American Outdoor Brands, Inc.

Good day, everyone, and welcome to the American Outdoors Brand, Inc. Fourth Quarter and Full Year Fiscal 2024 Financial Results Conference Call. This call is being recorded. And 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 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, tariff drawback adjustments, acquisition costs, other costs, and income tax adjustments. The reconciliation 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 very pleased with our performance for fiscal 2024, a year in which we delivered year-over-year net sales growth that exceeded our expectations and achieved several strategic milestones which position our company and our brands well for the future. At the core of our company is our relentless focus on innovation, which is driven by the activities of our consumer. This is a commitment that we maintain no matter what the environment, and it drives not only brand loyalty with our consumers, but also long-lasting and trusting relationships with our retailers. Those retailers have learned that while other suppliers are reeling from changes and uncertainty in the environment, often halting their innovation efforts and slashing prices, They can rely on us to remain steadfast in our promise to maintain the value of our brands, invest in innovation, strengthen our supply chain, and most of all, support their customers with a steady stream of exciting products from leading brands that bring shoppers through the door. That reliability helped drive growth in fiscal 2024 by allowing us to forge stronger relationships with our consumers and retailers, despite the consumer uncertainty that characterized the year. It also allowed us to deliver on a number of commitments we made to our stockholders heading into fiscal 2024. When we entered the year, we shared our intent to control those elements we could control in order to best position us for those elements we could not control. We set out a number of objectives for fiscal 24, and we believe the results we are sharing today demonstrate that we have delivered on those commitments. For instance, We said we would invest in international expansion to drive growth in the channel. We made that investment and delivered solid growth. We said we would expand our Meet Your Maker brand beyond D2C into retail, and we introduced Meet into the retail channel in November. We said we would lay the groundwork to expand our Gorilla brand into retail as well. We completed that work, and Gorilla is set to enter the retail channel in the coming months. We said we would keep our foot on the pedal when it came to innovation. And in fiscal 24, we launched many new, meaningful products, several of which represent our entry into new markets and new product categories. We said we would plan for future growth and efficiencies. And in January, we expanded the lease at our Missouri headquarters and distribution facility, making room for organic growth and acquisitions and identifying a number of operational efficiencies, including supply chain consolidation. And we said we would continue to exercise disciplined capital management. And in fiscal 24, we further strengthened our balance sheet, ending the year with nearly $30 million in cash, returning capital to shareholders, and exiting the year debt-free at a strong position to drive future growth. I'm extremely proud of what our team accomplished in the fiscal year, So now let's dig into the details. Net sales in the year grew more than 5%, reflecting growth in our outdoor lifestyle category as well as our shooting sports category. In outdoor lifestyle, which consists of products related to hunting, fishing, camping, outdoor cooking, and rugged outdoor activities, we grew sales by nearly 7%. That growth was led by strength in our hunting, meat processing, and fishing-related brands, most notably BOG, MEAT, and BABA, and reflects the success of our strategy to identify incremental retail opportunities, both domestically and internationally. Accordingly, we expanded Meet Your Maker, Meet Processing Equipment into the retail channel in 2024, and we positioned Gorilla Outdoor Cooking Products for retail entry in fiscal 2025, providing new audiences for these popular consumer brands. We also expanded our presence in Canada during the year, bringing more of our exciting outdoor brands to Canadian consumers. It's worth noting that fiscal 2024 growth in our outdoor lifestyle category was entirely organic, as we've now lapped the acquisition of Grilla. In our shooting sports category, which includes solutions for target shooting, aiming, safe storage, cleaning and maintenance, and personal protection, we delivered full year growth of 3.2%, despite adjusted NICS background checks coming in 5.4% lower than the prior year. Our net sales increase was driven by a combination of strong sales in our target shooting and reloading brands, namely Caldwell and Frankfurt Arsenal, along with our ability to clear out some slower-moving inventory in the personal protection category during the year, as Andy will address during his inventory discussion. Turning now to our distribution channels. Increase in expanded distribution