American Outdoor Brands, Inc.

Good day, everyone, and welcome to American Outdoor Brands, Inc. second quarter fiscal 2022 financial results conference call. This call is being recorded. At this time, I would like to turn the call over to Liz Sharp, Vice President of Investor Relations, for some information about today's 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, 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 product, 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 amortization of acquired intangible assets, stock compensation, transition costs, COVID-19 expenses, technology implementation, related party interest income, other costs, and the tax effect related to all 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 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. I'm very pleased with our performance for the first half of fiscal 2022. We are in the midst of a growing outdoor market that has welcomed new participants to the outdoors. We have a collection of authentic brands that continue to resonate with our core consumers. We own a unique dock and unlock process that has organically created innovative brands and products. And we have built an operations team that has successfully navigated recent supply challenges to keep our products moving. In addition, we have achieved key milestones in establishing our post-spinoff standalone infrastructure. Together, these elements form a strong operation that will allow us to continue servicing our customers and delivering growth for the balance of fiscal 22 and for the long term. With that, let me share some details of our recent performance. 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 as they reopened from 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. These fluctuations in timing are the reason we view our six-month performance as a more meaningful comparison than the shorter-term quarterly comparisons. For 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. These results reflect our dedication to building authentic lifestyle brands that help consumers make the most out of the moments that matter. The markets we serve, fishing, camping, hunting, shooting sports, and the rugged outdoor lifestyles have all benefited from a new, higher level of participation that began in our last fiscal year and continues to provide us with an expanded consumer base containing millions of new participants. Not to mention our increased reach into adjacent markets with wholly new consumers, such as land management, meat processing, and home security. We continue to identify opportunities within this expanded consumer base, utilizing our brand-lane structure and our dock-and-unlock strategy. Our brand lanes, Defender, Marksman, Harvester, and Adventurer, organize our brands by consumer activity and provide us with an ideal competitive advantage for developing innovative new products year after year that turn consumers into long-term advocates as we take our brands from niche to known. Once a brand is docked into its appropriate brand lane, we begin to unlock its potential by leveraging the lane's resources, which include brand marketing, creative, product development, sourcing, and e-commerce. Dock and Unlock continues to fuel innovation, drive future growth, and support our objective to deliver a compound annual organic growth rate of 8% to 10% over the next four to five years. During the second quarter, we benefited from a strong consumer preference for our brands across our portfolio, especially the hunting-related brands in our harvester brand lane in anticipation of the fall hunting season. This includes Meet Your Maker, our internally developed direct-to-consumer brand of meat processing equipment. Meat provides an outstanding case study of our dock and unlock process in action. Launched in March of 2020 and sold exclusively in the direct-to-consumer channel, meat products are winning over consumers at a very exciting pace. In October, meat achieved its first million-dollar month, a record it surpassed again in the month of November. And by the end of November, including orders through Black Friday and Cyber Monday, Meet achieved trailing 12-month net sales of just over $6 million, from a starting point of zero less than two years ago. To sum it up, we identified a consumer opportunity in the growing field-to-table movement, a gap in our offering, and a lack of appealing acquisition targets. From there, Dock and Unlock led us to design, build, launch, and take market share with an organically developed brand that has delivered growth of 414% in the past year alone. In addition, we have identified additional new products under the meat brand that we're launching as we speak. More on that next quarter. Meat is an outstanding example of the strength that lies in investing our capital into organic growth opportunities made possible by Dock & Unlock. This ability to invest in ourselves is a key driver for our future growth. I see no reason that our meat brand cannot become a meaningful percentage of our revenue in the future, and I see every reason for us to create exciting new brands in the future that have the same potential. We had other new product developments in the quarter as well, resulting from our dock and unlock strategy. Bubba, our fishing lifestyle brand known for