PR Newswire | Sep 3, 2020 04:06PM EDT

Results

09/03 15:05 CDT

American Outdoor Brands, Inc. Reports First Quarter Fiscal 2021 Financial Results- Net Sales Growth +51.9%- E-commerce Channel Net Sales +130% -- Traditional Channel Net Sales +15%- Gross Margin +590 basis points- Net Income +135.9% COLUMBIA, Mo., Sept. 3, 2020

COLUMBIA, Mo., Sept. 3, 2020 /PRNewswire/ -- American Outdoor Brands, Inc.(NASDAQ Global Select: AOUT), an industry leading provider of products and accessories for rugged outdoor enthusiasts, today announced financial results for the first quarter fiscal 2021, ended July 31, 2020.

First Quarter Fiscal 2021 Financial Highlights

* Quarterly net sales were $50.5 million, an increase of $17.3 million, or 51.9%, over net sales of $33.2 million for the comparable quarter last year, driven primarily by increases in both e-commerce and traditional sales channels. * Quarterly gross margin was 47.0%, an increase of 590 basis points, over gross margin of 41.1% for the comparable quarter last year. * Quarterly net income was $1.8 million, or $0.13 per diluted share, compared with a net loss of $(5.0) million, or $(0.36) per diluted share, for the comparable quarter last year. * Quarterly non-GAAP net income was $5.0 million, or $0.36 per diluted share, compared with a non-GAAP net loss of $(1.2 million), or $(0.09) per diluted share, for the comparable quarter last year. GAAP to non-GAAP adjustments for net income exclude costs related to the acquired intangible amortization, stock compensation, and other costs. * Quarterly Adjusted EBITDAS was $8.7 million, or 17.3% of net sales, compared with $10,000, or 0.0% of net sales, for the comparable quarter last year.

Brian Murphy, President and CEO, said, "I want to thank all of our employees for their incredible accomplishments. In the past several months, this dedicated team has successfully organized and executed our spin-off into an independent company, maintained safety protocols to ensure the health and safety of our workforce and our business, and delivered first quarter results that featured significant growth in both net sales and profitability. We believe our net sales growth of nearly 52% reflected the strong alignment between our diverse brand portfolio and current consumer trends, including participation in outdoor activities, driven in part by pandemic related travel restrictions and social distancing, increased interest in self-protection, and our ability to replenish retailer inventories. We also believe our results demonstrated the benefit of investments we have made, over time, in our logistics capabilities and our e-commerce platform. Our objective is to situate our brands wherever the consumer expects to find them. Given that our e-commerce channel and our traditional channel each contributed an equal share of our net sales in the quarter, we are clearly achieving that objective. In addition, we believe our increased profitability in the quarter demonstrated that we have built a leverageable platform that positions us well for future growth. On August 24, 2020, we began operating as a standalone company. We believe that our passion for products that allow people to pursue their outdoor adventures is especially timely, as consumers increasingly look to outdoor activities such as fishing, hunting, shooting sports, camping, and hiking. We are excited about our future, and we look forward to delivering innovative products that make it possible for people to re-think their connection with the outdoors."

Andrew Fulmer, Chief Financial Officer, said, "Increased net sales in the quarter benefited, in part, from an initiative we began in fiscal 2020 to migrate certain retail customers from lumpy, 'bulk buy' ordering to a more balanced approach. That initiative allowed us to achieve more direct alignment between those retailers' sales and our replenishment of their inventory, ultimately driving net sales. During the quarter, we prepared for our spin-off, which became effective last week. Those preparations included the establishment of a $50.0 million senior secured credit facility, expandable by an additional $15.0 million under certain conditions. This new credit facility, combined with $25.0 million of starting cash from our former parent company, means that we now have $75 million to $90 million in available capital, providing significant liquidity as we begin our new life as an independent company."

