PR Newswire | Dec 9, 2021 04:06PM EST

Results

12/09 15:05 CST

American Outdoor Brands, Inc. Reports Second Quarter Fiscal 2022 Financial Results- Net Sales $70.8 Million- Gross Margin 46.7%- GAAP EPS $0.32 / Non-GAAP EPS $0.58- Company Narrows Full Year Fiscal 2022 Guidance- Company Announces $15 Million Share Repurchase Program COLUMBIA, Mo., Dec. 9, 2021

COLUMBIA, Mo., Dec. 9, 2021 /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 second quarter fiscal 2022 ended October 31, 2021.

Second Quarter Fiscal 2022 Financial Highlights

* 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% compared with the second quarter of fiscal 2020, reflecting growth in the traditional sales channel of 9.8%, and growth in the e-commerce channel of 228.9%. * Gross margin of 46.7% 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 exclude acquired intangible amortization, stock compensation, transition costs, COVID-19 expenses, technology implementation, and other costs. For a detailed reconciliation, see the schedules that follow in this release. * Adjusted EBITDAS was $11.7 million, or 16.5% of net sales, compared with $15.8 million, or 19.9% of net sales, for the comparable quarter last year.

Brian Murphy, President and Chief Executive Officer, said, "During our second fiscal quarter, our e-commerce net sales grew nearly 5% year over year, and over 228% 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% versus the year ago period, and net sales growth of over 62% 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(tm) process continues to fuel innovation, drive future growth, and support our objective to deliver compound annual organic growth of 8% to 10% 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%. 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(tm) lifestyle. Our Dock & Unlock(tm) strategy delivers results, and in the second quarter, new products comprised over 25% 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(tm)."

Andrew Fulmer, Chief Financial Officer, 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% over fiscal year 2021, and net sales growth of 69% over fiscal 2020."

Outlook

AMERICAN OUTDOOR BRANDS, INC. AND SUBSIDIARIES

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

(Unaudited)

Range for the Year Ending April 30, 2022

Net sales (in thousands) $ $ 280,000 285,000

GAAP income per share - diluted $ $ 1.00 1.19

Amortization of acquired 0.96 0.96intangible assets

Stock compensation 0.21 0.21

Technology implementation 0.19 0.19

Tax effect of non-GAAP (0.34) (0.34)adjustments

Non-GAAP income per share - $ $ diluted 2.02 2.21

Non-GAAP Adjusted EBITDAS (in $ $ thousands) 42,000 45,500

The Company is not providing a quantitative reconciliation of non-GAAP Adjusted EBITDAS guidance in reliance on the "unreasonable efforts" exception for forward-looking non-GAAP measures set forth in SEC rules because certain financial information, the probable significance of which cannot be determined, is not available and cannot be reasonably estimated without unreasonable effort and expense. In this regard, the Company does not provide a reconciliation of forward-looking non-GAAP Adjusted EBITDAS to GAAP net income due to the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliation. Because certain deductions for non-GAAP exclusions used to calculate projected GAAP net income may vary significantly based on actual events, including variations in acquired intangible asset amortization and stock compensation expense, the Company is not able to forecast on a GAAP basis with reasonable certainty all deductions needed in order to provide a GAAP calculation of projected net income at this time. The amounts of these deductions may be material and, therefore, could result in projected GAAP net income being materially less than is indicated by projected non-GAAP Adjusted EBITDAS.

Conference Call and WebcastThe Company will host a conference call and webcast today, December 9, 2021, to discuss its second quarter fiscal 2022 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 and a discussion of non-GAAP financial measures. The conference call and webcast will begin at 5:00 p.m. Eastern Time (2:00 p.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 3997604. 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," "non-GAAP income per share diluted," "Adjusted EBITDAS," and "free cash flow" are presented. A reconciliation of these and other non-GAAP financial measures are contained at the end of this press release. A reconciliation of projected non-GAAP income per share diluted and free cash flow are contained under the "Outlook" section of this press release. From time-to-time, the Company considers and uses these non-GAAP financial measures as 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) technology implementation, (vi) the tax effect of non-GAAP adjustments, (vii) interest expense, (viii) income tax expense, (ix) depreciation and amortization, and (x) 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 and believes the disclosure of such measures provides useful information to investors regarding the Company's financial condition and results of operations. 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 its brands Caldwell(r); Wheeler(r); Tipton(r); Frankford Arsenal(r); Hooyman(r); BOG(r); MEAT!; Uncle Henry(r); Old Timer(r); Imperial(r); Crimson Trace(r); LaserLyte(r); Lockdown(r); ust(r); BUBBA(r); and Schrade(r). 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. Specific forward-looking statements in this press release include our belief that the decline in net sales during the second fiscal quarter primarily reflects the timing of orders from our traditional channel customers; our belief that last year, certain customers increased their orders in our second quarter to address depleted inventories following COVID-related closures; our dedication to building authentic, lifestyle brands that help consumers make the most out of the moments that matter; our belief that 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 belief that our Dock & Unlock(tm) process continues to fuel innovation, drive future growth, and support our objective to deliver compound annual organic growth of 8% to 10% over the next four to five years; our belief that there is a strong consumer preference for a number of brands across our portfolio; our belief that our Dock & Unlock(tm) strategy delivers results; our belief that we have a robust new product pipeline in place, a portfolio of authentic outdoor brands in hand, and an energized outdoor consumer; our belief that our IT migration was a successful transition to an independent IT infrastructure and that we remain solidly on track to implement our fully independent ERP platform by August 2022; our belief that the strength of our balance sheet provides us with multiple options to effectively deploy our capital to help drive growth; our expectation that our normal, seasonal cash build will occur in the second half of the year and further strengthen our balance sheet; our belief that 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; and our narrowing of our guidance and our outlook for fiscal 2022. 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 encountered by retailers and other components of the distribution channel for our products; economic, social, political, legislative, and regulatory factors; 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; 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; 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, including our Annual Report on Form 10-K for the fiscal year ended April 30, 2021.