its high-quality angling equipment and apparel, which is situated in the Adventurer brand lane, entered an entirely new product category by launching its newest product line, the Kitchen Series, a collection of high-end culinary knives designed to complement the water-to-plate lifestyle. BOG, our very popular line of hunting gear engineered for the unknown, resides in our harvester brand lane. BOG products often incorporate our proprietary technology, and in September, BOG expanded its tripod family to include two new camo design patterns. BOG also announced an expansion of its family of ground blinds to include a hay bale blind designed for open-field hunting and a larger hub line designed for rifle, crossbow, or compound bow hunters, and spacious enough to accommodate multiple hunters at the same time. Two exciting developments in our Defender brand lane included our Crimson Trace brand, which introduced the CT RAD series, a comprehensive family of 10 new rapid aiming sights in both red and green illuminated options, as well as micro, compact, and full-size platforms. And lastly, our Lockdown brand, which offers connected solutions designed to protect high consequence valuables, rolled out the new Lockdown Logic app, developed by our in-house R&D team, which includes app development resources. The new app enhances the consumer experience, unlocks new functionality and features, and lays the foundation for future product launches in the Lockdown brand family. Our customers tell us regularly that we are, without a doubt, the innovation leader within our product categories. And in the second quarter, new products comprised over 25% of our revenue. This innovation is the direct result of our Dock and Unlock strategy, and new products resulting from this process drive our long-term organic growth and generate healthy, accretive, and sustainable margins. In fact, the strong margins we demonstrated in the second quarter are a direct reflection of this power in action. In fiscal 2022, we will launch over 350 new products, surpassing our annual average. New product launches will occur across all four of our brand lanes, with the highest new product growth rate coming from the hunting-related brands in our harvester brand lane and the camping and fishing-related brands in our adventurer brand lane. Turning to brand performance, We believe that brand growth in the quarter reflects the same timing fluctuations we discussed earlier. For that reason, we believe that here as well, the six-month comparison is a more accurate assessment of performance. For the six months of fiscal 22, over half our brands delivered growth over the same period in fiscal 21. Our top-selling products within the six-month period came from each of our four brand lanes, demonstrating the range of our brand portfolio and as well as our diversity across multiple consumer activity-driven markets. We believe this diversity will serve us well as we continue to expand into larger, addressable markets that have the ability to transcend near-term secular trends. In addition to providing diversity, a number of our brands are highly complementary to one another. Our brand-lead structure, combined with our e-commerce platform, allows us to identify and implement a number of cross-marketing opportunities among those brands to drive growth. For example, the consumers that purchase our bog products are typically hunters. It stands to reason that they will likely be interested in processing the meat they harvest on their hunts. So we saw a cross-marketing opportunity, and during the second quarter, we utilized our e-commerce platform to reach out to our bog audience, introducing them, perhaps for the first time, to meet your maker, meet processing equipment, enabling us to complete that field-to-table concept for our consumer while we expand our customer base. We see a number of opportunities across our portfolio where our highly complementary brands can work together in this fashion. As you know, our e-commerce platform is a key element in our strategy to place our brands wherever consumers decide to shop for them, whether online or in a physical retail store. This approach is particularly important in our current environment when the impacts of COVID are dynamic and consumers alternate between in-store shopping and online options. Our second quarter e-commerce growth demonstrates the positive impact of this strategy. Clearly, the investment we made long ago in our websites continues to pay off. Now turning to logistics, our teams here and in Asia, again, continue to successfully navigate supply chain constraints and poor congestion issues. Their work helped us achieve the strategic inventory build we have discussed on prior calls, inventory that is important to ensuring that our retailers and our own online storefronts are stocked for the hunting and holiday shopping seasons, particularly with our most popular products. That inventory also supports the new product launches I mentioned earlier. With a robust new product pipeline in place, a portfolio of authentic brands in hand, and an energized outdoor consumer market. We are excited about the future, and we look forward to sharing our progress as we take our brands from niche to known. With that, I'll turn it over to Andy to discuss our financial results.