channel opportunities are one of the four growth avenues that comprise our long-term strategic plan. In our traditional and e-commerce channels, we've long said that we focus on ensuring our brands are available wherever consumers look for them, whether in-store or online. The importance of that focus was clear in fiscal 2024. While e-commerce sales declined slightly, due primarily to lower orders from our largest online retailer, Sales growth in our traditional channel was up more than 12% for the year, driven in part by the entry of our meat brand into the retail channel and underscoring the strong retail partnerships I outlined earlier. In our domestic and international channels, we delivered growth across the board in fiscal 2024. The international market represents a tremendous opportunity for our outdoor lifestyle-oriented brands, particularly Bubba, Meat Your Maker, and Boggs, and its growth over time plays a key role in our long-term strategic plan. Expanding our distribution network in Canada in fiscal 2024 was an important milestone in that plan and was a significant factor in helping drive total international sales to over $12 million, representing about 6% of our business and delivering growth of more than 35% in the year. 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 very pleased with our POS results for fiscal 2024. POS sales in our outdoor lifestyle category were strong, and inventories increased slightly. On the shooting sports side, it's not surprising that POS sales were weaker year over year, given the recent consumer market for firearms and related products, while POS inventories declined in the year. Lastly, I want to talk about innovation, which is our superpower and core to our long-term growth strategy. Our dock and unlock innovation process is robust. In fiscal 2024, it helped bring our total portfolio of patents and patents pending to over 390 and drove the launch of several exciting products across a number of our brands, including Bubba, Caldwell, Grilla, and Hueyman. In fact, New products generated over 23% of our net sales in fiscal 2024. There are a few of these that are noteworthy examples of our strategy in action, namely those that represent our entry into new markets and new product categories. For example, for the 10 million Americans participating in Shotgun Sports, we launched the Caldwell Claymore Solo. a lightweight, battery-free, single clay thrower that fills a market gap with its innovation and extreme value, as well as the Claymore Pull Pup, a handheld clay thrower that flies past the competition in terms of delivering an improved user experience. For the 50 million-plus anglers in the U.S., we launched the Bubba Pro Series Smart Fish Scale, our first entry into the catch-and-release market with the revolutionary fish scale and app designed to gamify fishing. In fact, the ProSFS is so revolutionary that it won a major industry award shortly after its launch and has already been named the official scale for major league fishing. For the millions of households and professionals across America who practice land management, our new Hueyman chest-mounted and vehicle-mounted seed spreaders helped us secure important new retail outlets, expanding the distribution for this growing brand by bringing it into the DIY and farm-and-home markets. And for the nearly 100 million households that participate in outdoor cooking, we launched the Grilla Mammoth Vertical Smoker, an innovative and feature-rich pellet smoker that represents a new product category for our expanding Grilla family, and won Field & Stream's Best Vertical Smoker Award for 2023. These are just a few of the products we launched throughout fiscal 2024, taken together Our new products position us well for fiscal 2025 and beyond, as we expect that both traditional and online retailers will continue to seek out strong and innovative brands to help drive consumer foot traffic and deliver an enhanced consumer experience. I believe we have the most robust new product pipeline ever in our company's history, extending well into the next five years and providing us with a significant long-term competitive advantage. Before I hand it over to Andy, I want to share what excites us most about heading into FY25. Our 21 brands operate across a highly fragmented outdoor industry, where growth is supported by a large installed base of millions of passionate enthusiasts, many of whom consider new gear and technology essential to advancing their pursuits. Our growth strategy is a bet on innovation, which is differentiated by a process that yields repeatability and generates IP-protectable innovation designed to disrupt those large stagnant categories where consumers are starved for new gear and technology. As we transition from our early innings as a new public company, we believe our recent significant investments in infrastructure have cleared the way for further sales in EBITDA's growth, led by our leverageable operating model. And lastly, Disciplined capital management has reinforced our strong balance sheet with no debt, cash flow upside, and available capital of $120 million. With that, I'll turn it over to Andy to discuss our financial results.