American Outdoor Brands, Inc. Q3 FY2026 earnings call

• Brian mentioned third quarter performance demonstrates disciplined execution of strategy despite shifting tariff policies, uneven retailer ordering, and consumer uncertainty. Team focused on fundamentals, strong retail sell-through, innovation pipeline, and portfolio management. • Outdoor lifestyle category grew 5.4% driven by BOG and Meet Your Maker. Shooting sports category declined 15% due to aiming solution softness but Caldwell had solid growth. • Investments in new product pipeline bear fruit with new products representing over 26% of net sales. Preparing rollout of ScoreTracker Live in April. • Decided to divest UST brand as camping accessories category is price-driven and brand agnostic. Also, redeploy capital from aiming solutions to higher growth categories and took a reserve related to aiming solutions inventory. • Tariffs continue to be a dynamic element; teams staying close to developments and positioning business accordingly.

Net sales for the quarter were $56.6 million, down 3.3% year-over-year. The outdoor lifestyle category generated over 62% of net sales in the quarter, with net sales increasing 5.4% year-over-year to $35.3 million, driven by BOG and Meet Your Maker brands. The shooting sports category declined 15% in the quarter, mainly due to softness in aiming solution products, though Caldwell brand delivered solid growth. Traditional channel net sales decreased 2.1%, e-commerce net sales decreased 4.6%. Gross margin was 41% for Q3, down 370 basis points from Q3 last year, driven by new tariffs and an inventory reserve related to aiming solutions.

• Maintaining full-year guidance for net sales in range of $191 million to $193 million. Adjusting for retailer order acceleration in fiscal 2025, underlying net sales decline for fiscal 2026 would be ~5%. • Expect full-year gross margins in range of 42% to 43%, with lower margins in Q4 due to increased amortization of tariffs. • Expect total operating expenses to decline for full fiscal 2026. • Adjusted EBITDA for fiscal 2026 expected to be in range of 4 to 4.5 percent of net sales, targeting EBITDA contribution of 25% to 30% on net sales above $200 million.

• Tariff policies can change quickly, impacting costs and operations. • Uncertainty in consumer spending and economic conditions can affect sales. • The outdoor lifestyle and shooting sports categories face market dynamics and competition. • Slow moving inventory and divestment of certain brands can impact financial performance.

Q: Please remind us what was pulled forward in the fourth quarter last year for reasonable comparison of applied fourth quarter sales run rate?

A: Retailers pulled in roughly $10 million, mostly in the last two weeks of Q4, from May back into the last couple weeks of April.

Q: Why is inventory reduction happening faster than expected?

A: It's about efficiency, looking at higher growth opportunities and moving through slower-moving inventory.

Q: Reason for increase in inventories initially?

A: Main driver is increase in tariffs.

Q: Directionally see continue gross margin pressure in first half of 2027?

A: Safe assumption as capitalized tariffs continue to go through P&L.

Q: How much tariff pressure is from IEPA and efforts to recover tariffs?

A: IEPA tariffs are part of pressure, TBD on future, and doing everything to preserve rights for refunds.

Q: Did third quarter borrow from fourth quarter?

A: No, everything came through as normal.

Q: Confirm impairment was only on UST?

A: 100% of impairment was on UST.

Q: Thoughts on consumer spending and uptick in shooting sports?

A: Aiming solutions is one of worst performing, but outside areas doing well, shotgun sports has share gains; consumer spending has bifurcation, store foot traffic growth improving.

Q: Will new products built up in inventory number at year-end?

A: Key products from SHOT Show planned to ship late April, early May.

Q: Expect UST inventory to be gone or not in books at year-end?

A: UST inventory is pretty minimal after impairment.