Outlook

AMERICAN OUTDOOR BRANDS, INC. AND SUBSIDIARIES

NET SALES, EARNINGS PER SHARE, and ADJUSTED EBITDAS GUIDANCE, INCLUDING GAAP TONON-GAAPRECONCILIATION

(Unaudited)

Range for the Year Ending April 30, 2021

Net sales (in thousands) $ 195,000 $ 205,000

GAAP loss per share - diluted $ (0.22) $ (0.11)

Amortization of acquired intangible assets 1.14 1.14

Stock Compensation 0.21 0.21

COVID-19 0.02 0.02

Transition costs 0.03 0.03

Related party interest income (0.03) (0.03)

Tax effect of non-GAAP adjustments (0.37) (0.37)

Non-GAAP income per share - diluted $ 0.78 $ 0.89

Non GAAP Adjusted EBITDAS (in thousands) $ 19,000 $ 21,000

Conference Call and WebcastThe company will host a conference call and webcast tomorrow, September 4, 2020, to discuss its first quarter fiscal 2020 financial and operational results. Speakers on the conference call will include Brian Murphy, President and Chief Executive Officer, and Andrew Fulmer, Chief Financial Officer. The conference call may include forward-looking statements. The conference call and webcast will begin at 8:30 a.m. Eastern Time (5:30 a.m. Pacific Time). Those interested in listening to the conference call via telephone may call directly at (833) 570-1129 and reference conference identification number 6055576. No RSVP is necessary. The conference call audio webcast can also be accessed live on the company's website at www.aob.com, under the Investor Relations section.

Reconciliation of U.S. GAAP to Non-GAAP Financial MeasuresIn this press release, certain non-GAAP financial measures, including "non-GAAP net income" and "Adjusted EBITDAS" are presented. From time-to-time, the company considers and uses these supplemental measures of operating performance in order to provide the reader with an improved understanding of underlying performance trends. The company believes it is useful for itself and the reader to review, as applicable, both (1) GAAP measures that include (i) amortization of acquired intangible assets, (ii) stock compensation, (iii) transition costs, (iv) COVID-19 expenses, (v) the tax effect of non-GAAP adjustments, (vi) income tax expense/(benefit), (viii) depreciation and amortization, and (ix) related party interest income; and (2) the non-GAAP measures that exclude such information. The company presents these non-GAAP measures because it considers them an important supplemental measure of its performance. The company's definition of these adjusted financial measures may differ from similarly named measures used by others. The company believes these measures facilitate operating performance comparisons from period to period by eliminating potential differences caused by the existence and timing of certain expense items that would not otherwise be apparent on a GAAP basis. These non-GAAP measures have limitations as an analytical tool and should not be considered in isolation or as a substitute for the company's GAAP measures. The principal limitations of these measures are that they do not reflect the company's actual expenses and may thus have the effect of inflating its financial measures on a GAAP basis.

About American Outdoor Brands, Inc.

American Outdoor Brands, Inc. (NASDAQ Global Select: AOUT) is an industry leading provider of outdoor products and accessories, including hunting, fishing, camping, shooting, and personal security and defense products, for rugged outdoor enthusiasts. The company produces innovative, top quality products under the brands Caldwell(r); Crimson Trace(r); Wheeler(r); Tipton(r); Frankford Arsenal(r); Lockdown(r); BOG(r); Hooyman(r); Smith & Wesson(r) Accessories; M&P(r) Accessories; Thompson/Center Arms(tm) Accessories; Performance Center(r) Accessories; Schrade(r); Old Timer(r); Uncle Henry(r); Imperial(r); BUBBA(r); UST(r); LaserLyte(r); and MEAT!. For more information about all the brands and products from American Outdoor Brands, Inc., visit www.aob.com.

