American Outdoor Brands, Inc. Q4 FY2025 earnings call

Management Statement and Operational Highlights

• Fiscal 2025 marked a pivotal year with net sales growth over 10%, gross margin growth of 60 basis points, adjusted EBITDA growth of 81%.
• Innovation Highlights: Launched products like BUBBA SFS Lite, Caldwell ClayCopter, and Grilla Pie-Ro. New products introduced after FY '20 had a 5-year CAGR of over 40% and represent ~50% of net sales in FY '25.
• Growth in Segments: Outdoor lifestyle grew to 57% of net sales, international to 6.5%, e-comm to 38%. Added new brands (MEAT! Your Maker, Grilla) with D2C sales now over 13% of total net sales.
• Patents and Pipeline: Secured 170 new patents, growing patent portfolio by over 65%, with a strong new product pipeline.

Segment Performance

• Product Segments:
  • Outdoor lifestyle vs shooting sports: Outdoor lifestyle net sales grew from 46% of net sales in FY '20 to 57% in FY '25. Shooting sports net sales grew 3.8% in FY '25.
  • International vs domestic: International net sales grew from 4% in FY '20 to 6.5% in FY '25.
  • E-comm vs traditional: E-comm net sales grew from 32% in FY '20 to 38% in FY '25.
• Quarterly Breakdown: Q4 net sales were $61.9 million, almost 34% above prior year. Outdoor lifestyle had 53% year-over-year growth in Q4, shooting sports had 15.7% year-over-year growth.

Guidance

• Suspended fiscal 2026 net sales guidance due to tariff uncertainties and order pull-forward from Q4 into FY '25.
• Anticipate seasonality pattern with Q1 typically lowest, Q2/Q3 highest, Q4 higher than Q1.
• Mitigating tariff risks through supply chain adjustments (exploring sourcing in Vietnam, Cambodia, etc.) and selective pricing adjustments.
• Set to join Russell 3000 and Russell 2000 indices effective June 30.

Risks

• Tariff Uncertainties: Evolving tariff landscape, including IEEPA tariffs, which could impact gross margins.
• Retailer Inventory Management: Retailers may be cautious in restocking due to inventory optimization and macroeconomic factors.
• Macroeconomic Factors: Inflation, shifting consumer behavior, and tariff-driven price increases could affect consumer demand.

Question and Answer Q: Could you provide more color on the $8 million to $10 million of fiscal '26 demand pulled into Q4 and early Q1 consumer discretionary spend?

A: Retailers pulled forward orders due to anticipated future price increases. Early Q1 trends show strong POS but some bumpiness due to retailer inventory navigation.

Q: What drove strength in the traditional channel and early Q1 consumer discretionary spend?

A: Traditional channel strength due to load-in of new products; early Q1 trends show healthy POS with strong underlying consumer resonance.

Q: Why was guidance withdrawn and what's order activity like?

A: Guidance withdrawn due to tariff uncertainties and order pull-forward. Order activity saw a pause in late April/May, but underlying POS trends remain strong.

Q: Thoughts on tariffs and sourcing from China?

A: Tariffs will impact back half of fiscal year. Have inventory position to mitigate, and can quickly shift sourcing to other countries if needed.