American Outdoor Brands, Inc.

Good afternoon, and welcome to the American Outdoor Brand's fourth quarter 2023 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your telephone keypad. To withdraw your question, please press star, then two. Please note, this event is being recorded. I would now like to turn the conference over to 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 referenced certain non-GAAP financial measures. Our non-GAAP results exclude amortization of acquired intangible assets, goodwill impairment, stock compensation, shareholder cooperation agreement costs, facility consolidation costs, technology implementation, acquisition costs, other costs, and income tax adjustments. The reconciliations 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. 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. With that, I'll turn the call over to Brian.

Thanks, Liz, and thanks everyone for joining us. Over the past three years, our industry experienced a surge in consumer demand caused by the COVID pandemic, followed by challenges stemming from high inflation and rising interest rates, which reduced consumer spending and drove retailers to focus on destocking their inventories. All of this change occurred in parallel with our first few years as a new public company. And while the factors driving this change were largely out of our control, They presented us with a unique opportunity to reconfirm our strategy and fine-tune our focus towards areas we can control and where we can drive progress. The first of these is innovation. We are proud to have introduced several breakthrough products in fiscal 23, planting the seeds for future growth. We are reinventing the way people fish, manage their food plots, shoot clays, and reload. Our cutting-edge offerings have been developed to meet the evolving needs of our customers, ensuring we stay ahead of the competition and capture new market opportunities. Second, we have completed critical infrastructure projects that lay the foundation for future growth. These initiatives include implementing a new ERP system that links our strategy with operations, consolidating our Oregon and Michigan facilities, and securing additional distribution space in our Columbia, Missouri facility to accommodate future land growth. These strategic investments are now complete, and they demonstrate our commitment to enhancing operational efficiency, optimizing resources, and preparing for future expansion. In parallel, we effectively managed our cash flow, generating $30.7 million in operating cash in fiscal 23. By closely monitoring our financials and implementing stringent measures, we've been able to strengthen our financial position and ensure a solid foundation for future growth and profitability. This disciplined approach safeguards our ability to invest in key areas and sees promising opportunities as they arise. Lastly, despite being a larger, more stable, standalone business with greater growth potential, than at the time of our spinoff three years ago, market forces have created the conditions for a lower stock price, leading us to opportunistically repurchase our own stock. This approach not only demonstrates confidence in our company's potential, but we believe that it also helps enhance shareholder value, reinforcing our commitment to generating long-term returns. Fiscal 2023 marked our second full year as an independent public company dedicated to building authentic lifestyle brands that help consumers make the most out of the moments that matter. On a three-year basis, we delivered net sales growth of more than 14% over pre-pandemic levels, reflecting strength in our e-commerce channel and driven primarily by growth of nearly 34% in our outdoor lifestyle category. which consists of products related to hunting, fishing, camping, outdoor cooking, and rugged outdoor activities. The markets we serve are large and growing. According to an Outdoor Industry Association report released just last week, the outdoor recreation base has grown in each of the last eight years, adding over 14 million participants since 2020 and now totaling over 168 million participants, or 55% of the US population over the age of six. In addition, consumer participation rates grew in 80% of the outdoor categories in 2022, including camping and fishing, large categories where our brands play. With our outdoor lifestyle category generating more than half of our net sales in fiscal 2023, we are truly ready for the future and excited to address this expanded outdoor market. Throughout the year, we continue to encounter choppy waters created by the shifting dynamics of retail supply and consumer demand in a post-pandemic environment. Despite those challenges, net sales for fiscal 2023 grew more than 14% of our pre-pandemic levels of fiscal 2020. And while those sales declined on a year-over-year basis, Our direct-to-consumer business, which largely consists of our outdoor lifestyle brands, delivered year-over-year growth of 76%, including our acquisition of Grilla Grills. Because our direct-to-consumer sales are not impacted by retail inventory levels, we consider those sales to be an indicator of how well our brands are resonating with consumers. Our direct-to-consumer sales also include sales of meet-your-maker meat processing equipment. Both meat and gorilla are sold exclusively direct to consumer, and together they generated nearly 13% of our total net sales in fiscal 2023. At our spinoff in 2020, our outdoor lifestyle category was less than half of our overall business. By the end of fiscal 2023, however, outdoor lifestyle made up 54% of our business and delivered growth of nearly 34% above pre-pandemic fiscal 2020. Given its large consumer markets and its favorable long-term participation trends, we believe this category will continue to grow as a percentage of our business over time. Point of sale data we received from our retailers indicates that sales of our products declined in the year in the high single digits. This is not a surprising result given the current environment. At the same time that our POS declined, however, Data indicates that channel inventory of our products declined by 26%. We view this as an important, positive dynamic, and we continue to believe this will drive replenishment orders in the second half of calendar 2023. Our international business remains an exciting growth opportunity for us. During the year, we expanded our international sales resources by signing a firm in Europe to