American Outdoor Brands, Inc.

Good day, everyone, and welcome to American Outdoor Brands, Inc. Third 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. Liz?

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 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 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 will turn the call over to Brian.

Thanks, Liz, and thanks everyone for joining us. We delivered a solid third quarter, and I'm very pleased with our results, which included top-line sales growth, disciplined capital management, and the unveiling of several strategically important product introductions that we believe expand our brand's runway for growth. I believe our results demonstrate our ability to remain focused on our long-term strategy while successfully navigating the near-term environment. Our third quarter sales reflected growth of more than 23% over our pre-pandemic third quarter of fiscal 2020, including our acquisition of Grilla Grills in fiscal 2022. For the third quarter, we delivered net sales growth of 5%, a result that came in ahead of our expectations and was supported by our diverse portfolio, evidenced by stronger sales across a number of brands within our shooting sports and outdoor lifestyle categories. which both delivered net sales growth. In addition, our e-commerce and traditional channels experienced net sales growth in the quarter. In our outdoor lifestyle category, which consists of products related to hunting, fishing, camping, outdoor cooking, and rugged outdoor activities, we delivered third quarter year-over-year growth of 2.8%. That growth was led by strength in our hunting and fishing-related products and reflected the success of our strategy to identify incremental retail opportunities including the expansion of our Meet Your Maker meat processing equipment into the retail channel last quarter. On a long-term basis, our outdoor lifestyle category has grown more than 43% compared to the pre-pandemic third quarter of fiscal 2020, including the grill 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 over 54% of our total net sales in the third quarter. Turning now to our shooting sports category, which includes solutions for target shooting, aiming, safe storage, cleaning and maintenance, and personal protection. We delivered growth of 7.6% compared to the prior year. This result was led by our ability to clear some slower moving inventory in the personal protection category, combined with stronger sales in shooting accessories. We are especially pleased with this result, given reports from firearm manufacturers in the quarter that continue to cite reduced consumer demand. With regard to channel sales in the third quarter, we delivered sales growth in both our traditional and e-commerce channels, reflecting our strategy to ensure that our brands meet the consumer wherever they shop. We also delivered sales growth in our domestic and international channels, reflecting our strategy to expand into international markets. In fact, our international sales grew by over 72% in the quarter, the result of introducing more of our lifestyle brands to the Canadian market. With regard to sell-through, we gather point of sale and channel inventory data from retailers that represent about half of our sales. We were pleased with our POS results this quarter. POS sales increased for both our outdoor lifestyle and shooting sports categories. Now, turning to innovation, which is core to our long-term growth strategy. Our ability to innovate allows us to drive growth by entering new product categories, and it's driven by our dock and unlock process. Our approach often consists of creating a new product with proprietary IP and using that product to establish a beachhead for a given brand. From there, we fan out, developing incremental products that allow us to enter new product categories and move from that single point of entry to a full family of products that build upon the brand's familiarity and its loyal following. We've proven the success of this approach in the past with our Bubba brand, moving from a single manual fillet knife to a full family of fishing products that now includes our Bubba Pro Series Smart Fish Scale, which was rapidly adopted and is now the official scale for Major League Fishing. In the third quarter, we again demonstrated the success of this approach by unveiling a number of innovative and internally developed new products under our Caldwell, Grilla, and Hueyman brands. I believe these products represent the tip of the iceberg as we execute against a robust new product pipeline that extends well into the next five years. providing us with a long-term competitive advantage and uniquely positioning our brands to expand market share, enter new product categories and markets, and broaden our distribution channels. Now let me share some of the exciting product details. In a sea of electric clay throwers, most powered by wires connected to a 40-pound car battery, Caldwell caught the attention of clay shooters last year when we introduced the