Forward-looking statements included in this press release speak only as of the date of this press release. The Company does not undertake any obligation to update its forward-looking statements to reflect events or circumstances after the date of this press release except as may be required by the federal securities laws.

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

AMERICAN OUTDOOR BRANDS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)

As of:

October 31, April 30, 2021 2021

(In thousands, except par value and share data)

ASSETS

Current assets:

Cash and cash equivalents $ $ 32,603 60,801

Accounts receivable, net of allowance forcredit losses of $98 on October 31, 49,644 37,487 2021 and $119 on April 30, 2021

Inventories 104,973 74,296

Prepaid expenses and other current assets 11,191 7,098

Income tax receivable 121 149

Total current assets 198,532 179,831

Property, plant, and equipment, net 12,447 10,992

Intangible assets, net 46,978 53,643

Goodwill 64,315 64,315

Right-of-use assets 24,722 25,375

Deferred income taxes 7,086 6,683

Other assets 358 424

Total assets $ $ 354,438 341,263

LIABILITIES AND EQUITY

Current liabilities:

Accounts payable $ $ 20,081 16,021

Accrued expenses 14,480 9,843

Accrued payroll and incentives 3,808 6,774

Lease liabilities, current 1,888 1,771

Accrued profit sharing 922 1,933

Total current liabilities 41,179 36,342

Lease liabilities, net of current portion 23,931 24,780

Other non-current liabilities 59 236

Total liabilities 65,169 61,358

Equity:

Preferred stock, $0.001 par value,20,000,000 shares authorized, no - - shares issued or outstanding

Common stock, $0.001 par value,100,000,000 shares authorized, 14,182,730 shares issued and outstanding on October 31, 14 142021 and 14,059,440 shares issued and outstanding on April 30, 2021

Additional paid in capital 266,686 265,362

Retained earnings 22,569 14,529

Total equity 289,269 279,905

Total liabilities and equity $ $ 354,438 341,263

AMERICAN OUTDOOR BRANDS, INC. AND SUBSIDIARIES

CONSOLIDATED AND COMBINED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(In thousands, except per share data)

(Unaudited)

For the Three Months Ended For the Six Months Ended October 31, October 31,

2021 2020 2021 2020

$ $ $ $ Net sales 131,528 129,565 70,760 79,098

Cost of sales 37,723 42,025 69,508 68,762

Gross profit 33,037 37,073 62,020 60,803

Operating expenses:

Research and 1,457 1,932 2,977 3,162development

Selling, marketing, and 15,664 15,679 28,864 26,305distribution

General and 10,615 9,898 20,654 19,308administrative

Total operating 27,736 27,509 52,495 48,775expenses

Operating income 5,301 9,564 9,525 12,028

Other income/(expense),net:

Other income, net 619 127 747 211

Interest (expense)/ (53) 56 (99) 392income, net

Total other income, net 566 183 648 603

Income from operations 5,867 9,747 10,173 12,631before income taxes

Income tax expense 1,284 2,408 2,133 3,503

Net income/ $ $ $ $ comprehensive income 4,583 7,339 8,040 9,128

Net income per share:

$ $ $ $ Basic 0.32 0.52 0.57 0.65

$ $ $ $ Diluted 0.32 0.52 0.56 0.65

Weighted average numberof common sharesoutstanding:

Basic 14,135 13,981 14,109 13,978

Diluted 14,348 14,155 14,369 14,125

AMERICAN OUTDOOR BRANDS, INC. AND SUBSIDIARIES

CONSOLIDATED AND COMBINED STATEMENTS OF CASH FLOWS

(Unaudited)

For the Six Months Ended October 31,

2021 2020

(In thousands)

Cash flows from operating activities:

Net income $ $ 8,040 9,128

Adjustments to reconcile net income tonet cash provided by/(used in) operating activities:

Depreciation and amortization 8,386 10,459

Loss on sale/disposition of assets 127 -

Provision for credit losses on 38 174accounts receivable

Deferred income taxes (403) (780)

