American Outdoor Brands Inc
For the period ended Jul 31, 2024. Filed Sep 5, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jul 31, 2024 · Filed Sep 5, 2024
AOUT$17.31+0.3%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-01-31; filed 2024-03-07.
0000950170-24-027969
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-07-31; filed 2024-09-05.
0000950170-24-104003
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 80 previous paragraphs and 55 current paragraphs.
33 unchanged; 15 reworded; 7 added; 23 removed; 9 previous and 0 current paragraphs rearranged.
Tables are not compared: 18 previous and 10 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (7)
Current report
First Quarter Fiscal 2025 Highlights
Current report
Net sales were $41.6 million, a decrease of $1.8 million or 4.1%, from the comparable quarter last year.
Current report
For the three months ended July 31, 2024, total net sales decreased $1.8 million, or 4.1%, from the comparable quarter last year primarily because of a decrease in our direct-to-consumer net sales partially offset by an increase in net sales to international retailers.
Current report
Gross margin for the three months ended July 31, 2024 was flat to comparable quarter last year, with lower freight and shipping container costs offset by higher promotional product discounts.
Current report
Research and development expenses increased $75,000 over the comparable quarter last year, primarily from higher consulting and third party service expenses. Selling, marketing, and distribution expenses decreased $671,000 from the comparable quarter last year mainly because of lower advertising expense. General and administrative expenses decreased $1.7 million from the comparable quarter last year, primarily because of lower legal and consulting expense and lower acquired intangible asset amortization expense.
Current report
Operating loss for the three months ended July 31, 2024 was $1.5 million lower as compared to the comparable quarter last year primarily from lower operating expenses mentioned above.
Current report
Cash used in operating activities was $4.4 million for the three months ended July 31, 2024 compared with cash generated by operating activities of $5.2 million for the three months ended July 31, 2023. Cash used by operating activities for the three months ended July 31, 2024 was primarily impacted by $13.4 million of increased inventory. The increase in inventory was a result of planned increase in purchases to prepare for the fall and winter hunting and holiday seasons. The cash usage for the three months ended July 31, 2024 was partially offset by a $4.1 million increase in accounts payable due to the timing of inventory purchases and $2.0 million of increase accrued expenses related to the timing of outbound freight accruals.
Removed paragraphs (23)
Previous report
Third Quarter Fiscal 2024 Highlights
Previous report
Net sales were $53.4 million, an increase of $2.5 million or 5.0%, over the comparable quarter last year.
Previous report
Gross margin was 42.7%, a decrease of 440 basis points from the comparable quarter last year.
Previous report
Net sales were $154.8 million, an increase of $5.8 million, or 3.9%, over the prior year comparable period.
Previous report
Gross margin was 44.6%, a decrease of 170 basis points from the prior year comparable period.
Previous report
Net loss was $6.9 million, or $0.53 per diluted share, compared with a net loss of $8.2 million, or $0.61 per diluted share, for the prior year comparable period.
Previous report
For the three months ended January 31, 2024, total net sales increased $2.5 million, or 5.0%, over the comparable quarter last year because of an increase in net sales of certain personal protection and rugged outdoor products as well as our hunting and fishing products.
Previous report
Gross margin for the three months ended January 31, 2024 decreased 440 basis points from the comparable quarter last year, primarily because of higher tariff, freight, and duty expenses driven by increased inventory purchases earlier in fiscal 2024, as well as an increase in promotional activity.
Previous report
For the nine months ended January 31, 2024, total net sales increased $5.8 million, or 3.9%, over the prior year comparable period because of an increase in net sales of our outdoor lifestyle products.
Previous report
Net sales in our e-commerce channel decreased $1.0 million, or 1.5%, over the prior year comparable period, primarily because of lower net sales to the world's largest e-commerce retailer as a result of reduced orders. E-commerce channel net sales for our shooting sports category decreased because of lower net sales for certain personal protection products. E-commerce channel net sales for our outdoor lifestyle category increased primarily from higher net sales for certain hunting and rugged outdoor products as a result of additional promotional activity, partially offset by lower net sales for our outdoor cooking products.
Previous report
Net sales in our traditional channels increased $6.8 million, or 8.4%, over the prior year comparable period. Traditional channel net sales for our shooting sports category increased primarily because of selling slow moving personal protection products at a discount and higher net sales of certain shooting accessories mentioned above. Traditional channel net sales for our outdoor lifestyle category increased primarily as a result of higher net sales for hunting, fishing, and certain rugged outdoor products, which include new product introductions during fiscal 2024. In addition, our traditional channel net sales increased because we began selling one of our outdoor lifestyle direct-to-consumer only brands at retail. Our international net sales increased $1.9 million, or 26.5%, over the prior year comparable period as a result of increased sales in Canada because of increased orders in the region as we focus on introducing more outdoor lifestyle products in Canada.
