American Outdoor Brands, Inc. Common Stock 2027 Q1 Earnings Call

Thank you and good afternoon. Our comments today may contain predictions, estimates, and other forward-looking statements. Our use of words like anticipate, project, estimate, expect, intend, should, could, indicate, suggest, believe, and other similar expressions is intended to identify those forward-looking statements. Forward-looking statements also include statements regarding our product development, focus, objectives, strategies, and vision, our strategic evolution, our market share and market demand for our products, market and inventory conditions related to our products and in our industry in general, and growth opportunities and trends. Our forward-looking statements represent our current judgments about the future, and they are subject to various risks and uncertainties. Risk factors and other considerations that could cause our actual results to be materially different are described in our securities filings. You can find those documents as well as a replay of this call on our website at aob.com.

Today's call contains time-sensitive information that is accurate only as of this time, and we assume no obligation to update any forward-looking statements. Our actual results could differ materially from our statements today. A few important items to note about our comments on today's call. First, we reference certain non-GAAP financial measures. Our non-GAAP results exclude amortization of acquired intangible assets, stock compensation, contract exit costs, other costs, and income tax adjustments. The reconciliation of GAAP financial measures to non-GAAP financial measures, whether they are discussed on today's call, can be found in our filings as well as today's earnings press release, which are posted on our website. Joining us on today's call is Brian Murphy, President and CEO, and Andy Fulmer, CFO. With that, I will turn the call over to Brian.

Thank you, Liz. We are off to a strong start in fiscal 2027. We believe our first quarter results reflect the strength of our brands, healthy retailer and consumer demand for our products, and the continued impact of our innovation strategy. We also believe the quarter reflects the impact of the strategic priorities and operating discipline we've built into our business over time. Our focus on innovation, disciplined execution, and agility helped us deliver these strong results, and we believe those same capabilities will be important as we continue to execute against our growth objectives for the year. First quarter net sales were $37.3 million, an increase of 25% over the prior year quarter.

As a reminder, we believe last year's first quarter was impacted by approximately $6 million of orders that retailers accelerated into the fourth quarter of fiscal 2025, creating a favorable comparison for the quarter we are reporting today. Even after adjusting for that acceleration, first quarter net sales increased approximately 4%, a great result that reflects the continued strength of our brands. Our growth in the quarter was driven by several factors and reflected higher sales with our largest retailers, including our largest e-com retailer and our largest mass retailer. We also benefited from higher direct-to-consumer sales through our own websites, as well as strong sales to our international customers. Importantly, our first quarter performance was broad-based, with double-digit growth in both our outdoor lifestyle and shooting sports categories.

We also saw continued strength in POS during the quarter, telling us that consumer demand for our brands and products remained healthy. In fact, this is now our sixth consecutive quarter of positive year-over-year POS growth. POS increased 6% in outdoor lifestyle and 3% in our shooting sports category. Our key growth brands, BOG, BUBBA, Caldwell, Grilla, and MEAT! Your Maker, once again delivered positive year-over-year net sales growth on a combined basis. Our healthy POS results were supported by strong consumer pull-through of the new products we've introduced in the last 24 months. That pull-through drove strong retailer replenishment, resulting in new products contributing 36% of first quarter net sales, well above our historical average of 20%-25%. Importantly, innovation drives not only revenue but profitability by generating natural consumer demand without the need for promotions.

We all know that new products alone don't stand a chance without a compelling value proposition for the consumer. This is where innovation differentiates AOB. We focus on product categories where innovation can disrupt the status quo and where a superior product can cause consumers to move away from incumbents. We're not just looking to take share. We strive to redefine what consumers expect from a category by reshaping the activity itself. Interestingly, there are a handful of innovation ingredients that many category-defining brands like Keurig, Ring, YETI, and SharkNinja have in common with AOB's growth brand. The four ingredients that stand out to me are disruptive innovation, IP protection, product ecosystems, and an element of product alchemy. This last piece is critical.

