American Outdoor Brands, Inc. Reports Fourth Quarter and Full Fiscal 2023 Financial Results

About this update from American Outdoor Brands, Inc.

• FY23 Net Sales $191.2 Million • FY23 Gross Margin 46.1% • FY23 e -Commerce Sales $87.2 Million – Traditional Sales $104.0 Million • FY23 Operating Cash Flow of $30.7 Million COLUMBIA, Mo. , June 28, 2023 /PRNewswire/ -- American Outdoor Brands, Inc. (NASDAQ Global Select: AOUT), an industry leading provider of products and accessories for rugged outdoor enthusiasts, today announced financial results for the fourth quarter and full year fiscal 2023 ended April 30, 2023 . Full Year Fiscal 2023 Financial Highlights Full year net sales were $191.2 million , a decrease of $56.3 million , or 22.8%, compared with net sales of $247.5 million for the prior year. Compared with pre-COVID levels in fiscal 2020, total net sales grew 14.2%, while e-commerce sales grew 60.6% and traditional channel net sales declined by 8.0%. Full year gross margin was 46.1%, a decrease of 10 basis points, from gross margin of 46.2% for the prior year. Full year GAAP net loss was $12.0 million , or $0.90 per diluted share, compared with a GAAP net loss of $64.9 million , or $4.66 per diluted share, last year. The net loss last year included a $67.8 million non-cash goodwill impairment charge. Full year non-GAAP net income was $6.6 million , or $0.48 per diluted share, compared with non-GAAP net income of $24.7 million , or $1.77 per diluted share, for the prior year. GAAP to non-GAAP adjustments for net income exclude a non-cash impairment of goodwill, acquired intangible amortization, stock compensation, and other costs. For a detailed reconciliation, see the schedules that follow in this release. Full year Adjusted EBITDAS was $12.8 million , or 6.7% of net sales, compared with Adjusted EBITDAS of $35.0 million , or 14.2% of net sales, for the prior year. For a detailed reconciliation, see the schedules that follow in this release. Fourth Quarter Fiscal 2023 Financial Highlights Quarterly net sales were $42.2 million , a decrease of $3.7 million , or 8.0%, compared with net sales of $45.9 million for the comparable quarter last year. Compared with pre-COVID levels in fiscal 2020, quarterly net sales declined 2.0%, while e-commerce sales grew 0.7% and traditional channel net sales declined by 4.3%. Quarterly gross margin was 45.2%, an increase of 140 basis points, compared with quarterly gross margin of 43.8% for the comparable quarter last year. Quarterly GAAP net loss was $3.8 million , or $0.29 per diluted share, compared with a GAAP net loss of $76.7 million , or $5.71 per diluted share, for the comparable quarter last year. The quarterly net loss last year included a $67.8 million non-cash goodwill impairment charge. Quarterly non-GAAP net income was $793,000 , or $0.06 per diluted share, compared with non-GAAP net income of $1.9 million , or $0.14 per diluted share, for the comparable quarter last year. GAAP to non-GAAP adjustments for net income exclude a non-cash impairment of goodwill, acquired intangible amortization, stock compensation, and other costs. For a detailed reconciliation, see the schedules that follow in this release. Quarterly Adjusted EBITDAS was $1.8 million , or 4.3% of net sales, compared with $3.2 million , or 7.0% of net sales, for the comparable quarter last year. For a detailed reconciliation, see the schedules that follow in this release. Brian Murphy , President and Chief Executive Officer, said, "Fiscal 2023 marked our second full year as an independent public company dedicated to building authentic, lifestyle brands that help consumers make the most out of the moments that matter. I am proud of the achievements we made in fiscal 2023, especially given the uncertain macroeconomic environment that the year presented. On a three-year basis, we delivered net sales growth of more than 14% over our pre-pandemic levels, reflecting strength in our e-commerce channel, and driven primarily by growth of almost 34% in our outdoor lifestyle category, which consists of products related to hunting, fishing, camping, and rugged outdoor activities." "Innovation is our core strength and a key element in our long-term growth strategy. We believe our innovation machine is robust, and new products launched in the past two years generated over 25% of our full year net sales, which is consistent with prior years. Our Dock & Unlock™ process fuels that innovation, and we unveiled a host of new products across our brand portfolio during the year. Several of those products have won industry awards; many incorporate features that are 'cross pollinated' from across our