Previous report
Gross margin for the nine months ended January 31, 2024 decreased 170 basis points from the prior year comparable period primarily from higher tariff, freight, and duty expenses from increased inventory purchases earlier in fiscal 2024 and increased promotional product discounts.
Previous report
Research and development expenses increased $217,000 over the comparable quarter last year, primarily from increased depreciation for new product tooling. Selling, marketing, and distribution expenses remained flat as compared to the comparable quarter last year. General and administrative expenses decreased $1.4 million from the comparable quarter last year, primarily because of lower insurance premiums, reduced enterprise resource planning system implementation-related expenses, and lower rent expense as result of the facility consolidations we completed in the prior fiscal year.
Previous report
Research and development expenses increased $178,000 over the prior year comparable period from increased depreciation for new product tooling. Selling, marketing, and distribution expenses increased $1.7 million over the prior year comparable period, primarily because of increased outbound freight costs and other sales volume-related expenses. General and administrative expenses decreased $3.5 million from the prior year comparable period, primarily because of $1.2 million lower legal and advisory fees associated with the completed cooperation agreement with a stockholder that was completed in the prior fiscal year, $1.1 million of reduced enterprise resource planning system implementation-related expenses, and $500,000 of lower rent expense as result of the facility consolidations we completed in the prior fiscal year.
Previous report
The following table sets forth certain information regarding operating loss for the nine months ended January 31, 2024 and 2023 (dollars in thousands):
Previous report
Operating loss for the nine months ended January 31, 2024 was $7.0 million, a $1.7 million increase from an operating loss of $8.7 million for the nine months ended January 31, 2023, primarily because of lower operating expenses as mentioned above.
Previous report
We recorded income tax expense of $13,000 for the three months ended January 31, 2024 compared with income tax benefit of $125,000 for the prior year comparable period because of differences in the timing of recording return to provision adjustments relating to our Federal tax returns. The income tax expense recorded for the three months ended January 31, 2024 was primarily due to a full valuation allowance recorded against our deferred tax assets. The income tax benefit recorded during the three months ended January 31, 2023 was primarily due to recording return to provision adjustments relating to the Federal tax return filed for the prior fiscal year.
Previous report
The following table sets forth certain information regarding income tax expense for the nine months ended January 31, 2024 and 2023 (dollars in thousands):
Previous report
On March 7, 2023, the Internal Revenue Service (“IRS”) initiated an examination of our Federal income tax return filed for the tax period ended April 30, 2021. During the three months ended January 31, 2024, we were notified by the IRS that they had concluded their examination. As a result of their examination procedures, there was no impact to our condensed consolidated financial statements.
Previous report
Net loss was $6.9 million, or $0.53 per diluted share, for the nine months ended January 31, 2024 compared with net loss of $8.2 million, or $0.61 per share, for the prior year comparable period, primarily because of lower operating expenses.
Previous report
Cash generated by operating activities was $9.8 million for the nine months ended January 31, 2024 compared with cash generated by operating activities of $24.3 million for the nine months ended January 31, 2023. Cash generated by operating activities for the nine months ended January 31, 2024 was primarily impacted by $1.3 million of lower prepaid expenses and other current assets because of reduced deposits on inventory and increased accrued payroll and incentives because of higher management incentive accruals, offset by lower accounts payable due to timing.
Previous report
On January 31, 2023, we entered an Assignment Agreement with our former parent company and RCS – S&W Facility, LLC to assign to us the rights of the tenant under the Lease Agreement, dated October 26, 2017, as amended by the First Amendment of Lease Agreement, dated October 25, 2018, and as further amended by the Second Amendment to Lease Agreement, dated January 31, 2019 (collectively, the “Lease”), which assignment was effective on January 1, 2024.
Previous report
The Lease covers approximately 632,000 square feet of building and surrounding property located at 1800 North Route Z, Columbia, Boone County, Missouri, or the Building, where we formerly subleased approximately 361,000 of the Building from our former parent company. We now lease the entire building and the Lease provides us with an option to expand the Building by up to 491,000 additional square feet. The terms of the Lease are consistent with the sublease agreement that we formerly had with our former parent company. The Lease term ends on November 26, 2038 and, pursuant to the Assignment Agreement, does not provide for an extension of the term of the Lease. We will receive tax and other incentives from federal, state, and local governmental authorities previously received by our former parent. Our former parent will guarantee the Lease through the end of the term. During the three months ended January 31, 2024, we recorded a right-of-use asset and lease liability of $10.6 million for the additional space provided under the Assignment Agreement.
