American Outdoor Brands, Inc. Reports First Quarter Fiscal 2023 Financial Results
Net Sales $43.7 Million - Gross Margin 43.6%
- e-commerce Sales
$20.5 Million -- Traditional Sales$23.1 Million - Facility Consolidation Underway
First Quarter Fiscal 2023 Financial Highlights
- Quarterly net sales were
$43.7 million , a decrease of$17.1 million , or 28.1%, compared with net sales of$60.8 million for the comparable quarter last year. E-commerce net sales of$20.5 million , which were driven by increased direct-to-consumer net sales, grew by 23.7%, while traditional net sales of$23.1 million , which were impacted by lower foot traffic at retail and lower shooting sports sales to OEM customers, declined by 47.6%. Compared with pre-COVID levels in the first quarter of fiscal 2020, total net sales grew 31.5%, while e-commerce net sales grew by 92.2% and traditional net sales grew by 2.7%. - Quarterly gross margin was 43.6%, compared with quarterly gross margin of 47.7% for the comparable quarter last year, a decrease driven primarily by lower sales volumes and increased freight expenses.
- Quarterly GAAP net loss was
$5.7 million , or ($0.42 ) per diluted share, compared with net income of$3.5 million , or$0.24 per diluted share, for the comparable quarter last year. - Quarterly non-GAAP net income was
$84,000 , or$0.01 per diluted share, compared with non-GAAP net income of$6.8 million , or$0.48 per diluted share, for the comparable quarter last year. GAAP to non-GAAP adjustments for net income exclude acquired intangible amortization, stock compensation, technology implementation, stockholder cooperation agreement costs, and acquisition costs. For a detailed reconciliation, see the schedules that follow in this release. - Quarterly Adjusted EBITDAS was
$1.4 million , or 3.2% of net sales, compared with$9.6 million , or 15.7% of net sales, for the comparable quarter last year. For a detailed reconciliation, see the schedules that follow in this release.
"During the quarter, our e-commerce net sales grew nearly 24% year over year, supported by strength in our direct-to-consumer business, which includes MEAT! Your Maker meat processing equipment and Grilla grills. Together, these two brands generated over 15% of our net sales in Q1 and helped our Outdoor Lifestyle category generate over 53% of our total net sales in the quarter. We consider our direct-to-consumer sales to be one gauge of how well our brands are resonating with consumers since those sales are not impacted by retailer issues, such as inventory levels or limited open-to-buy. We remain excited about growth opportunities within our Outdoor Lifestyle category, which consists of products related to hunting, fishing, camping, and rugged outdoor activities, and which delivered two-year growth of 26.5% over the first quarter of fiscal 2021 and three-year growth of 54.2% over the pre-pandemic first quarter of fiscal 2020."
"We continued to leverage our Dock & Unlock™ strategy to deliver a steady flow of organically developed, exciting new products that generated nearly 26% of our first quarter revenue. We also attended ICAST 2022, the fishing industry's premier tradeshow, where our BUBBA fishing lifestyle brand received the award for 'Best Cutlery, Hand Pliers and Tools" for our innovative Multi-Flex Interchangeable Knife Sets. This marks the third consecutive year that BUBBA has taken home the award in this category. While at ICAST, we launched the BUBBA Voyager Gear Box, our first entry into waterproof storage, and we unveiled and previewed our proprietary BUBBA Electric Fish Scale, an exciting new product that truly energized and excited our core fishing retailers, distributors, and consumers, ahead of the full launch and shipping of initial inventory in Spring of 2023."
"A key part of our long-term strategy includes growing the brands in our portfolio by plugging them into our Dock & Unlock process and utilizing our leverageable business model. During the first quarter, we amended our
"While we are not giving specific guidance today, we are providing a framework for our revenue outlook for fiscal 2023. Consumer spending patterns over the balance of our fiscal year have yet to be determined, and we believe that retailers and distributors continue to be extremely cautious with regard to their inventory levels. That said, we also believe our brands are performing well and in alignment with recent consumer outdoor participation trends. As a result, we believe our revenue for fiscal 2023 could exceed pre-pandemic fiscal 2020 revenue by as much as 25%. We believe our solid financial position enables us to continue executing on our long-term strategic plan, investing in our business, and addressing the exciting growth opportunities we have identified for fiscal 2023 and beyond."