brand lanes; most incorporate proprietary features; and all of them, taken together, advance our strategy to enter new product categories and expand our product lines and distribution channels. An example of this 'cross pollination' is our new BUBBA tournament-grade Pro Series Smart Fish Scale (SFS) and accompanying app, our first entry into the large, underserved, 'catch and release' market, and a product that, we believe, has the ability to reinvent the way anglers pursue their sport." "In fiscal 2023, we completed several strategic objectives, including the implementation of a new ERP system with the successful go-live of Microsoft D365; the establishment of a new analytics platform with the launch of Microsoft Power BI; the consolidation of our facilities in Oregon , Texas , and Michigan into our Missouri facility; and the finalization of a full lease takeover at our Missouri facility slated for January 2024 , which will provide increased distribution capacity for long-term organic and inorganic growth. By maintaining a clear focus on our long-term objectives and making several meaningful strategic investments, we believe we have positioned our company well for the future." Andrew Fulmer , Chief Financial Officer, said, "In Fiscal 2023, we strengthened our balance sheet, generated significant operating cash flow, remained disciplined with cost control, invested in our long-term growth, and demonstrated effective capital deployment, all while navigating market challenges with consumer demand and cautious retailer inventory management. With robust operating cash flow in the year of $30.7 million , including an inventory reduction of $21.9 million , we paid down $20.0 million on our line of credit and repurchased over $3.5 million of our stock. We ended the year with a cash balance of $22.0 million and only $5.0 million outstanding on our line of credit, yielding a net negative debt position and up to $92.0 million in available capital." "Turning to our outlook, we believe that our brands remain well positioned to capitalize on positive, long-term consumer outdoor participation trends. As a result, we believe that our net sales for fiscal 2024 could exceed fiscal 2023 net sales by as much as 3.5%. We also believe our solid financial position enables us to continue executing on our long-term strategic plan as we invest in our business, return capital to stockholders, and address the exciting growth opportunities we have identified for our company," concluded Fulmer. Conference Call and Webcast The Company will host a conference call and webcast today, June 28, 2023 , to discuss its fourth quarter and full year fiscal 2023 financial and operational results. Speakers on the conference call will include Brian Murphy , President and Chief Executive Officer, and Andrew Fulmer , Chief Financial Officer. The conference call may include forward-looking statements and a discussion of non-GAAP financial measures. The conference call and webcast will begin at 5:00 p.m. Eastern Time ( 2:00 p.m. Pacific Time ). Those interested in listening to the conference call via telephone may call directly at (833) 630-1956 and ask to join the American Outdoor Brands call. No RSVP is necessary. The conference call audio webcast can also be accessed live on the Company's website at www.aob.com , under the Investor Relations section. Reconciliation of U.S. GAAP to Non-GAAP Financial Measures In this press release, certain non-GAAP financial measures, including "non-GAAP net income and "Adjusted EBITDAS" are presented. A reconciliation of these and other non-GAAP financial measures are contained at the end of this press release. From time-to-time, the Company considers and uses these non-GAAP financial measures as supplemental measures of operating performance in order to provide the reader with an improved understanding of underlying performance trends. The Company believes it is useful for itself and the reader to review, as applicable, both (1) GAAP measures that include (i) amortization of acquired intangible assets, (ii) goodwill impairment, (iii) stock compensation, (iv) facility consolidation costs, (v) technology implementation, (vi) acquisition costs, (vii) stockholder cooperation agreement costs, (viii) fair value inventory step-up, (ix) amortization of acquired intangible assets, (x) income tax adjustments, (xi) interest expense, (xii) income tax benefit/expense, and (xiii) depreciation and amortization; and (2) the non-GAAP measures that exclude such information. The Company presents these non-GAAP measures because it considers them an important supplemental measure of its performance and believes the disclosure