represent our many cutlery brands and our Crimson Trace aiming solutions brands. International net sales for fiscal 2023 approached $9 million, representing just under 5% of our business and demonstrating growth of more than 37% over pre-pandemic levels. We're in the early innings here, and we believe that international net sales could eventually comprise roughly 10% of our total annual net sales. Innovation is our core strength. and therefore the key element in our long-term growth strategy. Our innovation engine, fueled by our dock and unlock process, is robust, and new products launched in the past two years generated over 25% of our fiscal 2023 net sales, a level consistent with prior years. Several new products we launched in 2023 have won industry awards, most incorporate proprietary features, and all of them taken together advance our strategy to enter new categories, and expand our distribution channels. Here are a few examples. Shooting clays has historically required owning a truck and lugging a large, bulky, electric clay thrower and a heavy car battery into the field. So we created the Caldwell Claymore, a lightweight, foot operated, durable, and portable clay target thrower that is entirely mechanical and allows for convenient storage, transport, and use in remote locations, no car battery needed. Those who carry a knife for daily tasks have always believed their everyday carry knife required frequent sharpening to remain useful. So we teamed up with Rage, a leader in replaceable blade technology for hunting, to create the Schrade and Rage knife series, a unique industry collaboration that introduces hunters to our Schrade brand and introduces the broader consumer market to the concept of never sharpening their knives again. Millions of firearm owners know that reloading ammo, while cost-effective, is a tedious and time-consuming process that often yields inaccurate powder measurements, spillage of materials, and damaged casings. So we created the Frankfurt X10 Progressive Reloading Press, an innovative 10-station, gear-driven workhorse that reloads ammo in one smooth pull of a handle, making reloading easy and efficient, even when switching calibers. Managing a plot of land has always involved spreading a variety of materials, from seeds to fertilizer, using spreaders that are heavy, uncomfortable, and deliver an inconsistent application of materials. So we created Hoeyman chest spreaders, designed for year-round use and with innovative features that eliminate issues with traditional spreaders, outperform the competition, and take our Huiman brand beyond hunting into farming, gardening, and broader land management markets. And lastly, we expanded our ever-growing Bubba portfolio, a lifestyle brand known for its high-quality angling equipment. By way of background, it may surprise you to learn that in the U.S., There are more anglers that target bass than there are golfers. Those 30 million anglers share a passion for the big catch, a quick weigh-in, and a humane release back into the water. Until now, that process has meant using a traditional fish scale that is awkward to hold, hard to see, and uses little, if any, technology. In short, this was a big, sleepy market that lacked innovation, and our team knew it was a space where Bubba had permission to play. So we entered the large, underserved catch and release market with our Bubba Tournament Grade Pro Series Smart Fish Scale, or the Bubba Pro SFS, a revolutionary product that we believe will change the way people fish. The Pro SFS redefines the fishing experience by seamlessly integrating traditional angling practices with advanced technology. Let me explain how. Beginning with the precision weight scale, the Pro SFS features a quick power-up and delivers a highly accurate and consistent fish weight measurement in a sleek and durable design that incorporates Bubba's signature non-slip grip and waterproof technology. But the Pro SFS is much more than a scale. It serves as a comprehensive fishing data hub that captures real-time information about the catch, such as the exact time of the catch, weather conditions at that time, and the exact location of the catch via GPS. This data is automatically logged into the accompanying Bubba app, creating a personal fishing log and empowering anglers with valuable insights that allow them to understand fish behavior and optimize their fishing strategy. The Bubba app also features integrated tournament functionality, allowing any angler to quickly and easily launch a tournament, invite fellow anglers in distant locations, and track the results in real time directly on the app. And it utilizes a proprietary smart calling system that maximizes fishing time by eliminating the guesswork of deciding which fish to keep. And lastly, While it's rich in functionality, the Pro SFS has a user-friendly interface that ensures both seasoned anglers and newcomers alike can effortlessly navigate its features. The Pro SFS is the first product of its kind that gamifies fishing. Over two years in the making, it incorporates a number of patents and patents pending, and has been designed entirely in-house, from the industrial design to the app development to the user interface. Not only is it a truly disruptive product, it also creates a new, potentially sizable revenue opportunity through an app subscription that currently sells for $49.99 per year and has a monthly option as well. With approximately 30 million anglers in the U.S. that target bass alone, capturing even a small percentage of this very large market could generate significant revenue. And the reception so far has been tremendous. The Bubba Pro SFS, had major league fishing professionals singing its praises on social media before we even launched the product. And the consumer response has been overwhelmingly positive as well, with a nearly perfect 4.9 star rating on the Apple App Store. We are extremely excited about the ProSFS, and you can count on hearing a lot more about it in the quarters to come. The products I've shared today, along with many of the other products in the pipeline, reflect our dedication to leveraging our culture of innovation to deliver solutions for consumers in the moments that matter. We believe that over time, our demonstrated ability to innovate will fuel our top line growth to 400 million and beyond, while our lean infrastructure will help deliver more of that growth to the bottom line. With that, I'll turn it over to Andy to discuss our financial results.