world's first battery-free, foot-operated clay thrower with a stackable clay hopper. called the Claymore. It has been very successful to say the least. When developing the Claymore, we also stumbled upon a gap in the marketplace. There were few product offerings available between the two main types of clay throwers, handheld, which are generally entry-level and lower priced, and stationary clay throwers, which tend to be much more expensive. Our solution, the Caldwell Claymore Solo, which leverages the same battery-free mechanics of the original Claymore, but loads and throws one clay at a time instead of being stack fed. Because of this, it's remarkably light at just 15 pounds, half the weight of the original Claymore, and competitively priced, filling a gap with innovation and extreme value. But we didn't stop there. We looked at the clay thrower market and wondered why consumers had to compromise throwing distance when choosing between a handheld thrower and a stationary one. We also recognize the benefit of being able to change the angle of the target with a handheld thrower. However, most like the ability to securely hold the clay in place when tilting the thrower before release. We solved both of these problems with the Caldwell Claymore Pull-Pup. Our new handheld thrower can easily launch clay targets over 55 yards, while our dual grip design, combined with a unique holding clip, enables users to easily launch targets off camber at a variety of angles. Next, we saw an opportunity for our new Grilla brand to fulfill its promise to help consumers evolve their backyard. One of the benefits of owning a brand that's entirely direct to consumer is the closer connection it brings to the actual user, including product ideas. Grilla consumers expressed frustration with the vertical smoker offerings from competitors. Feedback included lack of space, limited meat rack and hanging options, poor smoke generation, and few options to control and monitor cooking. We've solved all of those problems with the new Mammoth Vertical Smoker, which features over 1,600 square inches of smoking space, accommodates up to 10 racks and 24 hangers, puts out a generous amount of smoke using a proprietary lift heat deflector, and utilizes our new AlphaConnect 2.0 controller to control and monitor cooking. The Mammoth absolutely hit the mark. and we continue to sell out each new container of mammoth vertical smokers as they arrive, demonstrating the powerful nature of Grilla's connection with the consumer. Lastly, as our Hui Man brand has expanded into land management products, we've identified several categories riddled with consumer pain points ripe for innovation. One such area is seed spreaders. Seed can be very expensive, and if you need to cover a large area, two considerations stand out. speed and precision. After releasing our first seed spreader last year, the Hueyman chest-mounted spreader, we turned our attention to high-capacity spreaders. These are commonly mounted to vehicles, including ATVs. We discovered that, in addition to speed and precision, users had to overcome two additional pain points with vehicle-mounted spreaders. One, an overly cumbersome attachment process, and two, frustration from seed Spilling from the hopper, anytime precision and distance adjustments were made. Our new 125-pound capacity Hueyman vehicle spreaders solve all of these problems, enabling the user to attach our spreader in under 60 seconds and adjust the spreader's accuracy without compromising valuable seat. With these products in hand, we attended SHOT Show in January, an annual industry event that is generally focused on new shooting-related products. Our Caldwell brand is always popular at SHOT, and the new Claymore products were extremely well received. And while attendees weren't surprised to see Caldwell at the show, they were surprised and very interested to see a full Grilla outdoor kitchen setup, the new Mammoth Smoker, our Meet Your Maker meat processing equipment, and our Hooey Man product lineup, all of which were brand new to SHOT, and the reception was tremendous. But most importantly, we were able to expose these brands to an entirely new audience, retailers in adjacent distribution channels. Increased and expanded distribution channel opportunities are one of our four growth avenues that comprise our long-term strategic plan, and they are particularly strategic given the current retail environment. As we've said on prior calls, the surge in consumer buying during the pandemic allowed retailers in our industry to become less selective when stocking their shelves. But today's consumer is more discerning, and retailers have shifted towards careful inventory management seeking out compelling products that consumers truly want. At AOB, we believe that by introducing a steady stream of innovative solutions backed by enthusiast brands, we can capture market share, gain new placement, and expand shelf space with retailers looking to draw in the consumer. With that, I'll turn it over to Andy to discuss our financial results.