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™ 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™ lifestyle.  Our Dock & Unlock™ 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^™."

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

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 Webcast
The 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 Measures
In 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®; Wheeler®; Tipton®; Frankford Arsenal®; Hooyman®; BOG®; MEAT!; Uncle Henry®; Old Timer®; Imperial®; Crimson Trace®; LaserLyte®; Lockdown®; ust®; BUBBA®; and Schrade®.  For more information about all the brands and products from American Outdoor Brands, Inc., visit www.aob.com.

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 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™ 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™ 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 Relations
lsharp@aob.com
(573) 303-4620

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