Thanks, Brian. Our performance year-to-date, combined with our outlook for the second half of fiscal 2022, continues to support our long-term strategy. Net sales for Q2 were $70.8 million compared to $79.1 million in the prior year, a decrease of 10.5%. We believe the decrease was primarily driven by the timing of orders from our traditional brick-and-mortar channels as certain customers accelerated their inventory purchases into our first fiscal quarter to mitigate their own supply chain risk. In addition, we believe our second quarter last year reflected heightened demand driven by increased foot traffic at retailers in our traditional channel as they reopened from pandemic restrictions. Despite the decline in our traditional channel sales during Q2 of this year, our e-commerce net sales grew nearly 5% over second quarter of last year, as Brian mentioned earlier. Net sales for the first six months of fiscal 22 were $131.5 million, which represents a 1.5% increase over fiscal 21 and an increase of more than 62% over fiscal 2020. Now turning to gross margins. Gross margins in the second quarter came in above our expectations at 46.7%, a reduction of just 20 basis points from last year. Our operations team did a great job staying on top of various transportation options and costs, helping us to minimize the impact wherever possible. Gap operating expenses for the quarter were $27.7 million, which is roughly flat compared to last year. Within that number were decreases in our variable selling costs resulting from reduced sales, combined with lower website costs, as we completed the launch of new websites for each of our key brands in the year-ago period. Expenses also included a reduction in intangible asset amortization. These decreases were offset by our planned increases relating to standalone G&A costs, such as IT infrastructure and insurance, as well as increases in freight costs and advertising expense. Non-GAAP operating expenses in the quarter were $22.7 million, compared to $22.5 million in Q2 of last year. Non-GAAP operating expenses exclude intangible amortization, stock compensation, and certain non-recurring expenses as they occur. GAAP EPS for Q2 was $0.32 as compared with $0.52 last year, and non-GAAP EPS for Q2 was $0.58 compared to $0.77 last year. Our fiscal 22 figures are based on our fully diluted share count of approximately 14.3 million shares. Adjusted EBITDAs for the quarter was $11.7 million at a margin of 16.5%. This compares to adjusted EBITDAs of $15.8 million, or a margin of 19.9% in the prior year. Adjusted EBITDAs for the first half of fiscal 2022 was $21.3 million, or 16.2%, which is in line with our expectations and, in fact, is above the high end of our guidance range for the full fiscal year. Turning to the balance sheet and cash flow, we ended the quarter with $32.6 million of cash and no borrowings on our line of credit. The sequential decrease in our cash balance was driven largely by two items. The first is the typical seasonal build in receivables we see at this time of year. The second is our planned strategic investment in inventory we've talked about in the past to mitigate supply chain risk. Specifically, we've been working to build inventory in Q1 and Q2 of our high-volume products, as well as inventory to support a number of upcoming new product launches, and our efforts here have been very successful. The current challenges we face from port congestion and container shortages are in line with what we expected. And our team has done a great job, as usual, closely managing these issues on a daily basis. In addition, we believe our planned pull forward of inventory purchases in Q1 and Q2 positions us well to continue servicing our customers through the second half of fiscal 22. Going forward, we would expect inventory levels to decrease in the second half of the year as we fulfill demand for our products. Our spending for CapEx and patent costs of $1.8 million in Q2 included about $1 million for IT infrastructure and was consistent with our expectations. We are still planning total capital expenditures for the full fiscal year of between $7.5 million and $8.5 million. We've discussed previously that our spinoff last year included a transition services agreement with our former parent company, that provides us with two years of IT support while we stand up our own independent platform by August