Reworded paragraphs (15)
Previous wording
The following discussion and analysis of our financial condition and results of operations for the three and nine months ended January 31, 2024 and 2023 should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for fiscal year ended April 30, 2023. This discussion and analysis should also be read in conjunction with our unaudited condensed consolidated financial statements and the notes thereto included in Item 1 of this Quarterly Report on Form 10-Q.
Current wording
The following discussion and analysis of our financial condition and results of operations for the three months ended July 31, 2024 and 2023 should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for fiscal year ended April 30, 2024. This discussion and analysis should also be read in conjunction with our unaudited condensed consolidated financial statements and the notes thereto included in Item 1 of this Quarterly Report on Form 10-Q.
Previous wording
Operating loss for the three months ended January 31, 2024 was relatively flat as compared to the comparable quarter last year.
Current wording
Gross margin was 45.4%, flat as compared to the comparable quarter last year.
Previous wording
Net loss was $2.9 million, or $0.23 per diluted share, compared with a net loss of $2.9 million, or $0.21 per diluted share, for the comparable quarter last year.
Current wording
Net loss was $2.4 million, or $0.18 per diluted share, compared with a net loss of $4.1 million, or $0.31 per diluted share, for the comparable quarter last year.
Previous wording
Non-GAAP Adjusted EBITDAS was $2.4 million for the three months ended January 31, 2024 compared with $3.3 million for the three months ended January 31, 2023. See non-GAAP financial measure disclosures below for our reconciliation of non-GAAP Adjusted EBITDAS.
Current wording
Non-GAAP Adjusted EBITDAS was $2.0 million for the three months ended July 31, 2024 compared with $1.1 million for the three months ended July 31, 2023. See non-GAAP financial measure disclosures below for our reconciliation of non-GAAP Adjusted EBITDAS.
Previous wording
Net sales in our e-commerce channel increased $388,000, or 1.6%, over the comparable quarter last year, primarily because of an increase in direct-to-consumer net sales for products sold on our e-commerce platform. E-commerce channel net sales for our outdoor lifestyle category increased primarily from higher rugged outdoor product net sales as a result of higher holiday shopping trends and increased promotional product discounts.
Current wording
Net sales in our e-commerce channel decreased $1.9 million, or 10.2%, from the comparable quarter last year, primarily because of lower direct-to-consumer net sales for products sold on our e-commerce platform. E-commerce channel net sales decreased for both our outdoor lifestyle category from lower outdoor cooking and rugged outdoor product net sales and our shooting sports category from lower personal protection product net sales.
Previous wording
Net sales in our traditional channels increased $2.1 million, or 8.1%, over the comparable quarter last year. Traditional channel net sales for our shooting sports category increased primarily because of selling slow moving personal protection products at a discount and higher net sales of certain shooting accessories. Traditional channel net sales for our outdoor lifestyle category increased primarily from higher fishing and hunting product net sales as a result of higher holiday shopping trends, partially offset by lower orders of certain rugged outdoor products. In addition, our international net sales increased $1.0 million, or 72.2%, over the comparable quarter last year as a result of increased sales in Canada because of increased orders in the region as we continued to focus on introducing more outdoor lifestyle brands in Canada.
Current wording
Net sales in our traditional channels increased $73,000, or 0.3%, over the comparable quarter last year. Traditional channel net sales increased primarily because of higher net sales of shooting accessories in our shooting sports category partially offset by lower net sales of rugged outdoor products in our outdoor lifestyle category. In addition, our international net sales increased $774,000, or 21.2%, over the comparable quarter last year as a result of increased sales in Canada.
Previous wording
New products, which we define as any SKU introduced over the prior two fiscal years, represented 22.1% of net sales for the three months ended January 31, 2024.
Current wording
New products, which we define as any SKU introduced over the prior two fiscal years, represented 23.4% of net sales for the three months ended July 31, 2024.
Previous wording
We recorded income tax expense of $28,000 for the nine months ended January 31, 2024 compared with income tax benefit of $98,000 for the prior year comparable period. The income tax expense recorded during the nine months ended January 31, 2024 was primarily due to a full valuation allowance recorded against our deferred tax assets. The income tax benefit recorded during the nine months ended January 31, 2023 was primarily due to recording return to provision adjustments relating to the Federal tax return filed for the prior fiscal year.