Conference Call and Webcast
The Company will host a conference call and webcast today,
Reconciliation of
In this press release, certain non-GAAP financial measures, including "non-GAAP net income," "non-GAAP income per share diluted," and "Adjusted EBITDAS" are presented. A reconciliation of these and other non-GAAP financial measures are contained at the end 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) technology implementation, (iv) acquisition costs, (v) stockholder cooperation agreement costs, (vi) income tax adjustments, (vii) interest expense, (viii) income tax expense, and (x) depreciation and amortization; 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
Safe Harbor Statement
Certain 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 our direct-to-consumer sales is one gauge of how well our brands are resonating with consumers; our excitement about growth opportunities within our Outdoor Lifestyle category; our long-term strategy to grow the brands in our portfolio by plugging them into our Dock & Unlock process and utilizing our leverageable business model; our estimate that the consolidations of our operations in
Contact:
lsharp@aob.com
(573) 303-4620
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CONSOLIDATED BALANCE SHEETS |
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As of: |
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|
|
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(Unaudited) |
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(In thousands, except par value and share data) |
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ASSETS |
|||
Current assets: |
|||
Cash and cash equivalents |
$ 17,469 |
$ 19,521 |
|
Accounts receivable, net of allowance for credit losses of |
23,920 |
28,879 |
|
Inventories |
120,638 |
121,683 |
|
Prepaid expenses and other current assets |
10,754 |
8,491 |
|
Income tax receivable |
1,072 |
1,231 |
|
Total current assets |
173,853 |
179,805 |
|
Property, plant, and equipment, net |
10,357 |
10,621 |
|
Intangible assets, net |
60,673 |
63,194 |
|
Right-of-use assets |
25,417 |
23,884 |
|
Other assets |
369 |
336 |
|
Total assets |
$ 270,669 |
$ 277,840 |
|
LIABILITIES AND EQUITY |
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Current liabilities: |
|||
Accounts payable |
$ 13,495 |
$ 13,563 |
|
Accrued expenses |
9,634 |
7,853 |
|
Accrued payroll and incentives |
2,983 |
2,788 |
|
Lease liabilities, current |
1,618 |
1,803 |
|
Accrued profit sharing |
820 |
998 |
|
Total current liabilities |
28,550 |
27,005 |
|
Notes and loans payable, net of current portion |
19,551 |
24,697 |
|
Lease liabilities, net of current portion |
24,739 |
23,076 |
|
Other non-current liabilities |
31 |
31 |
|
Total liabilities |
72,871 |
74,809 |
|
Equity: |
|||
Preferred stock, |
— |
— |
|
Common stock, |
14 |
14 |
|
Additional paid in capital |
268,855 |
268,393 |
|
Retained (deficit)/earnings |
(56,046) |
(50,351) |
|
|
(15,025) |
(15,025) |
|
Total equity |
197,798 |
203,031 |
|
Total liabilities and equity |
$ 270,669 |
$ 277,840 |
|
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CONSOLIDATED STATEMENTS OF OPERATIONS |
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(In thousands, except per share data) |
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For the Three Months Ended |
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2022 |
2021 |
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(Unaudited) |
||||
Net sales |
$ 43,676 |
$ 60,768 |
||
Cost of sales |
24,637 |
31,785 |
||
Gross profit |
19,039 |
28,983 |
||
Operating expenses: |
||||
Research and development |
1,756 |
1,521 |
||
Selling, marketing, and distribution |
11,780 |
13,200 |
||
General and administrative |
11,064 |
10,039 |
||
Total operating expenses |
24,600 |
24,760 |
||
Operating (loss)/income |
(5,561) |
4,223 |
||
Other income/(expense), net: |
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Other income, net |
241 |
129 |
||
Interest expense, net |
(186) |
(46) |
||
Total other income, net |
55 |
83 |
||
(Loss)/income from operations before income taxes |
(5,506) |
4,306 |
||
Income tax expense |
189 |
849 |
||
Net (loss)/income |
$ (5,695) |
$ 3,457 |
||
Net (loss)/income per share: |
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Basic |
$ (0.42) |
$ 0.25 |
||
Diluted |
$ (0.42) |
$ 0.24 |
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Weighted average number of common shares outstanding: |
||||
Basic |
13,443 |
14,083 |
||
Diluted |
13,443 |
14,301 |
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CONSOLIDATED STATEMENTS OF CASH FLOWS |
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(Unaudited) |
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For the Three Months Ended |
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2022 |
2021 |
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(In thousands) |