of 2022. In November, we completed a major milestone in the project with our successful migration to our own independent IT infrastructure. This was an important and complex step in the project, so I applaud our IT team for leading it successfully and our employees for supporting the transition. With that important accomplishment behind us, we're preparing for the implementation of our ERP platform, Microsoft D365, which is on track for Go Live next summer. Our cost estimates for the IT infrastructure project remain unchanged, and we expect the total will be about $8 million over the course of fiscal 22 and 23. In fiscal 22, we expect capex of about $3.5 million and one-time operating expenses of about $1.6 million. We also expect to record $1.2 million of duplicative expenses in fiscal 22. These are the costs of operating both our existing and new platforms in parallel during the system changeover period. We will treat both the $1.6 million and the $1.2 million as technology implementation costs in G&A when calculating our non-GAAP operating expenses and adjusted EBITDAs. Back to the balance sheet. We ended Q2 with no outstanding bank debt and the full capacity available on our $50 million line of credit. This facility provides an additional $15 million of availability under certain conditions. Turning to our capital allocation strategy, as we've stated since our spinoff, organic growth remains our top priority. As Brian detailed earlier in the call, our ability to create brands internally, such as meat, that deliver purely organic growth and healthy gross margins is a unique benefit of our Dock and Unlock process, and they merit our primary focus. At the same time, we also believe that locating and acquiring tuck-in brands that can benefit from Dock and Unlock can fuel our growth well beyond the 8% to 10% organic CAGR we've established for the next few years. For that reason, we continue to actively seek out attractive acquisition targets that would complement our current brand portfolio while remaining disciplined in our focus on only those that meet our criteria. In fact, we've come close on a few opportunities recently that ultimately didn't meet that criteria. We expect the acquisition landscape will remain active well into calendar 2022, and we look forward to finding the right fit for our business. 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 a capacity on our line of credit, provided us with almost $100 million of available capital as of October 31st. Looking ahead, we expect our normal seasonal cash bill to occur in the second half of the year, further strengthening our balance sheet. 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, we are pleased to announce that our Board has authorized a share repurchase program of up to $15 million of our common stock through December 2023. Now turning to our guidance. 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 growth over fiscal year 2021. We estimate that net sales for fiscal 22 will be in the range of $280 to $285 million, which at the midpoint would represent growth of roughly 2% over the prior year and growth of nearly 69% over fiscal 2020. With net sales in that range, we expect full-year GAAP BPS in the range of $1 to $1.19 and non-GAAP BPS in the range of $2.02 to $2.21. Our expectation for adjusted EBITDA margins of between 15% and 16% for the full year remains unchanged. Now for a bit more detail on the guidance. Our full year outlook for fiscal 22 puts net sales growth during our second half at about 15% over the first half. As we look out across Q3 and Q4, we would expect to see Q3 net sales slightly higher sequentially from Q2. followed by another slight sequential increase in Q4, as retailers restock after the holidays and we commence several new product launches. With regard to gross margin, we would expect to see gross margin percentages in the second half of fiscal 22 fairly similar to our percentages in the second half of last year. On the expense landscape, a reminder here that SHOT Show and the ATA Show will take place in Q3. In addition, Q3 will reflect our ongoing infrastructure and R&D investments. Finally, we expect our effective tax rate will be approximately 25% for the balance of fiscal 22, and our fully diluted share count will be about 14.5 million shares. With that, operator, please open the call for questions from our analysts.