Safe Harbor StatementCertain statements contained in this press release may be deemed to be forward-looking statements under federal securities laws, and we intend that such forward-looking statements be subject to the safe-harbor created thereby. All statements other than statements of historical facts contained or incorporated herein by reference in this press release, including statements regarding our future operating results, future financial position, business strategy, objectives, goals, plans, prospects, markets, and plans and objectives for future operations, are forward-looking statements. In some cases, you can identify forward-looking statements by terms such as "anticipates," "believes," "estimates," "expects," "intends," "targets," "contemplates," "projects," "predicts," "may," "might," "plan," "would," "should," "could," "may," "can," "potential," "continue," "objective," or the negative of those terms, or similar expressions intended to identify forward-looking statements. However, not all forward-looking statements contain these identifying words. We caution that these statements are qualified by important risks, uncertainties, and other factors that could cause actual results to differ materially from those reflected by such forward-looking statements. Such factors include, among others, the effects of the COVID-19, pandemic, including potential disruptions in our ability to source the materials necessary for the production of our products, disruptions and delays in the manufacture of our products, and difficulties encumbered by retailers and other components of the distribution channel for our products; economic, social, political, legislative, and regulatory factors; recently issued accounting standards on our consolidated financial statements; failure to realize the anticipated benefits from being a public company separate from Smith & Wesson, Inc.; our assessment of factors relating to the valuation of assets acquired and liabilities assumed in acquisitions, the timing for such evaluations, and the potential adjustment in such evaluations; assessments that we make about determining segments and reporting units; estimated amortization expense of intangible assets for future periods; the potential for impairment charges; lawsuits and their effect on us; inventory levels, both internally and in the distribution channel, in excess of demand; natural disasters, pandemics, seasonality, news events, political events, and consumer tastes; the impact of the Tax Cuts and Jobs Act, or Tax Reform, on our operating results, including our belief that Tax Reform will be a benefit to us and reduce our effective tax rate; the integration of our acquisitions, including the quality and strength of their products and their effect on our overall financial performance; the effect of political pressures on firearm laws and regulations; future investments for capital expenditures; future products and product development; the features, quality, and performance of our products? the success of our strategies and marketing programs? our market share and factors that affect our market share; liquidity and anticipated cash needs and availability; actions of social activists that could have an adverse effect on our business; the supply, availability, and costs of materials and components and related tariffs; our ability to maintain and enhance brand recognition and reputation; risks associated with the distribution of our products and overall availability of labor; and, other factors detailed from time to time in our reports filed with the Securities and Exchange Commission, or the SEC, including our Information Statement on Form 10 for the fiscal year ended April 30, 2020, filed with the SEC on July 1, 2020, as amended by Amendment No. 1 filed on July 13, 2020.

Contact: Liz Sharp, VP, Investor Relationslsharp@aob.com(573) 303-4620

AMERICAN OUTDOOR BRANDS, INC. AND SUBSIDIARIES

COMBINED STATEMENTS OF INCOME/(LOSS)

(Unaudited)

For the Three Months Ended July 31,

2020 2019

(Unaudited)

(In thousands, except per share data)

Net sales (including $1.5 million and$4.1 million of related party sales for $ 50,468 $ 33,216July 31, 2020 and 2019, respectively)

Cost of sales 26,737 19,550

Gross profit 23,731 13,666

Operating expenses:

Research and development 1,230 1,332

Selling, marketing, and distribution 10,543 7,717

General and administrative 9,494 11,836

Total operating expenses 21,267 20,885

Operating income/(loss) 2,464 (7,219)

Other (expense)/income, net:

Other income/(expense), net 84 (2)

Related party interest income, net 336 939

Total other (expense)/income, net 420 937

Income/(loss) from operations before 2,884 (6,282)income taxes

Income tax expense/(benefit) 1,095 (1,299)

Net income/(loss)/comprehensive income/ $ 1,789 $ (4,983)(loss)

Net income/(loss) per share:

Basic $ 0.13 $ (0.36)

Diluted $ 0.13 $ (0.36)

Weighted average number of common sharesoutstanding:

Basic 13,975 13,975

Diluted 13,975 13,975

AMERICAN OUTDOOR BRANDS, INC. AND SUBSIDIARIES

COMBINED BALANCE SHEETS

(Unaudited)

As of:

July 31, 2020 April 30, 2020

(In thousands)

ASSETS

Current assets:

Cash and cash equivalents $ - $ 234

Accounts receivable, net of allowance forcredit losses of $334 on July 31, 2020 and 41,993 35,096$448 on April 30, 2020

Inventories 69,593 59,999

Prepaid expenses and other current assets 3,471 3,244

Income tax receivable 136 104

Total current assets 115,193 98,677

Property, plant, and equipment, net 9,994 9,677

Intangibles, net 65,413 69,152

Goodwill 64,315 64,315

Right of use assets 2,264 2,772

Deferred income taxes 3,580 3,580

Other assets 19 242

$ 260,778 $ 248,415

LIABILITIES AND EQUITY

Current liabilities:

Accounts payable $ 15,112 $ 8,936

Accrued expenses 10,995 7,655

Accrued payroll and incentives 3,315 3,249

Lease liabilities, current 1,258 1,324

Accrued profit sharing 275 217

Total current liabilities 30,955 21,381

Lease liabilities, net of current portion 2,298 2,830

Other non-current liabilities 183 106

Total liabilities 33,436 24,317

Commitments and contingencies

Equity:

Parent company investment 227,342 224,098

Total equity 227,342 224,098

$ 260,778 $ 248,415

AMERICAN OUTDOOR BRANDS, INC. AND SUBSIDIARIES

COMBINED STATEMENTS OF CASH FLOWS

(Unaudited)

