American Outdoor Brands, Inc. (NASDAQ:AOUT) is a leading provider of outdoor lifestyle products and shooting sports accessories, encompassing hunting, fishing, outdoor cooking, camping, shooting, and personal security and defense products for rugged outdoor enthusiasts. The company has a diverse portfolio of 21 distinct brands that are organized into four brand lanes - Adventurer, Harvester, Marksman, and Defender - each focused on a specific consumer vertical.
Business Overview
At the core of American Outdoor Brands' strategy is a relentless focus on innovation, driven by the activities and passions of its consumers. This commitment to innovation not only drives brand loyalty with consumers, but also fosters long-lasting and trusting relationships with the company's retail partners. The company's reliable supply of exciting new products from leading brands helps drive consumer traffic and enhance the shopping experience for its retail customers.American Outdoor Brands' diverse product portfolio spans a wide range of outdoor lifestyle and shooting sports categories. The company's outdoor lifestyle brands, which include products related to hunting, fishing, camping, outdoor cooking, and rugged outdoor activities, generated 54% of total net sales in fiscal 2024. The shooting sports category, which includes solutions for target shooting, aiming, safe storage, cleaning and maintenance, and personal protection, accounted for the remaining 46% of net sales.
Fiscal 2024 Financial Performance
In fiscal 2024, American Outdoor Brands delivered solid financial results, with net sales increasing 5.2% year-over-year to $201.1 million. This growth was driven by a 6.9% increase in outdoor lifestyle sales and a 3.2% increase in shooting sports sales. The company's net income for the year was -$12.2 million, while operating cash flow and free cash flow were $24.5 million and $18.4 million, respectively.On a quarterly basis, the company's Q4 2024 net sales came in above expectations at $46.3 million, representing a 10% increase over the prior year quarter. This was driven by a 10.3% increase in shooting sports sales and a 9.1% increase in outdoor lifestyle sales.
Segment Performance
Outdoor Lifestyle:
American Outdoor Brands' outdoor lifestyle category, which includes products related to hunting, fishing, camping, outdoor cooking, and rugged outdoor activities, delivered strong performance in fiscal 2024. Segment sales increased 6.9% year-over-year, led by strength in the company's hunting, meat processing, and fishing-related brands, such as BOG, MEAT, and BUBBA. This growth was entirely organic, as the company has now lapped the acquisition of Grilla Grills.The company's strategy to identify and capitalize on incremental retail opportunities, both domestically and internationally, has been a key driver of the outdoor lifestyle segment's performance. In fiscal 2024, the company expanded its MEAT! Your Maker brand into the retail channel and positioned its Grilla Outdoor Cooking products for retail entry in fiscal 2025, providing new audiences for these popular consumer brands. The company also expanded its presence in Canada during the year, bringing more of its outdoor lifestyle brands to Canadian consumers.
Shooting Sports:
American Outdoor Brands' shooting sports category, which includes solutions for target shooting, aiming, safe storage, cleaning and maintenance, and personal protection, grew 3.2% in fiscal 2024, despite adjusted NICS background checks coming in 5.4% lower than the prior year. The sales increase was driven by strong performance in the company's target shooting and reloading brands, such as Caldwell and Frankford Arsenal, as well as the company's ability to clear out some slower-moving inventory in the personal protection category.Distribution Channels
American Outdoor Brands focuses on ensuring its brands are available wherever consumers look for them, whether in-store or online. In fiscal 2024, the company's traditional channel sales grew 12.3% year-over-year, driven in part by the entry of the MEAT! Your Maker brand into the retail channel and underscoring the strength of the company's retail partnerships.While e-commerce sales declined slightly, due primarily to lower orders from the company's largest online retailer, international sales grew more than 35% in fiscal 2024, representing approximately 6% of the company's total business. The international market, particularly Canada, represents a significant growth opportunity for American Outdoor Brands' outdoor lifestyle-oriented brands, such as BUBBA, MEAT! Your Maker, and BOG.
Innovation and New Product Introductions
Innovation is a core strength of American Outdoor Brands, and the company's Dock & Unlock innovation process has been instrumental in driving the launch of numerous exciting new products across its brand portfolio. In fiscal 2024, new products generated over 23% of the company's net sales.Some notable new product introductions include the Caldwell Claymore Solo, a lightweight, battery-free, single clay thrower for the shotgun sports market; the BUBBA Pro Series Smart Fish Scale, the company's first entry into the catch and release fishing market; the Hooyman chest-mounted and vehicle-mounted seed spreaders, which helped the company secure new retail outlets in the DIY and farm and home markets; and the Grilla Mammoth Vertical Smoker, an innovative and feature-rich pellet smoker that won Field & Stream's Best Vertical Smoker Award for 2023.
These new product launches, along with the company's robust pipeline of future innovations, position American Outdoor Brands well to continue delivering exciting and differentiated offerings to its consumers and retail partners.
Balance Sheet and Capital Allocation
American Outdoor Brands ended fiscal 2024 in a strong financial position, with $29.7 million in cash and no debt. The company generated $24.5 million in operating cash flow and $18.4 million in free cash flow during the year, which it used to pay down its remaining debt and repurchase $6 million worth of its common stock.Looking ahead to fiscal 2025, the company expects to maintain a similar level of capital expenditures, ranging from $3.5 million to $4.5 million, primarily for product tooling, maintenance, and patent investments, as well as the buildout of a new factory outlet in Missouri.
Guidance and Outlook
For fiscal 2025, American Outdoor Brands expects to see a continuation of strong growth in its outdoor lifestyle category, somewhat offset by a continuation of headwinds in its shooting sports category. The company believes fiscal 2025 net sales could grow by as much as 2.5% compared to fiscal 2024, representing only organic growth independent of any acquisitions.Gross margins are expected to improve slightly to approximately 45% in fiscal 2025, driven by an expected decrease in inbound freight costs and the continuation of a promotional environment similar to fiscal 2024. The company also expects a slight increase in operating expenses, mainly due to higher variable selling and distribution costs.
Based on these factors, American Outdoor Brands believes its adjusted EBITDAS in fiscal 2025 will be in the range of 5.5% to 6% of net sales, representing an increase of $1.5 million to $2.5 million compared to fiscal 2024.
Conclusion
American Outdoor Brands has demonstrated its ability to deliver consistent growth and strong financial performance, even in a challenging macroeconomic environment. The company's relentless focus on innovation, diversified product portfolio, and strategic investments in its distribution channels and international expansion have positioned it well for continued success.With a robust new product pipeline, a strengthened balance sheet, and a disciplined approach to capital allocation, American Outdoor Brands is poised to capitalize on the significant growth opportunities in the fragmented outdoor industry. As the company transitions from its early innings as a public company, investors can look forward to further sales and EBITDAS growth, driven by the company's leverageable operating model and strong competitive position.