American Outdoor Brands, Inc.

for standing by, and welcome to the American Outdoor Brands' fourth quarter 2021 earnings conference call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you'll need to press star 1 on your telephone. And now I'd like to introduce your host for today's program, Liz Sharp, Vice President of Investor Relations. Please go ahead.

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, 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 judgment 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. I have 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, transition costs, COVID-19 expenses, related party interest income, and the tax effect related to all of those adjustments. The reconciliations of GAAP financial measures to non-GAAP financial measures, whether or not 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. Also, when we reference EPS, we are always referencing fully diluted EPS. Joining us on today's call is is Brian Murphy, President and CEO, and Andy Fulmer, CFO. And with that, I will turn it over to Brian.

Thanks, Liz, and thanks, everyone, for joining us. Today, I'm excited to share the results of our first fiscal year as a public company, and I'm happy to report that those results exceeded our expectations for both net sales and net income. Fiscal 2021 was a historic year for our company. We completed our spinoff in August 2020 and became an independent public company dedicated to building authentic lifestyle brands that help consumers make the most out of the moments that matter. We believe that sharing our passion for building brands that allow people to pursue their outdoor adventures was especially timely as consumers increasingly looked to outdoor activities such as fishing, hunting, shooting sports, camping, and hiking in response to travel restrictions and social distancing. and as they continue to demonstrate an increased interest in self-protection. Some people turn to these activities for the very first time, and others for the first time in a long time. Regardless, we are pleased and proud that so many of them took our brands along with them on their journey. As a result, we delivered nearly $277 million in that sales, which represents 65% sales growth for the year and 50% sales growth for the fourth quarter. We are extremely proud of our employees whose loyalty, hard work, and dedication helped us establish our new company, service our customers with consistency, and deliver outstanding results despite a year of uncertainty driven by the pandemic. We believe the past year has ushered in an exciting new era for the outdoor industry, resulting in a new, higher foundational level of consumer participation. whether personal protection, shooting sports, camping, hunting, or fishing, each one of the markets in which our brands play has delivered meaningful growth. And importantly, each has welcomed many new participants who we believe will continue to explore the outdoors in the future. Calendar 2020 gave us 8 million new firearm owners, nearly 8 million new campers, and over 3 million new fishing license holders. During fiscal 21, our brands were uniquely positioned to address these strong U.S. consumer participation trends. That alignment, combined with our dock and unlock strategy, helped drive our strong performance in fiscal 21. As a reminder, our brands are organized into four distinct brand lanes, Defender, Marksman, Harvester, and Adventurer, each focused on a particular consumer type. Once a brand is docked into its respective brand lane, we begin to unlock its true potential by leveraging the lane's resources. including marketing, e-commerce, and new product development, allowing the brand to begin its transformation from niche to known. Our Dock & Unlock strategy drives growth, and in fiscal 21, it delivered results. First, Dock & Unlock helps us develop new products within existing markets, allowing us to take market share. In fiscal 21, we expanded our bubble line of fishing accessories to include shears, stainless steel pliers, hook extractors, and our Pro Series Lithium Ion Cordless Electric Filet Knife. These new products help drive Bubba revenue growth in fiscal 21 of over 73%. Second, Dock & Unlock provides some of our existing brands with access to entirely new product categories. In fiscal 21, we rebranded UST from its origins in lower ASP camping accessories to a camping lifestyle brand, and we introduced new, higher ASP products, including tents, air mattresses, and sleeping bags, which represent a larger category. Third, dock and unlock allows us to enter new and large consumer markets. In fiscal 21, we identified an unmet need in our harvester brand lane, so we developed and launched Meat Your Maker, a new brand developed internally that placed us in the $10 billion meat processing market and became a multi-million dollar revenue brand within its first nine months. Lastly, Dock and Unlock provides access to new distribution channels. In fiscal 21, we expanded Hooey Man from a single line of tree saws for hunters to a brand that offers a full range of land management tools popular with homeowners. These products are now available and beginning to gain traction at home and hardware stores. Dock and Unlock lies at the heart of our new product development pipeline. New products, which we define as any new SKU introduced over the prior two-year period, represented over 35% of our net sales for fiscal 21. Our new product pipeline remained robust throughout the year, and in the fourth quarter, we introduced new products across all four brand lanes. Let me hide a few of those for you. In our Defender lane, we launched the Crimson Trace CMR301, a universal laser and tactical light system. In our Marksman lane, we launched our new Tipton Knope Rope, pull-through bore cleaners. and the Caldwell AR500 target stand, which