American Outdoor Brands, Inc.

Good day, everyone, and welcome to American Outdoor Brands, Inc. Third 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. we reference 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'm extremely pleased with our third quarter results, which came in ahead of our expectations. We delivered net sales of over 58 million, a 9.5% increase over last year. We delivered growth in both our outdoor lifestyle and our shooting sports categories, supported by year-over-year increases in our traditional e-commerce and domestic sales channels. We delivered a significant increase in non-GAAP-adjusted EBITDAs, which nearly doubled year-over-year. And, similar to last quarter, our growth was driven mostly by in-line products, well ahead of several new product launches that we teased at during our last call and showcased publicly in the third quarter. We believe our strong performance demonstrates the effectiveness of our long-term strategy to leverage our innovation advantage to broaden our distribution opportunities, expand awareness of our brands, and strengthen our margins, all while remaining agile and asset-like. We delivered results in each of these areas in the third quarter. So let's jump in. First, let me share how we're leveraging our innovation advantage. At AOB, we often say that the greatest opportunity is the one that's right in front of us. And that means the growth potential in our existing brands. That growth potential comes from new products, which form the core of our innovation advantage. New products provide the oxygen that allows our brands to grow, and they create larger addressable markets to house that growth. They deepen consumer loyalty, and they attract entirely new consumers. They drive retail foot traffic, and they drive retailers to choose us as a unique cross-category innovation partner. And most importantly, New products fuel our long-term growth by adding layers of IP protective revenue to a platform that stacks up over time. While I plan to highlight some of these new products on today's call, I want to be clear that they represent just a couple of exciting examples in a very deep, very wide pipeline that spans many brands and runs several years into the future. Our internal teams are incredibly collaborative and resourceful, And they drive a process that continually replenishes that pipeline, which is why new products typically generate over 20% of our net sales each year. In January, we unveiled several new products that showcase our ability to leverage our innovation advantage to drive brand awareness and expand our markets by developing disruptive products that make outdoor activities more accessible to a broader audience of enthusiasts. Two prime examples come from our Bubba and Caldwell brands. First from Bubba, we're bringing fishing gamification to a much larger market of everyday anglers, allowing them to compete like the pros with the Bubba Smart Fish Scale, or SFS, Lite. Originally, our Bubba brand played only in the saltwater market, which represents about 10 million anglers. So when we decided to expand into the much larger freshwater market of about 40 million anglers, we had a clear strategy in mind. Develop a premium fish scale and app with a level of accuracy and reliability the pros will trust. Then use that earned trust to win over the everyday angler. We launched the Pro Series in June 2023, and by January 2024, it was named the official scale of Major League Fishing. putting Bubba on the map with an achievement that set the stage for this year's launch of the SFS Lite. The new SFS Lite offers some of the same pro-grade features and gamification capabilities for casual fishing trips with buddies, all at a price that everyday anglers can appreciate. While it's still a premium product at $69, it's a scale purposely designed and built to grow with anglers. offering configurations that support their journey and push the boundaries of what's possible. Anglers can track their biggest catches and most successful days on the water, or they can turn their time on the lake into a competition with friends. And when it's time to level up, anglers can upgrade their app to the Bubba Pro subscription, unleashing the full potential of the SFS life. The strategy we employed with Bubba is one that was several years in the making, but only now is visible with the launch of the SFS light. It's one example of our multi-year product development approach. Let me share one more. Last quarter, you may recall, we said that Caldwell was about to put a new spin on shotgun sports, and some of you probably wondered what we meant. Well, Caldwell is reshaping how millions of clay shooters take aim. In Q3, we introduced a revolutionary new target system called the Claycopter, which includes an easy-to-use, handheld electronic launcher that propels a set of biodegradable discs up to 100 yards in an endless variety of flight patterns, challenging shooters like never before. With the Claycopter system, taking a thrower and targets to the range couldn't be easier and more fun. For nearly 150 years, traditional clay targets have been the most practical option for shotgun sports enthusiasts eager to hone their wing shooting skills. But traditional clay targets typically require heavy throwers that are bulky and cumbersome to store and transport. Clays are notoriously fragile, they fly in predictable patterns, and they come in heavy containers that often make transportation a real challenge. In fact, clays cannot be purchased at all online due to their weight and breakage. Enter the Claycopter. Designed entirely in-house and surrounded by pending IP, the portable launcher weighs just three pounds and packs the same power of a traditional thrower in a handheld motorized design, small enough to fit in a range bag or backpack. The Claycopter target discs are 70% lighter than traditional clays, and designed to break only one shot. They can be purchased in a lightweight compact tube of 50 discs, and they're inexpensive to transport, freeing retailers in our Caldwell brand to ship directly to consumers and opening up a highly attractive consumable revenue stream. Next, let me turn to our achievements in widening our distribution and expanding awareness of our brands. We continue to gain traction and momentum with retailers in the third quarter, proving our value as a cross-category innovation partner by demonstrating our ability to provide them with instant access to innovation and excitement. This capability is a true differentiator for us, since we're often competing against organizations that can provide great efficiency across multiple categories, but often lack innovation or that can provide innovation, but only in a single category. We have cracked that code and found a way to give retailers both efficiency and innovation across an entire portfolio. This provides new distribution opportunities for our brands and products. For example, during the quarter, we secured new and expanded retail placement for our BOG, Caldwell, Grilla, and Meet Your Maker brands. This broader distribution is important because it generates brand awareness among consumers who often represent entirely new audiences. Lastly, I'll address our focus on increasing profitability while remaining agile and asset-light, both of which are equally important to our growth strategy. We continue to embrace our long-term model for net sales and profitability, and I'm extremely pleased with our ability to demonstrate growth and margin expansion in the third quarter, particularly given the recent environment of inflation, consumer uncertainty, and ever-evolving tariffs. Despite these environmental challenges, we believe we have a number of levers available to us in support of our model. First, because new products are such a high percentage of our revenue, they are a tremendous tool in preserving and strengthening our margin profile. by allowing us to feather in new, higher-margin, often IP-protected products, as well as subscription revenue services, such as the Bubba app that accompanies the fish scales we discussed today. Second, we continue to maintain a healthy direct-to-consumer business, which is complementary to our B2B strategy and gives us the option to introduce new products directly to consumers when appropriate. building loyalty and demand prior to introducing them into the retail channel. It's a strategy we've successfully executed in the past with our Grilla and Meet Your Maker brands. Third, because we own our product designs and the tooling required to make those products, we have some flexibility with regard to where those products are made. That said, we have strong and long-lasting supplier partnerships. Those partnerships are proving valuable as we work together to assess our optimal responses to the dynamic tariff landscape. Lastly, our strong balance sheet and asset-light model provide agility, allowing us to make those decisions that are best for the long-term health of our business. We believe we have the tools necessary to successfully navigate the future. We have encountered tariffs before and demonstrated that we have levers we can pull and have pulled. As a result, we believe we have optionality as we continue to grow while embracing our long-term model for profitability. With our innovation advantage in hand and our flexible asset-like platform already in place, we remain excited about our ability to deliver sustainable growth and profitability in fiscal 2025 and beyond. With that, I'll turn it over to Andy to discuss our financial results.