American Outdoor Brands, Inc.

Good day, everyone, and welcome to American Outdoor Brands, Inc. Second Quarter Fiscal 2024 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, 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 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, 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. And with that, I'll turn the call over to Brian.

Thanks, Liz, and thanks, everyone, for joining us. I'm pleased with our second quarter results, which demonstrated solid performance in sales and capital management, as well as ongoing progress in support of our long-term strategic objectives. We deliver net sales growth of 6.4%, a result that came in ahead of our expectations and that we view favorably given that retailers continue to remain cautious about their inventories and available open to buy dollars in the quarter. Our second quarter sales also reflected long-term growth of more than 21% over our pre-pandemic second quarter of fiscal 2020, including our acquisition of Grilla Grills in fiscal 2022. We delivered year-over-year growth of more than 14% in our outdoor lifestyle category, which consists of products related to hunting, fishing, camping, outdoor cooking, and rugged outdoor activities. On a long-term basis, our outdoor category has grown nearly 40% compared to the pre-pandemic second quarter of fiscal 2020, including the gorilla acquisition. I believe this result reflects the success of our strategy to grow this part of our business. In fact, our outdoor lifestyle category comprised nearly 60% of our total sales in the second quarter. Growth in our outdoor lifestyle category also reflects our strategy to seek out and place our brands where consumers expect to find them, whether online or in-store, as well as our strategy to drive sales through retail expansion opportunities. Accordingly, we were proud to join forces with Academy Sports and Outdoors in the second quarter to bring Academy customers a select lineup of our Meet Your Maker meat processing equipment. Beginning in October, select meat products became available at all 270 academy retail locations, and online. We originally launched Meet in 2019 as a new, exclusively direct-to-consumer brand. Leveraging our Harvester Brand Lane team's existing infrastructure and consumer insights, Meet quickly developed a loyal following of consumers who appreciate its premium, professional-grade equipment quality, its commitment to user education, its industry-leading lifetime warranty, and its authentic personality. Academy is an ideal partner for our initial entry of meat into brick-and-mortar stores, providing us with a great opportunity to introduce this exciting product lineup to a large number of new potential customers. Our shooting sports category saw a slight decline in second quarter net sales compared to the prior year, a result that is consistent with reports from firearm manufacturers citing ongoing heightened channel inventory and reduced consumer demand. Although we don't produce firearms or ammunition, related products in our shooting sports category include solutions for target shooting, aiming, safe storage, cleaning and maintenance, and self-defense. Turning now to channel sales in the second quarter, sales growth in our traditional channel was strong, led by the initial shipments related to the meat launch I just discussed, and supported by strength in the hunting and fishing categories under our BOG and BABA brands. Net sales in our e-commerce channel also increased year-over-year, driven primarily by sales for our largest online retailer. While promotions with that retailer in the shooting sports category came in higher than we originally anticipated, they were beneficial for two reasons. First, they helped deliver several of our brands into the hands of consumers in this otherwise uncertain consumer environment. And second, they helped to lower channel inventories of our shooting sports products as well. With regard to sell-through, we gather point-of-sale and channel inventory data from retailers that represent about half of our sales. This quarter's POS data was slightly down overall. Outdoor lifestyle was relatively flat, a result we were pleased with given the current environment. Our shooting sports category posted a year-over-year decline that was driven almost entirely by a drop in aiming solutions, which are primarily the sights and optics that attach to firearms. Sales of those products tend to follow adjusted NICS data more closely. The balance of sales in the shooting sports category performed well relative to the underlying channel trends for the category. POS data also indicates that channel inventory of our products declined slightly in the quarter on a year-over-year basis, with a decline in the shooting sports category partially offset by an increase in the outdoor lifestyle category, consistent with my earlier comments. Before I close out the sales discussion, I want to turn quickly to preliminary Black Friday weekend sales results. And these are direct-to-consumer sales for our Grilla and Mead products. For the four-day period from Black Friday through Cyber Monday, on a combined basis, Grilla and Mead delivered nearly 40% year-over-year growth. Grilla had its largest single sales day ever on Black Friday, and Mead had its largest single sales day ever on Cyber Monday. Again, preliminary, but pretty exciting results. Now, turning to innovation. Innovation is core to who we are and a key element in our long-term growth strategy. We are reshaping enthusiasts' expectations of what it means to deliver in the moments that matter, whether it's gamifying fishing with Bubba's new smart fish scale, defining hunting rest stability with Boggs' Death Grip line, or re-envisioning clay throwers that operate battery-free with Caldwell's Claymore line. As we court consumers who are increasingly discerning, we believe that by introducing a consistent stream of innovative solutions Backed by enthusiast brands, we're able to capture market share and gain new placement. This innovation engine, fueled by our dock and unlock process, generated over 25% of our second quarter net sales. While this time of year is typically quiet for us with regard to new product introductions, our teams are hard at work on a number of new products and extensions that will begin unveiling across several of our shooting sports brands at the upcoming SHOT Show in January. In addition, we're putting the finishing touches on launch plans for a very exciting new product from Grilla you'll hear about soon. While we've introduced several Grilla products and accessories since the acquisition, this upcoming launch represents the first in a lineup of significant new Grilla innovations generated by our dock and unlock process. We've also ported Grilla over to our Salesforce e-commerce platform and launched a brand new website. Visit us at GorillaGrills.com, check out our new Evolve Your Backyard campaign, and then stay tuned for a number of new Gorilla products we'll launch under this campaign in the coming quarters. Lastly, we were honored to receive recognition for our innovative achievements when we were recently named Accessory Manufacturer of the Year by the National Association of Sporting Goods Wholesalers. Our Caldwell brand took home honors as well for Best New Accessory. These awards are a testament to our creative teams under Caldwell and throughout AOB, whose teamwork and talent are at the very core of our success. With that, I'll turn it over to Andy to discuss our financial results.