complements the full line of AR500 targets we launched last year. In our harvester lane, we launched two old-timer brand electric fillet knives, one corded and one lithium-ion cordless. We also launched a full assortment of Hueyman H-Grip work gloves, which complement our new expanded line of Hueyman land management tools. And in the adventurer lane, we launched the Bubba Pro Series electric fillet knife, which integrates our brushless motor technology and our advanced lithium-ion technology. We also introduced our Bubba Fishing Line Nipper, a product that spans freshwater, saltwater, and fly fishing markets. And during the quarter, we put the finishing touches on a number of new products, including two major products that will represent Bubba's entry into several new product categories in fiscal 22. Stay tuned. We'll be unveiling most of these exciting new products next week at ICAST, the fishing industry's premier trade show. We believe many of our brands have significant untapped potential for long-term growth, and our dock and unlock platform has been built to manifest that potential. Our brand certainly aligned well with the consumer trends we saw in fiscal 21, but at the same time, we believe our results were also driven by our ability to capitalize on that demand in several ways. First, We benefited from significant strategic investments we began making in our e-commerce capabilities long before the pandemic began. We established websites for each of our key brands, which positioned us to successfully meet the consumer wherever they shopped, whether online or in-store. This allowed us to establish new consumer relationships and increase existing consumer engagement. It also allowed us to respond effectively to increased demand across our brand portfolio. As a result, we grew net sales in our e-commerce channel by over 100% in fiscal 21, including sales by our e-commerce customers and our own direct-to-consumer sales as consumers shifted towards online purchases. At the same time, net sales in our traditional channels grew nearly 49%. Our strong e-commerce and traditional channels are both very important since they allow us to capture consumer demand no matter what channel it comes through. Second, We benefited from earlier investments in our supply chain and distribution capabilities. Our teams here and in Asia did a great job and continue to do a great job navigating supply chain constraints and port congestion. As a result, we heard from a number of customers that we did a better job than our competitors of keeping products on their shelves. Lastly, in terms of bottom line performance, our supply chain team did a great job here as well, managing material cost increases and freight expenses in a high-demand environment. It's also important to note that we benefited from the absence of costs related to multiple industry trade shows and travel cancellations in fiscal 21, important investments that are a necessary part of a more normalized selling and marketing environment. Fiscal 21 was an extraordinary year, one that delivered unprecedented challenges and unforeseen opportunities. During that time, we successfully prepared for and became a new public company and delivered tremendous growth and profits in a year that, we believe, established an outdoor renaissance for the consumer. Looking ahead to fiscal 22, we plan to build upon our new consumer relationships, supported by a strong brand portfolio, a robust lineup of exciting new products, and an established e-commerce platform that will allow us to deepen our insight into the behavior of our consumers. While we do that, We will work diligently to leverage our platform, monitoring and managing the risks that are likely to remain in our environment throughout the year, which includes supply chain constraints, increasing raw materials and freight costs, and ongoing tariffs. As we look to the longer term, we are excited about the large number of new consumers that have entered many of the markets where our brands play. In addition to that, we believe many of our brands have the authenticity, the potential, and the ambition to play in markets beyond the outdoors. So we have developed a pathway that will expand our total addressable market and take our brands from niche to known, fueling our growth in four ways. Number one, increasing our market share by launching new products within existing categories. Two, by entering new large product categories where our brands have permission to play. Three, by entering entirely new consumer markets that increase our total addressable market opportunity. And number four, by broadening our distribution, by onboarding new customers that reflect our brand's expanded permission to play. On a combined basis, we believe this strategy will support organic sales growth at a compound annual growth rate of between 8% and 10% over the next four to five years, exclusive of any acquisitions. That implies at the low end that we have a plan to more than double the size of our business organically since the separation in August 2020. and we believe that growth is just the beginning. As we work to achieve that growth, we will continue to focus on delivering long-term profitability. Our investments in product development and marketing and distribution infrastructure have resulted in a platform with largely fixed costs, helping us deliver record profitability in fiscal 21 as our net sales grew. As a result, we believe this platform has the ability to deliver EBITDA margins in the mid to high teens over the next four to five years as well. We could not be more excited about our future. We are proud of the foundation we have established in our first year as a public company, and we are poised to build on that foundation, setting our sights on future growth and taking our brands from niche to known. With that, I'll turn it over to Andy.