It means the difference between a consumer saying, "I bought this," or saying, "You have to try this." Our innovation strategy combines these ingredients to deepen consumer loyalty over time. Let's take Caldwell, for example. First, disruptive innovation. A few years ago, we saw an opportunity to extend Caldwell into shotgun shooting, a category with meaningful consumer pain points and relatively low brand affinity. That led to two new platforms, Claymore, which addressed the mobility and power limitations of traditional clay throwers, and ClayCopter, which reimagined target shooting with a highly portable launcher and biodegradable targets that better mimic bird flight. Second, IP protection. We now have more than 30 patents or pending patent applications supporting the Claymore and ClayCopter families of product. Third, product ecosystem. Using our Caldwell Clays mobile app, shooters can now connect Claymore and ClayCopter launchers to wirelessly launch both traditional clays and revolutionary ClayCopter targets in the same shooting session, an entirely new experience that no other brand can offer.

The element of product alchemy, which creates product evangelists. Our new Claymore and ClayCopter products are generating an incredible organic response from shooters all across the world on social media, forums, and online reviews. A flurry of videos uploaded by consumers have each attracted millions of views and thousands of shares. The numbers alone don't capture what is happening. What stands out is the spontaneous reaction from people, usually a wide grin and a genuine, "Wow, you have to try this." These are real consumers sharing the surprise, raw excitement, and sheer fun these products have brought to recreational target shooting.

Every one of those posts is an invitation for someone else to experience it. That kind of consumer energy is powerful, and our retailers pay close attention to it. They see the excitement building and recognize the opportunity to bring that experience and that consumer into their stores. For us, that retailer engagement is especially valuable. It expands our brand's reach, creates new merchandising opportunities, makes it easier for more consumers to discover our platform, and has the potential to compress adoption cycles. That dynamic has helped make Caldwell one of the top-performing brands in our portfolio today, and it reinforces our confidence in Caldwell's five-year product pipeline, which is filled with exciting product that will continue to expand the platform and strengthen the brand. Caldwell is a good example of how we use these ingredients to create category-defining brands.

These ingredients can also combine in other areas as well to produce emerging new revenue streams for the company. BUBBA is a great example of that, with subscription services that are now generating real revenue. When we launched the first BUBBA smart fish scale and app two years ago, we included a complimentary two-year subscription, a move intended to lower the barrier to entry and encourage consumers to adopt the new technology. That was especially important in fishing, where consumers often look to elite competitors to guide their product choices. One reason our relationship with Major League Fishing has been so valuable. Those complimentary subscriptions are now beginning to roll off, and while we remain in the early innings of tracking conversions, the trends are very encouraging.

Paid subscriptions are now in the six-figure dollar range on a TTM basis and accelerated in the first quarter, a solid indication that consumers see ongoing value in the connected experience. With the consumer launch of SCORETRACKER LIVE at ICAST in July, we're now bringing that connected experience to a much broader audience, further expanding the long-term opportunity for the BUBBA ecosystem. As we look to the remainder of fiscal 2027, we like what we're seeing. Consumer demand for our products has remained healthy. Our key growth brands continue to perform well collectively, and our innovation pipeline is robust. That said, we also know from experience how quickly conditions can change. Consumer spending remains measured, tariffs continue to evolve, and broader economic and global conditions remain dynamic.

That makes it important that we continue to do what has served us well, stay close to our consumers and retail partners, remain focused on innovation, stay disciplined in our execution, and maintain the agility to respond quickly and effectively as conditions evolve. We are pleased with our start to the year, confident in our strategy, and focused on executing against the opportunities ahead. With that, I will turn the call over to Andy to walk through our first quarter financial results and our outlook for fiscal 2027.

Thanks, Brian. We are very pleased with our first quarter performance. We delivered strong net sales and profitability and ended the quarter with another strong balance sheet. Net sales for Q1 were $37.3 million compared to $29.7 million in Q1 last year, an increase of 25.4%. Brian outlined the acceleration of orders by our retailers that impacted Q1 of last year, so I will not go into that detail. Adjusting for that acceleration, net sales for Q1 increased by 4.3% compared to Q1 last year. On a category basis, net sales in outdoor lifestyle, which consists of products related to hunting, fishing, meat processing, outdoor cooking, and rugged outdoor activities, increased 34.4%. Net sales in shooting sports, which include solutions for target shooting, aiming, safe storage, cleaning and maintenance, and personal protection, increased 15.3% compared to Q1 last year.