of such measures provides useful information to investors regarding the Company's financial condition and results of operations. The Company's definition of these adjusted financial measures may differ from similarly named measures used by others. The Company believes these measures facilitate operating performance comparisons from period to period by eliminating potential differences caused by the existence and timing of certain expense items that would not otherwise be apparent on a GAAP basis. These non-GAAP measures have limitations as an analytical tool and should not be considered in isolation or as a substitute for the Company's GAAP measures. The principal limitations of these measures are that they do not reflect the Company's actual expenses and may thus have the effect of inflating its financial measures on a GAAP basis. About American Outdoor Brands, Inc. American Outdoor Brands, Inc. (NASDAQ Global Select: AOUT) is an industry leading provider of outdoor products and accessories, including hunting, fishing, camping, shooting, outdoor cooking, and personal security and defense products, for rugged outdoor enthusiasts. The Company produces innovative, top quality products under its brands BOG®; BUBBA®; Caldwell®; Crimson Trace®; Frankford Arsenal®; Grilla Grills®; Hooyman®; Imperial®; LaserLyte®; Lockdown®; MEAT!; Old Timer®; Schrade®; Tipton®; Uncle Henry®; ust®; and Wheeler®. For more information about all the brands and products from American Outdoor Brands, Inc. , visit www.aob.com . Safe Harbor Statement Certain statements contained in this press release may be deemed to be forward-looking statements under federal securities laws, and we intend that such forward-looking statements be subject to the safe harbor created thereby. All statements other than statements of historical facts contained or incorporated herein by reference in this press release, including statements regarding our future operating results, future financial position, business strategy, objectives, goals, plans, prospects, markets, and plans and objectives for future operations, are forward-looking statements. In some cases, you can identify forward-looking statements by terms such as "anticipates," "believes," "estimates," "expects," "intends," "targets," "contemplates," "projects," "predicts," "may," "might," "plan," "would," "should," "could," "may," "can," "potential," "continue," "objective," or the negative of those terms, or similar expressions intended to identify forward-looking statements. However, not all forward-looking statements contain these identifying words. Specific forward-looking statements in this press release include our belief that innovation is our core strength and the key element in our long-term growth strategy; our belief that our innovation machine is robust; our belief that our Dock & Unlock process fuels our innovation; our strategy to enter new product categories and expand our product lines and distribution channels; our belief that the Pro Series Smart Fish Scale has the ability to reinvent the way anglers pursue their sport; our belief that the full lease takeover at our Missouri headquarter will provide capacity for long-term organic and inorganic growth; our belief that by maintaining a clear focus on our long-term objectives and making several meaningful strategic investments, we have positioned our company well for the future; our belief that our brands remain well-positioned to capitalize on positive, long-term consumer outdoor participation trends; our belief that our net sales for fiscal 2024 could exceed pre-pandemic fiscal 2020 net sales by as much as 20%; and our belief that our solid financial position enables us to continue executing on our long-term strategic plan as we invest in our business, return capital to stockholders, and address the exciting growth opportunities we have identified for our company. We caution that these statements are qualified by important risks, uncertainties, and other factors that could cause actual results to differ materially from those reflected by such forward-looking statements. Such factors include, among others, potential disruptions in our ability to source the materials necessary for the production of our products, disruptions and delays in the manufacture of our products, and difficulties encountered by retailers and other components of the distribution channel for our products; economic, social, political, legislative, and regulatory factors; lawsuits and their effect on us; inventory levels, both internally and in the distribution channel, in excess of demand; natural disasters, pandemics, seasonality, news