For the Three Months Ended July 31,

2020 2019

(In thousands)

Cash flows from operating activities:

Net income/(loss) $ 1,789 $ (4,983)

Adjustments to reconcile net income/(loss)to net cash provided by/(used in) operatingactivities:

Depreciation and amortization 5,388 5,977

Provision for losses on notes and accounts 97 922receivable

Stock-based compensation expense 298 314

Changes in operating assets andliabilities:

Accounts receivable (6,994) 3,542

Inventories (9,594) (5,630)

Accounts payable 6,165 150

Accrued liabilities 3,464 (683)

Other (49) (867)

Net cash (used in)/provided by operating 564 (1,258)activities

Cash flows from investing activities:

Payments to acquire patents and software (105) (38)

Payments to acquire property and equipment (879) (433)

Net cash used in investing activities (984) (471)

Cash flows from financing activities:

Net transfers from Parent 186 1,754

Net cash provided by financing activities $ 186 $ 1,754

Net decrease in cash and cash equivalents (234) 25

Cash and cash equivalents, beginning of 234 162period

Cash and cash equivalents, end of period $ - $ 187

AMERICAN OUTDOOR BRANDS, INC. AND SUBSIDIARIES

RECONCILIATION OF GAAP FINANCIAL MEASURES TO NON-GAAP FINANCIAL MEASURES

(Dollars in thousands, except per share data)

(Unaudited)

For the Three Months Ended July 31,

2020 2019

$ % of Sales $ % of Sales

GAAP gross profit $ 23,731 47.0% $ 13,666 41.1%

Transition costs 127 0.3% 620 1.9%

Non-GAAP gross profit $ 23,858 47.3% $ 14,286 43.0%

GAAP operating expenses $ 21,267 42.1% $ 20,885 62.9%

Amortization of acquired (4,012) -7.9% (4,661) -14.0%intangible assets

Stock compensation (298) -0.6% (314) -0.9%

Transition costs (124) -0.2% (466) -1.4%

COVID-19 (223) -0.4% - -

Non-GAAP operating expenses $ 16,610 32.9% $ 15,444 46.5%

GAAP operating income/(loss) $ 2,464 4.9% $ (7,219) -21.7%

Amortization of acquired 4,012 7.9% 4,661 14.0%intangible assets

Stock compensation 298 0.6% 314 0.9%

Transition costs 251 0.5% 1,086 3.3%

COVID-19 223 0.4% - -

Non-GAAP operating income/ $ 7,248 14.4% $ (1,158) -3.5%(loss)

GAAP net income/(loss) $ 1,789 3.5% $ (4,983) -15.0%

Amortization of acquired 4,012 7.9% 4,661 14.0%intangible assets

Stock compensation 298 0.6% 314 0.9%

Transition costs 251 0.5% 1,086 3.3%

COVID-19 223 0.4% - -

Related party interest income (336) -0.7% (939) -2.8%

Tax effect of non-GAAP (1,201) -2.4% (1,383) -4.2%adjustments

Non-GAAP net income/(loss) $ 5,036 10.0% $ (1,244) -3.7%

GAAP net income/(loss) per $ 0.13 $ (0.36)share - diluted

Amortization of acquired 0.29 0.33intangible assets

Stock compensation 0.02 0.02

Transition costs 0.02 0.08

COVID-19 0.02 -

Related party interest income (0.02) (0.07)

Tax effect of non-GAAP (0.09) (0.10)adjustments

Non-GAAP net income/(loss) per $ 0.36 $ (0.09)share - diluted (a)

(a) Non-GAAP net income per share does not foot due torounding.

AMERICAN OUTDOOR BRANDS, INC. AND SUBSIDIARIES

RECONCILIATION OF GAAP NET (LOSS)/INCOME TO NON-GAAP ADJUSTED EBITDAS

(In thousands)

(Unaudited)

For the Three Months Ended July 31,

2020 2019

GAAP net income/(loss) $ 1,789 $ (4,983)

Income tax expense/(benefit) 1,095 (1,299)

Depreciation and amortization 5,388 5,831

Related party interest income (336) (939)

Stock compensation 298 314

Transition costs 251 1,086

COVID-19 costs 223 -

Non-GAAP Adjusted EBITDAS $ 8,708 $ 10

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SOURCE American Outdoor Brands, Inc.