Stock-based compensation expense 1,416 1,196

Changes in operating assets andliabilities:

Accounts receivable (12,195) (21,955)

Inventories (30,677) (13,576)

Accounts payable 3,632 11,716

Accrued liabilities 660 8,197

Other (4,298) (103)

Net cash (used in)/provided by (25,274) 4,456operating activities

Cash flows from investing activities:

Payments to acquire patents and (292) (378)software

Payments to acquire property and (2,540) (1,728)equipment

Net cash used in investing (2,832) (2,106)activities

Cash flows from financing activities:

Net transfers from former Parent - 31,706

Cash paid for debt issuance costs - (410)

Proceeds from exercise of options toacquire common stock, 413 - including employee stock purchaseplan

Payment of employee withholding taxrelated to restricted (505) - stock units

Net cash (used in)/provided by (92) 31,296financing activities

Net (decrease)/increase in cash and (28,198) 33,646cash equivalents

Cash and cash equivalents, beginning 60,801 234of period

Cash and cash equivalents, end of $ $ period 32,603 33,880

Supplemental disclosure of cash flowinformation

Cash paid for:

Interest $ $ 76 28

Income taxes $ $ 2,500 1

AMERICAN OUTDOOR BRANDS, INC. AND SUBSIDIARIESRECONCILIATION OF GAAP FINANCIAL MEASURES TO NON-GAAP FINANCIAL MEASURES(In thousands, except per share data)(Unaudited)

For the Three Months Ended For the Six Months Ended October 31, October 31,

2021 2020 2021 2020

$ $ $ $ GAAP gross profit 33,037 37,073 62,020 60,803

Transition costs - - - 127

Non-GAAP gross $ $ $ $ profit 33,037 37,073 62,020 60,930

GAAP operating $ $ $ $ expenses 27,736 27,509 52,495 48,775

Amortization ofacquired (3,428) (4,011) (6,856) (8,023)intangible assets

Stock (664) (899) (1,416) (1,196)compensation

Transition costs - (13) - (137)

Technology (887) - (1,159) -implementation

COVID-19 - - - (223)expenses

Other (18) (125) (18) (125)

Non-GAAP $ $ $ $ operating expenses 22,739 22,461 43,046 39,071

GAAP operating $ $ $ $ income 5,301 9,564 9,525 12,028

Amortization ofacquired 3,428 4,011 6,856 8,023intangible assets

Stock 664 899 1,416 1,196compensation

Transition costs - 13 - 264

Technology 887 - 1,159 -implementation

COVID-19 expenses - - - 223

Other 18 125 18 125

Non-GAAP $ $ $ $ operating income 10,298 14,612 18,974 21,859

$ $ $ $ GAAP net income 4,583 7,339 8,040 9,128

Amortization ofacquired 3,428 4,011 6,856 8,023intangible assets

Stock 664 899 1,416 1,196compensation

Transition costs - 13 - 264

Technology 887 - 1,159 -implementation

COVID-19 - - - 223expenses

Related party - (88) - (424)interest income

Other 18 125 18 125

Tax effect ofnon-GAAP (1,249) (1,338) (2,362) (2,540)adjustments

Non-GAAP net $ $ $ $ income 8,331 10,961 15,127 15,995

GAAP net income $ $ $ $ per share - diluted 0.32 0.52 0.56 0.65

Amortization ofacquired 0.24 0.28 0.48 0.57intangible assets

Stock 0.05 0.06 0.10 0.08compensation

Transition costs - - - 0.02

Technology 0.06 - 0.08 -implementation

COVID-19 - - - 0.02expenses

Related party - (0.01) - (0.03)interest income

Other - 0.01 - 0.01

Tax effect ofnon-GAAP (0.09) (0.09) (0.16) (0.18)adjustments

Non-GAAP net $ $ $ $ income per share (a) (a)- diluted 0.58 0.77 1.05 1.13

(a) Non-GAAP net income per share does notfoot due to rounding.

AMERICAN OUTDOOR BRANDS, INC. AND SUBSIDIARIES

RECONCILIATION OF GAAP NET INCOME TO NON-GAAP ADJUSTED EBITDAS(In thousands)(Unaudited)

For the Three Months Ended For the Six Months Ended October October 31, 31,

2021 2020 2021 2020

GAAP net income $ 4,583 $ $ $ 7,339 8,040 9,128

Interest expense 53 - 99 -

Income tax 1,284 2,408 2,133 3,503expense

Depreciation and 4,207 5,068 8,386 10,459amortization

Related party - (88) - (424)interest income

Stock 664 899 1,416 1,196compensation

Transition costs - 13 - 264

Technology 887 - 1,159 -implementation

COVID-19 costs - - - 223

Other 18 125 18 125

Non-GAAP $ 11,696 $ $ $ Adjusted EBITDAS 15,764 21,251 24,474

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SOURCE American Outdoor Brands, Inc.