events, political events, and consumer tastes; future investments for capital expenditures; future products and product development; the features, quality, and performance of our products; the success of our strategies and marketing programs; our market share and factors that affect our market share; liquidity and anticipated cash needs and availability; the supply, availability, and costs of materials and components and related tariffs; our ability to maintain and enhance brand recognition and reputation; risks associated with the distribution of our products and overall availability of labor; and, other factors detailed from time to time in our reports filed with the Securities and Exchange Commission , including our Annual Report on Form 10-K for the fiscal year ended April 30, 2023 . Contact: Liz Sharp , VP, Investor Relations [email protected] (573) 303-4620 AMERICAN OUTDOOR BRANDS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS As of: April 30, 2023 April 30, 2022 (In thousands, except par value and share data) ASSETS Current assets: Cash and cash equivalents $ 21,950 $ 19,521 Accounts receivable, net of allowance for credit losses of $125 on April 30, 2023 and $129 on April 30, 2022 26,846 28,879 Inventories 99,734 121,683 Prepaid expenses and other current assets 7,839 8,491 Income tax receivable 1,251 1,231 Total current assets 157,620 179,805 Property, plant, and equipment, net 9,488 10,621 Intangible assets, net 52,021 63,194 Right-of-use assets 24,198 23,884 Other assets 260 336 Total assets $ 243,587 $ 277,840 LIABILITIES AND EQUITY Current liabilities: Accounts payable $ 11,544 $ 13,563 Accrued expenses 8,741 7,853 Accrued payroll, incentives, and profit sharing 1,813 3,786 Lease liabilities, current 904 1,803 Total current liabilities 23,002 27,005 Notes and loans payable 4,623 24,697 Lease liabilities, net of current portion 24,064 23,076 Other non-current liabilities 34 31 Total liabilities 51,723 74,809 Equity: Preferred stock, $0 .001 par value, 20,000,000 shares authorized, no shares issued or outstanding — — Common stock, $0 .001 par value, 100,000,000 shares authorized, 14,447,149 shares issued and 13,233,151 shares outstanding on April 30, 2023 and 14,240,290 shares issued and 13,403,326 outstanding on April 30, 2022 14 14 Additional paid in capital 272,784 268,393 Retained deficit (62,375) (50,351) Treasury stock, at cost (1,213,998 shares on April 30, 2023 and 836,964 shares on April 30, 2022 ) (18,559) (15,025) Total equity 191,864 203,031 Total liabilities and equity $ 243,587 $ 277,840 AMERICAN OUTDOOR BRANDS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (In thousands, except per share data) For the Three Months Ended April 30 , For the Years Ended April 30 , 2023 2022 2023 2022 (Unaudited) Net sales $ 42,203 $ 45,893 $ 191,209 $ 247,526 Cost of sales 23,129 25,769 103,145 133,287 Gross profit 19,074 20,124 88,064 114,239 Operating expenses: Research and development 1,474 1,147 6,361 5,501 Selling, marketing, and distribution 11,565 11,677 51,791 56,168 General and administrative 10,038 10,224 42,612 41,244 Goodwill impairment — 67,849 — 67,849 Total operating expenses 23,077 90,897 100,764 170,762 Operating loss (4,003) (70,773) (12,700) (56,523) Other income, net: Other income, net 136 306 1,188 1,311 Interest expense, net (120) (157) (761) (324) Total other income, net 16 149 427 987 Loss from operations before income taxes (3,987) (70,624) (12,273) (55,536) Income tax (benefit)/expense (151) 6,062 (249) 9,344 Net loss $ (3,836) $ (76,686) $ (12,024) $ (64,880) Net loss per share: Basic $ (0.29) $ (5.71) $ (0.90) $ (4.66) Diluted $ (0.29) $ (5.71) $ (0.90) $ (4.66) Weighted average number of common shares outstanding: Basic 13,240 13,433 13,372 13,930 Diluted 13,240 13,433 13,372 13,930 AMERICAN OUTDOOR BRANDS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS For the Years Ended April 30 , 2023 2022 (In thousands) Cash flows from operating activities: Net loss $ (12,024) $ (64,880) Adjustments to reconcile net income to net cash provided by/ (used in) operating activities: Depreciation and amortization 16,511 16,967 Loss on sale/disposition of assets 94 161 (Benefit from)/provision for credit losses on accounts receivable (11) 17 Goodwill impairment — 67,849 Deferred income taxes — 6,683 Stock-based compensation expense 4,050 2,812 Changes in operating assets and liabilities: Accounts receivable 2,044 8,591 Inventories 21,949 (41,431) Accounts payable (1,308) (4,521) Accrued liabilities (1,085) (7,061) Other 486 (3,140) Net cash provided by/(used in) operating activities 30,706 (17,953) Cash flows from investing activities: Acquisition of business — (27,000) Payments to acquire patents and software (3,555) (3,191) Proceeds from sale of property and equipment 30 — Payments to acquire property and equipment (1,301) (3,397) Net cash used in investing activities (4,826) (33,588) Cash flows from financing activities: Proceeds from loans and notes payable — 25,170 Payments on notes and loans payable (20,170) — Payments to acquire treasury stock (3,534) (15,025) Cash paid for debt issuance costs (88) (103) Proceeds from exercise of options to acquire common stock, including employee stock purchase plan 656 875 Payment of employee withholding tax related to restricted stock units (315) (656) Net cash (used in)/provided by financing activities (23,451) 10,261 Net increase/(decrease) in cash and cash equivalents 2,429 (41,280) Cash and cash equivalents, beginning of period 19,521 60,801 Cash and cash equivalents, end of period $ 21,950 $ 19,521 Supplemental disclosure of cash flow information Cash paid for: Interest $ 761 $ 125 Income taxes (net of refunds) $ (73) $ 3,819 AMERICAN OUTDOOR BRANDS, INC. AND SUBSIDIARIESRECONCILIATION OF GAAP FINANCIAL MEASURES TO NON-GAAP FINANCIAL MEASURES (In thousands, except per share data)(Unaudited) For the Three Months Ended April 30 , For the Years Ended April 30 , 2023 2022 2023 2022 GAAP gross profit $ 19,074 $ 20,124 $ 88,064 $ 114,239 Facility consolidation costs — — 356 — Fair value inventory step-up — 27 — 27 Non-GAAP gross profit $ 19,074 $ 20,151 $ 88,420 $ 114,266 GAAP operating expenses $ 23,077 $ 90,897 $ 100,764 $ 170,762 Amortization of acquired intangible assets (3,074) (3,473) (12,298) (13,757) Goodwill impairment — (67,849) — (67,849) Stock compensation (1,150) (476) (4,050) (2,812) Facility consolidation costs (26) — (510) — Technology implementation (553) (329) (2,138) (1,948) Acquisition costs — (599) (47) (599) Stockholder cooperation agreement costs — — (1,177) — Other — — — (40) Non-GAAP operating expenses $ 18,274 $ 18,171 $ 80,544 $ 83,757 GAAP operating loss $ (4,003) $ (70,773) $ (12,700) $ (56,523) Fair value inventory step-up — 27 — 27 Amortization of acquired intangible assets 3,074 3,473 12,298 13,757 Goodwill impairment — 67,849 — 67,849 Stock compensation 1,150 476 4,050 2,812 Facility consolidation costs 26 — 866 — Technology implementation 553 329 2,138 1,948 Acquisition costs — 599 47 599 Stockholder cooperation agreement costs — — 1,177 — Other — — — 40 Non-GAAP operating income $ 800 $ 1,980 $ 7,876 $ 30,509 GAAP net loss $ (3,836) $ (76,686) $ (12,024) $ (64,880) Fair value inventory step-up - 27 - 27 Amortization of acquired intangible assets 3,074 3,473 12,298 13,757 Goodwill impairment - 67,849 - 67,849 Stock compensation 1,150 476 4,050 2,812 Facility consolidation costs 26 — 866 — Technology implementation 553 329 2,138 1,948 Acquisition costs - 599 47 599 Stockholder cooperation agreement costs - — 1,177 — Other - — - 40 Income tax adjustments (174) 5,805 (1,993) 2,520 Non-GAAP net income $ 793 $ 1,872 $ 6,559 $ 24,672 GAAP net loss per share - diluted $ (0.29) $ (5.71) $ (0.90) $ (4.66) Fair value inventory step-up — — — — Amortization of acquired intangible assets 0.23 0.26 0.92 0.99 Goodwill impairment — 5.05 — 4.87 Stock compensation 0.09 0.04 0.30 0.20 Facility consolidation costs — — 0.06 — Technology implementation 0.04 0.02 0.16 0.14 Acquisition costs — 0.04 — 0.04 Stockholder cooperation agreement costs — — 0.09 — Other — — — — Income tax adjustments (0.01) 0.43 (0.15) 0.18 Non-GAAP net income per share - diluted $ 0.06 $ 0.14 (a) $ 0.48 $ 1.77 (a) (a) Non-GAAP net income per share does not foot due to rounding. AMERICAN OUTDOOR BRANDS, INC. AND SUBSIDIARIES RECONCILIATION OF GAAP NET LOSS TO NON-GAAP ADJUSTED EBITDAS (In thousands)(Unaudited) For the Three Months Ended April 30 , For the Years Ended April 30 , 2023 2022 2023 2022 GAAP net loss $ (3,836) $ (76,686) $ (12,024) $ (64,880) Interest expense 120 157 761 324 Income tax (benefit)/expense (151) 6,062 (249) 9,344 Depreciation and amortization 3,933 4,417 16,048 16,967 Stock compensation 1,150 476 4,050 2,812 Goodwill impairment — 67,849 — 67,849 Technology implementation 553 329 2,138 1,948 Fair value inventory step-up — 27 — 27 Acquisition costs — 599 47 599 Facility consolidation costs 26 — 866 — Stockholder cooperation agreement costs — — 1,177 — Other — — — 40 Non-GAAP Adjusted EBITDAS $ 1,795 $ 3,230 $ 12,814 $ 35,030 View original content to download multimedia: https://www.prnewswire.com/news-releases/american-outdoor-brands-inc-reports-fourth-quarter-and-full-fiscal-2023-financial-results-301866228.html SOURCE American Outdoor Brands, Inc.

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