American Outdoor Brands, Inc.

Good day, everyone, and welcome to American Outdoor Brands, Inc. First Quarter Fiscal 2025 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, technology implementation, non-recurring inventory reserve adjustments, 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 will turn the call over to Brian.

Thanks, Liz, and thanks, everyone, for joining us. I am pleased with our performance in the first quarter, which reflected solid execution in a dynamic consumer environment. Our results reflected a significant increase in profitability, as well as a consumer preference for innovative products from our popular brands in our outdoor lifestyle and shooting sports categories. This quarter, we demonstrated that product innovation and expanded distribution opportunities, both of which are core to our long-term growth strategy, are key to driving results. Our focus on that strategy and on controlling those things that we can control is why we expect to deliver growth for fiscal 2025 despite some choppiness that may occur in the quarters along the way. Let's discuss that strategy before we dig into the quarterly results. As an innovation company in the outdoor enthusiast industry, we maintain a relentless focus on innovation, drilling down to understand the activities of the 175 million Americans who participate in outdoor recreation each year. Whether they're grilling or fishing, hunting or target shooting, or simply working the land under their feet, these are passionate consumers who tend to participate for a lifetime, and they love their gear. As they pursue their passions, we work hard to find their pain points, And then we work even harder to create and deliver innovative solutions that take their experiences to the next level. Our innovation process has become our superpower. Our teams continually tap into the diverse products and technologies that exist across our portfolio, creating unique and usually proprietary solutions that fill our new product pipeline. And sometimes, instead of a product, they identify the opportunity to create an entirely new brand, At the end of the day, whether the solution is a new product or a new brand, we're game for either. And we've done both successfully. We believe our ability to innovate is the key to unlocking growth potential with customer partners. The bottom line, innovation is exciting. It attracts consumers. Because of this, innovation forms the basis of our four pillar growth strategy, which we've outlined before. Those pillars are, first, gaining market share. seeking to displace the competition by expanding our existing product lines. Second, entering new product categories, leveraging our experience in one category, like Gorilla Grills, to help us enter new categories, like our new Mammoth Vertical Smokers. Third, entering new consumer markets, bringing in new consumers, such as property owners, who now buy Hui Man land management tools that were originally created for hunters. And fourth, expanding distribution, Opening doors to untapped customer channels, like moving meet your maker, meet processing equipment, beyond D2C and into retail. Innovation lies at the core of all of these strategic initiatives. And the repeatable and scalable process we've developed to deliver that innovation has yielded tangible results. In fact, those results have been stacking up since our spinoff in 2020. Compared to four years ago, our new products have generated over $60 million of incremental organic revenue and 169 new patents, reflecting innovation vitality and the creation of a deep moat designed to protect our future revenue. And with that, let me turn to our results for the first quarter. Net sales for our first quarter came in as expected, declining slightly year over year by just over 4%. That said, new products performed well across several brands in both our shooting sports and outdoor lifestyle categories, helping to offset declines and deliver net sales in the quarter. In addition, we generated a significant increase in adjusted EBITDAs of more than 76%. We replenished our inventory levels as planned in preparation for the fall hunting and holiday seasons, and we repurchased shares in the quarter. Andy will address all of these points in detail later in the call. In our shooting sports category, which includes solutions for target shooting, aiming, safe storage, cleaning and maintenance, and personal protection, net sales declined by about 7% compared to last year. In shooting sports, new products from our Caldwell Claymore family, including our Solo and Pull Pup clay target throwers, drove strength in shooting accessories and helped partially offset the weakness in personal protection products that is reflective of recent trends in that market. It's worth noting that while we don't produce firearms, our shooting sports category tends to align with adjusted NICS background check results, which were down roughly 3% in the same period. New product innovation, like our expanded Caldwell Claymore family, plays an important role in not only growing our shooting sports category overall, but also in helping to cushion this part of our business from the dynamic nature of the personal protection market. In our outdoor lifestyle category, which consists of products related to hunting, fishing, camping, outdoor cooking, and rugged outdoor activities, net sales declined slightly by 1.7%. New products from our meat, bog, and bubble brands delivered strong meat processing, hunting, and fishing performance and helped to nearly offset lower net sales in outdoor cooking and rugged outdoor related products. Turning now to our distribution channels, As I pointed out, increased and expanded distribution channel opportunities are one of the four growth avenues that comprise our long-term strategic plan. During the quarter, we expanded distribution of our BOG and Caldwell brands by placing them into new retail locations, introducing these popular products to a broader consumer audience. Our efforts to expand our distribution network extend to the international market as well. Accordingly, Our efforts to introduce more of our brands to Canadian consumers helped deliver international net sales of 4.4 million, comprising over 10% of our net sales in the quarter and representing growth of over 21%. While we're still in the early innings, these results demonstrate the tremendous potential the international market holds for our brands. With regard to sell-through, POS sales in our outdoor lifestyle category were positive in the quarter. On the shooting sports side, POS sales were weaker year over year. Not a surprising result, given the recent consumer market for firearms and related accessories. Lastly, new products generated about 23% of our net sales in the first quarter. During Q1, our team attended ICAST, the world's largest sport fishing trade show. Attendees at the show continued to rave about our new Bubba Pro Series Smart Fish Scale, which has now completed its first spring season as the official scale of Major League Fishing. The show provided us a great opportunity to give retailers a preview of an exciting new line of tools that will take our Bubba brand into new fishing markets and further extend its reach among the 54 million anglers in the U.S. who pursue their passion for sport fishing. You'll see these new Bubba products on retail shelves this coming spring. And that's not all. We have several new product launches on the calendar for a number of our brands, including Grilla, Meteor Maker, Caldwell, and Wheeler, so stay tuned. Our new product pipeline is more robust than ever, extending well into the next five years, providing us with a significant long-term competitive advantage. With that, I'll turn it over to Andy to discuss our financial results.