As a reminder, to ask a question, you will need to press star 1 on your telephones. To withdraw your question, press the pound key. Again, that's star one on your telephone to ask a question. Please stand by while we compile the Q&A roster. Our first question comes from the line of Eric Wote of B Raleigh Securities. Your line is open.

Thank you. Good afternoon, everybody. A couple questions, I guess. One, can you help us Bridge, you know, kind of your expectations of moving from, you know, a 2-ish percent growth rate this year to the 8% to 10% range over the next coming years against, you know, what looks to be a pretty tough comparison on a two-year stack. And how dependent is that growth rate on M&A?

So, hey, Eric, this is Brian. So I would tell you that it's not dependent upon M&A at all. That's just purely based on our organic growth rate. And what drives that really comes down to new products and new distribution. So if you recall, new products represents for us anywhere between 25% and I think it's been as high as 35% of our total net sales. We have an incredibly robust new product pipeline. If you look at this year alone, most of those new products are coming out in Q4. So part of that in Q3, but the majority are coming out in Q4, kind of giving us a nice tailwind headed into next year. And we've got some big plans for our brands that we'll be excited to share. And honestly, at those higher ASPs that we've talked about. So innovative new products, higher ASPs. So we feel very comfortable with the range we've set out there.

Got it. And then... Given what you saw from the retailers in terms of ordering earlier in the year, where are you right now with retail shelves and your own e-commerce in terms of inventories versus where you'd like them to be? Are they perfectly in line with the inventory levels that you expect and want, or is there still a little bit left that you're going to be short on there?

Sure. This is Brian again. The kind of the first part of your question, when we say that our customers accelerated purchases, that is like from conversations we've done top to tops. And we do those every quarter to make sure we know how we can best support our biggest customers. So we heard that across the board that they were looking to mitigate supply chain challenges. And then in terms of kind of restocking some of those, we feel like there's in certain areas continued sort of hand to mouth. depending on what that is. Harvester, and our Harvester Lane is a good example. In Q2, we saw that there was an elevated hunting season in participation over last year, which kept our replenishment just chugging along to make sure that we could keep up with those service levels. So to me, that was more hand-to-mouth. But overall, I think mostly those retailers that pulled forward those purchases were also gearing up for the holidays and wanted to make sure they had sufficient inventory. So it's a mix between the two. Got it. Thanks, Frank.

Yep.

Thank you. Our next question comes from Scott Stemmer of CO King. Your question, please.

Good evening. Thanks for taking my call, guys. Thanks, Scott. You talked about in your prepared remarks about how POS is looking pretty good right now. Are we talking... up on a year-over-year basis at least as we stand right now in the third quarter?

Yes. I mean, coming out of Q2, POS was strong. It was positive over last year. So we are seeing the positive trends in POS. Okay.

And can you talk about is there any promotional activity going on? I imagine probably not, but just want to see, you know, as we get into a little bit more of a normalized atmosphere. Sure. you know, what you're seeing.

Yeah, Scott, this is Andy. Great question. So in my comments, I talked about gross margins in the second half of the year. Part of that is, compared to last year, part of that is planned holiday promotions. Not a significant amount, but part of it is.

But nothing out of line from historicals. This is all sort of, this happens every year.

Got it. Okay, that's all I have for now. Thank you. Yep, thanks, guys.

Thank you. Our next question comes from John Kernan of Cohen. Your line is open.

Hi, yeah, this is John Cardoso. I'm for John Kernan. Building off of Eric's earlier question, can you parse out expectations for how you're thinking traditional versus e-com will contribute to your organic 8% to 10% growth target going forward? Thank you.

Sure. Yeah, that's a great question. This is Brian. Very, very high level. I would expect that our e-commerce business continues to grow relative to our overall company, overall business. Embedded in that e-commerce number, if you recall, is direct-to-consumer. And we just gave you a snapshot, a small snapshot of what one of the brands, the one that's exclusively direct-to-consumer meet, how that's performing. So you can begin to see at least one brand, how that's impacting our numbers. So we do see direct-to-consumer continuing to rise. I still believe it's in its infancy. But over time, what has ranged, depending on the quarter and coming out of COVID and going back into COVID, et cetera, has ranged from, call it, 20%, 25%, up to as much as 50%. 50% feels a little high in the near term. But I could see us continuing to drift up to something around that range longer term as direct-to-consumer continues to become a larger share of our revenues.

Great. Thank you. Just touching a little bit more on the product pipeline, just going forward, I know you touched on a couple product areas already, but are there any in particular you're pretty excited about going forward as we think about the back half of the year that we should keep our eyes on?

