Release Date: June 27, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- American Outdoor Brands Inc (AOUT, Financial) achieved year-over-year net sales growth of over 5%, exceeding expectations.
- The company expanded its international presence, particularly in Canada, driving total international sales to over $12 million, a growth of more than 35%.
- The MEAT! brand successfully entered the retail channel, and the Grilla brand is set to follow, indicating strong future retail growth.
- Innovation remains a core strength, with new products generating over 23% of net sales in fiscal 2024.
- The company ended the fiscal year debt-free with nearly $30 million in cash, demonstrating strong financial health and disciplined capital management.
Negative Points
- E-commerce sales declined slightly due to lower orders from the largest online retailer.
- Gross margins decreased by 210 basis points to 44%, mainly due to higher tariff and freight costs, increased promotional activity, and tariff drawback adjustments.
- Adjusted EBITDA decreased to $9.8 million from $12.8 million in the previous fiscal year.
- The Shooting Sports category faced headwinds, with adjusted mix background checks coming in 5.4% lower than the prior year.
- Operating expenses remained high at $100.9 million, driven by higher variable selling, distribution, and compensation costs.
Q & A Highlights
Q: Can you provide more details on the standout new products or segments in Q4?
A: New products were a significant part of the year, contributing 23% of our net sales. In Q4, BUBBA performed exceptionally well, driven by the fishing season. Brands like BOG and MEAT! also saw strong performance, with MEAT! benefiting from its retail entry in November. Grilla continued to do well, particularly with the launch of the Mammoth Vertical Smoker, which has been in high demand. — Brian Murphy, President, Chief Executive Officer, Director
Q: How has the MEAT! brand performed in retail, and what are the plans for Grilla's retail rollout?
A: Academy has been a great partner for the MEAT! brand, driving increased website traffic and sales of accessory items. MEAT! is also entering Tractor Supply stores. For Grilla, we focused on ensuring the brand is retail-ready, including packaging improvements. The Mammoth Vertical Smoker will be a key product as we introduce Grilla to retail, with significant consumer and retailer excitement. — Brian Murphy, President, Chief Executive Officer, Director
Q: Can you break down the growth in traditional retail and the impact of the Canadian market?
A: Growth in traditional retail was driven by high fill rates, targeted marketing, and strong partnerships. Canada has become a significant part of our business, with increased product availability and support. Traditional retailers have improved their operations to compete with e-commerce, and our premium pricing strategy has built trust and strong relationships with them. — Brian Murphy, President, Chief Executive Officer, Director
Q: What are your thoughts on the M&A market and use of capital?
A: The M&A market had slowed, but we've seen a recent pickup in deal flow, particularly in the outdoor lifestyle segment. We are targeting complementary acquisitions that leverage our innovation engine and diversify our portfolio. Our strong liquidity position makes us a buyer of choice. We also plan to invest in organic growth, including a small factory outlet in Missouri. — Brian Murphy, President, Chief Executive Officer, Director
Q: Does your fiscal '25 guidance account for any potential ramp in demand related to the upcoming election?
A: Our guidance takes a conservative view of the Shooting Sports category, not factoring in any potential election-related demand increases. Any such increase would be incremental to our current projections. — Brian Murphy, President, Chief Executive Officer, Director and H. Andrew Fulmer, Chief Financial Officer, Executive Vice President, Treasurer
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
