henry, Imperial, Bubba, UST, LaserLyte, and Meat!.

Net income reached $7.3 million, or 52 cents per share, compared with a net loss of $393,000, or 3 cents, a year ago. On an adjusted basis, excluding items related to its spinoff from Smith & Wesson, earnings more than tripled to $11.0 million, or 77 cents per share, from $2.8 million, or 20 cents, a year ago.

Gross margins improved 690 basis points to 46.9 percent. A favorable product mix and the general lack of promotions on other products offset the unfavorable impact of increased tariff costs and some inventory reserves.

Adjusted EBITDAS tripled to $15.8 million, or 19.9 percent of sales, from $5.6 million, or 11.7 percent, for the comparable quarter last year.

Inventory increased by approximately $4 million, mainly due to its previously discussed investment to help mitigate potential pandemic-related supply chain risks, increased tariff costs capitalized as well as new products arriving for launch in calendar 2021. A focus on higher ASPs (average selling prices) across many of its brands is partly the reason for elevated inventory values.

Looking forward, American Outdoor Brands raised its guidance. For the year ended April 30, 2021:

  • Sales are now expected in the range of $235 million to $245 million, up from a range of $195 million to $205 million previously;
  • GAAP EPS is now expected in the range of 52 cents to 70 cents, up from a range of a loss of 11 cents to 22 cents previously; and
  • Non-GAAP EPS is now projected in the range of $1.49 to $1.67 versus a range of 78 cents to 89 cents previously.

Photos courtesy American Outdoor Brands