Yeah, great question. This is Brian again. So we did talk about the new rods, bubble rods that we're coming out with, and those will be shipping in our Q4. I would definitely keep a lookout for those. Every piece of feedback we've heard from our retailers is they're very excited about it. Sounds like we're going to get great placement with those. And in many stores, even like a store within a store concept, which is really neat for that brand as we're trying to tell that water-to-plate lifestyle, and really that's a good example, too, of I think we had talked about in times past, you know, partnering with retailers or customers who can help us tell those stories over a longer period of time. That just gives us the benefit of when we come out with these new products to be able to tell that story, and then you can begin to do what you're going to see in Q4, which is this store-within-a-store concept across several retailers. So we're really excited about that one. We also have some new products planned for Hueyman, UST, Schrade, Wheeler. Honestly, most of that falls on what I refer to internally as the right side of the wheel, which would be our Harvester and Adventurer brands.

Great. Thank you for the color. We'll definitely keep an eye out for those. That's it for me. Thank you.

Thank you. Next time.

Thank you. Our next question comes from Mark Smith of Lake Street Capital. Your line is open.

Hi, guys. You talked a little bit about it, but can you just dig into inventory as we look at retail or distributors, how your comfort level with that inventory, have we seen it maybe build too much in instances, or are there any places maybe where there are holes and retail doesn't have what they need?

Yeah, Mark, this is Brian. I think it's a little bit of a mixed bag. I think we saw the retailers stock up pretty heavily ahead of the holiday seasons. And for them, I think the open to buy is going to be limited for a little while, and that goes for all consumer products. But I think as they begin to sell down, as they took that risk out of their pipeline, we'll begin to see that coming back up. Like I mentioned earlier, the POS trends are very positive. So the product is selling through without a doubt. So I think as that continues to chip away at their inventory levels, you begin to see a more normalized buying pattern from those retailers. But I think, you know, they're continuing to look at other things too. You've got potentially this next summer a longshoreman strike that people have been talking about. You've got some other factors, obviously Chinese New Year. So we're keeping an eye on those as well. But I would not be surprised if there's going to be some of this type of behavior from these retailers for the next few quarters as they look to mitigate supply chain risk.

Okay. And does that fit in with a little bit of the sequential kind of cadence of sales? As you expect April sales to sequentially be a little stronger than January. Is some of that just the flow through of that inventory?

Yeah, Mark, this is Andy. That's exactly right. That's how we're seeing it.

Perfect. And then what are you guys seeing as we look at the M&A environment? Anything that's changed out there?

You know, yeah, this is Brian. It continues to move along nicely. I mean, Andy made a few comments about us getting close on a few deals, and we were at the altar on a few different opportunities. And, you know, to be honest with you, one of my old mentors said some of the best deals are the ones that you don't do, And we want to be very careful that these are the right deals for us and our shareholders. But we do remain actively engaged with several other targets as we speak, and we're excited about those. So it remains robust.

Okay. The last one for me, you know, you called out hunting category kind of being strong here. As we look at you know, the marksman lane and some of this falling into the defender lane as well. You know, how do you help a consumer evolve from, you know, let's say a new firearm owner to a marksman, if that makes sense?

Yeah, that's a great question. This is Brian again. So when I made mention to the ways our brands are collaborating with each other and we called out BOG and MEAT, So Crimson Trace and Caldwell is a fantastic example that gets exactly what you're asking. So you'll see collaborations between those two brands as we kind of migrate those 8 to 10 million new firearm owners up through to shooting sports. And when you go to the range, what are the types of things that you're going to need? Hearing and eye protection and steel targets. So We certainly help the consumer with that journey, no different than we did with BOG and meat in sort of finalizing that field-to-table movement. It's really about that, you know, from the counter to the range movement with those two brands.

Excellent. Great. Thank you, guys. Yep. Thank you.

Thank you. At this time, I'd like to turn the call back over to Brian Murphy for closing remarks. Sir?

Thank you, Operator. Before we close, please note that we'll be attending SHOT Show in January. Excited to be exhibiting at this important event for the first time in two years. We hope to see some of you there. Thank you, everyone, for joining us today. We wish you a happy and healthy holiday season, and we look forward to speaking with you again next quarter.

And this concludes today's conference call. Thank you for participating. You may now disconnect.