American Outdoor Brands said its sales in the fiscal third quarter ended Jan. 31 fell 15.1%, reflecting lower net sales from traditional brick-and-mortar channels. On a two-year basis, sales increased by 61.8%. The company lowered its earnings and sales outlook for the year due to slowing demand for firearms products.
Third Quarter Fiscal 2022 Financial Highlights
- Net sales were $70.1 million for the third quarter of Fiscal 2022, down from record net sales of $82.6 million for the third quarter of Fiscal 2021, reflecting a decline in net sales from the traditional brick-and-mortar channel. On a two-year basis, net sales increased 61.8% in the third quarter of fiscal 2020, reflecting traditional sales channel growth of 26.6% and e-commerce channel growth of 122.4%.
- The gross margin of 45.8% represents an increase of 60 basis points compared to the comparable quarter last year.
- Net earnings were $3.8 million, or $0.27 per diluted share, compared to net earnings of $8.0 million, or $0.56 per diluted share, for the comparable quarter of Previous exercice.
- Non-GAAP net income was $7.4 million, or $0.52 per diluted share, compared to non-GAAP net income of $11.8 million, or $0.82 per diluted share, for the comparable quarter of last year. GAAP/non-GAAP adjustments for net income exclude amortization of acquired intangibles, stock compensation, transition costs, COVID-19 related expenses, technology implementation and other costs.
- Adjusted EBITDA was $10.5 million, or 15.0% of net sales, compared to $15.8 million, or 19.1% of net sales, for the comparable quarter of the year previous.
Brian Murphy, President and CEO, said, “Over the past two years, many consumers have discovered for the first time, or rediscovered, a passion for outdoor lifestyle activities, as well as for shooting sports and personal protection. This new, broader base of consumer participation has contributed to the significant growth of our business and should also fuel our future growth. During the third quarter, net sales of products in our outdoor lifestyle category, which consists of products primarily related to hunting, fishing, camping and challenging outdoor activities, increased by more than 80% over the pre-pandemic third quarter of fiscal 2020, and net sales of products in our firearm-related shooting sports category, which includes shooting accessories and personal protection-related products , increased approximately 45% from the third quarter of fiscal 2020.
“We believe that some of the gains we’ve made and the industry as a whole has seen over the past two years have been propelled by the pandemic, which has led to outsized growth over the past year. As a result, our third quarter total net sales were down approximately 15% as the company experienced very strong growth of over 90% over the same period last year. The decline was due to lower sales net sales growth in our shooting sports category, particularly personal protection related products, but was partially offset by product sales growth in our outdoor lifestyle category We moved quickly to adapt to this change in the post-pandemic environment and have worked closely with our firearms-related OEM customers and retailers as they navigated the rapidly changing business. consumer firearm purchase.
“Importantly, we continued to implement a number of exciting initiatives that support our long-term growth strategy. Our outdoor lifestyle category grew 7% in the third quarter compared to fiscal 2021. Growth of our outdoor lifestyle category is an important part of our long-term strategic plan, and today we are thrilled to announce that we will be acquiring Grilla Grills, a direct-to-consumer supplier of high quality grills, smokers and accessories for the growing $7 billion US barbecue market. With the addition of Grilla to our brand portfolio, we gain an authentic brand with a loyal customer base that is well suited to benefit from our Dock-and-Unlock strategy and will expand our direct-to-consumer revenue base. Both Grilla Grills and our existing MEAT! Your Maker brand is 100% direct-to-consumer brands which, when combined, are expected to drive nearly 10% of our total net sales. The acquisition of Grilla, which is expected to be immediately accretive and expected to close in the coming weeks, will also further diversify our revenue mix towards our outdoor lifestyle category, which we believe will generate nearly 50% of our net sales from the fourth quarter. . We are delighted to welcome Grilla Grills to the American Outdoor family of brands.
“Our Dock & Unlock process continues to fuel innovation, drive future growth and support our goal of achieving compound annual organic growth of 8% to 10% over the next four to five years. During the third quarter, we unveiled a number of new products, including two new meat grinders from MEAT!, our brand of direct-to-consumer meat processing equipment, and the Claymore, a truly innovative clay from our Calwell brand. Many of our new products reflect our intention to continue to grow our outdoor lifestyle category, while focusing more on shooting sports in areas that represent large, long-term and more stable markets, such as shooting sports, targets and scopes. With a strong pipeline of new products 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 Kennel to Known™.
Andrew Fulmer, Chief Financial Officer, said, “We believe our strong balance sheet continues to provide us with multiple options to effectively deploy our capital to drive growth, as evidenced by our multiple new product launches in the third quarter and the planned acquisition of Grilla Grills in the fourth quarter. Grilla has achieved net sales growth of over 161% over the past two years and a compound annual growth rate of approximately 50% over the past five years. Our cash balance, combined with the increased capacity of our line of credit, provided us with nearly $90 million of available capital at the end of the third quarter. We believe our strong financial position allows 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, our Board of Directors authorized a stock buyback program of up to $15 million of our common stock in December 2021, and by the end of our third quarter, we had purchased $7 million of our stock. ordinary. Since then, we have completed the program with $8 million of common stock purchases during the fourth quarter. »
“During the third quarter, we received data from our retail partners indicating that point-of-sale trends for products in our firearm-related Shooting Sports and Personal Protection category had declined. Based on Based on this information and our current visibility for the remainder of our fiscal year, we are adjusting our guidance range for fiscal year 2022 accordingly.”
For the year ending April 30:
- Sales are expected to be between $245 and $250 million, previously between $280 and $285 million;
- GAAP earnings per share between 61 cents and 74 cents, previously $1.00 to $1.19;
- Non-GAAP earnings per share between $1.65 and $1.78, previously between $2.02 and $2.21; and
- Non-GAAP adjusted EBITDA between $34 million and $36 million, previously between $42 million and $45.5 million.
American Outdoor Brands manufactures outdoor products and accessories including hunting, fishing, camping, shooting, personal safety and defense products under the Caldwell, Wheeler, Tipton, Frankford Arsenal, Hooyman, Bog, MEAT brands !, Uncle Henry, Old Timer, Imperial, Crimson Trace, LaserLyte, Lockdown, Bubba and Schrade.