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Cash flows from operating activities: |
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Net (loss)/income |
$ (5,695) |
$ 3,457 |
|
Adjustments to reconcile net income to net cash (used in)/provided |
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Depreciation and amortization |
4,162 |
4,179 |
|
Loss on sale/disposition of assets |
— |
127 |
|
Provision for credit losses on accounts receivable |
7 |
23 |
|
Deferred income taxes |
— |
(110) |
|
Stock-based compensation expense |
714 |
752 |
|
Changes in operating assets and liabilities: |
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Accounts receivable |
4,952 |
3,939 |
|
Inventories |
1,045 |
(17,746) |
|
Accounts payable |
277 |
4,226 |
|
Accrued liabilities |
1,798 |
(805) |
|
Other |
(2,192) |
(1,207) |
|
Net cash provided by/(used in) operating activities |
5,068 |
(3,165) |
|
Cash flows from investing activities: |
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Payments to acquire patents and software |
(1,392) |
(449) |
|
Payments to acquire property and equipment |
(218) |
(537) |
|
Net cash used in investing activities |
(1,610) |
(986) |
|
Cash flows from financing activities: |
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Payments on notes and loans payable |
(5,170) |
— |
|
Cash paid for debt issuance costs |
(88) |
— |
|
Proceeds from exercise of options to acquire common stock, |
— |
5 |
|
Payment of employee withholding tax related to restricted |
(252) |
(312) |
|
Net cash used in financing activities |
(5,510) |
(307) |
|
Net decrease in cash and cash equivalents |
(2,052) |
(4,458) |
|
Cash and cash equivalents, beginning of period |
19,521 |
60,801 |
|
Cash and cash equivalents, end of period |
$ 17,469 |
$ 56,343 |
|
Supplemental disclosure of cash flow information |
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Cash paid for: |
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Interest |
$ 161 |
$ 38 |
|
Income taxes |
$ 32 |
$ 85 |
|
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For the Three Months Ended |
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2022 |
2021 |
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GAAP gross profit |
$ 19,039 |
$ 28,983 |
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Non-GAAP gross profit |
$ 19,039 |
$ 28,983 |
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GAAP operating expenses |
$ 24,600 |
$ 24,760 |
||
Amortization of acquired intangible assets |
(3,075) |
(3,428) |
||
Stock compensation |
(714) |
(752) |
||
Technology implementation |
(769) |
(272) |
||
Acquisition costs |
(47) |
— |
||
Shareholder cooperation agreement costs |
(1,010) |
— |
||
Non-GAAP operating expenses |
$ 18,985 |
$ 20,308 |
||
GAAP operating (loss)/income |
$ (5,561) |
$ 4,223 |
||
Amortization of acquired intangible assets |
3,075 |
3,428 |
||
Stock compensation |
714 |
752 |
||
Technology implementation |
769 |
272 |
||
Acquisition costs |
47 |
— |
||
Shareholder cooperation agreement costs |
1,010 |
— |
||
Non-GAAP operating income |
$ 54 |
$ 8,675 |
||
GAAP net (loss)/income |
$ (5,695) |
$ 3,457 |
||
Amortization of acquired intangible assets |
3,075 |
3,428 |
||
Stock compensation |
714 |
752 |
||
Technology implementation |
769 |
272 |
||
Acquisition costs |
47 |
— |
||
Shareholder cooperation agreement costs |
1,010 |
— |
||
Income tax adjustments |
164 |
(1,113) |
||
Non-GAAP net income |
$ 84 |
$ 6,796 |
||
GAAP net (loss)/income per share - diluted |
$ (0.42) |
$ 0.24 |
||
Amortization of acquired intangible assets |
0.23 |
0.24 |
||
Stock compensation |
0.05 |
0.05 |
||
Technology implementation |
0.06 |
0.02 |
||
Acquisition costs |
— |
— |
||
Shareholder cooperation agreement costs |
0.07 |
— |
||
Income tax adjustments |
0.01 |
(0.08) |
||
Non-GAAP net income per share - diluted (a) |
$ 0.01 |
$ 0.48 |
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(a) Non-GAAP net income per share does not foot due to rounding. |
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RECONCILIATION OF GAAP NET (LOSS)/INCOME TO NON-GAAP ADJUSTED EBITDAS |
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For the Three Months Ended |
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2022 |
2021 |
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GAAP net (loss)/income |
$ |
(5,695) |
$ |
3,457 |
|
Interest expense |
186 |
46 |
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Income tax expense |
189 |
849 |
|||
Depreciation and amortization |
4,162 |
4,179 |
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Stock compensation |
714 |
752 |
|||
Technology implementation |
769 |
272 |
|||
Acquisition costs |
47 |
— |
|||
Shareholder cooperation agreement costs |
1,010 |
— |
|||
Non-GAAP Adjusted EBITDAS |
$ |
1,382 |
$ |
9,555 |
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