Current wording
We recorded income tax expense of $22,000 for the three months ended July 31, 2024 compared with income tax expense of $55,000 for the prior year comparable period. The income tax expense recorded for the three months ended July 31, 2024 and 2023 was primarily due to a full valuation allowance recorded against our deferred tax assets.
Previous wording
Net loss was $2.9 million, or $0.23 per diluted share, for the three months ended January 31, 2024 compared with net loss of $2.9 million, or $0.21 per share, for the comparable quarter last year.
Current wording
Net loss was $2.4 million, or $0.18 per diluted share, for the three months ended July 31, 2024 compared with net loss of $4.1 million, or $0.31 per share, for the comparable quarter last year. The lower net loss was primarily related to lower operating expenses during the three months ended July 31, 2024 as compared to the three months ended July 31, 2023.
Previous wording
The following table sets forth our calculation of non-GAAP Adjusted EBITDAS for the three and nine months ended January 31, 2024 and 2023, respectively (dollars in thousands):
Current wording
The following table sets forth our calculation of non-GAAP Adjusted EBITDAS for the three months ended July 31, 2024 and 2023, respectively (dollars in thousands):
Previous wording
The following table sets forth certain cash flow information for the nine months ended January 31, 2024 and 2023 (dollars in thousands):
Current wording
The following table sets forth certain cash flow information for the three months ended July 31, 2024 and 2023 (dollars in thousands):
Previous wording
Cash used in investing activities was $1.1 million higher during the nine months ended January 31, 2024 compared with the prior year comparable period, primarily from higher spending on warehouse equipment in conjunction with the Lease assignment, noted below. We expect to spend approximately $6.0 million to $6.5 million of capital expenditures in fiscal 2024, an increase of $1.1 million to $1.6 million over fiscal 2023.
Current wording
Cash used in investing activities was $1.1 million during the three months ended July 31, 2024 compared with $836,000 used in the prior year comparable period with higher spending on product tooling. We expect to spend approximately $3.5 million to $4.5 million of capital expenditures in fiscal 2025, a decrease of $1.5 million to $2.5 million from the $6.0 million we spent in fiscal 2024, a year in which we spent $2.9 million on capital expenditures as a result of the lease assignment of the full building at our headquarters in Columbia, Missouri.
Previous wording
Cash used in financing activities was $10.6 million for the nine months ended January 31, 2024, primarily from $5.0 million to payoff all our borrowings on our revolving line of credit and $5.6 million used to repurchase 635,075 shares of our common stock.
Current wording
Cash used in financing activities was $778,000 for the three months ended July 31, 2024, primarily from $381,000 used to repurchase 42,017 shares of our common stock.
Previous wording
We had $15.9 million of cash equivalents on hand as of January 31, 2024 and had $22.0 million in cash and cash equivalents on hand as of April 30, 2023.
Current wording
We had $23.5 million of cash equivalents on hand as of July 31, 2024 and had $29.7 million in cash and cash equivalents on hand as of April 30, 2024.
Previous wording
The preparation of our condensed consolidated financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of net sales and expenses during the reporting periods. Significant accounting policies are summarized in Note 2 of the Notes to the consolidated and combined financial statements in our Annual Report on Form 10-K for the fiscal year ended April 30, 2023. The most significant areas involving our judgments and estimates are described in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the fiscal year ended April 30, 2023, to which there have been no material changes. Actual results could differ from our estimates.
Current wording
The preparation of our condensed consolidated financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of net sales and expenses during the reporting periods. Significant accounting policies are summarized in Note 2 of the Notes to the consolidated and combined financial statements in our Annual Report on Form 10-K for the fiscal year ended April 30, 2024. Our critical accounting policies are described in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the fiscal year ended April 30, 2024, to which there have been no material changes. Actual results could differ from our estimates.
Rearranged previous paragraphs (9)
Previous report — wording carried elsewhere
Our operating results for the nine months ended January 31, 2024 included the following:
Previous report — wording carried elsewhere
Non-GAAP Adjusted EBITDAS was $8.7 million for the nine months ended January 31, 2024 compared with $11.0 million for the nine months ended January 31, 2023. See non-GAAP financial measure disclosures below for our reconciliation of non-GAAP Adjusted EBITDAS.
Previous report — wording carried elsewhere
The following table sets forth certain information regarding consolidated net sales and gross profit for the nine months ended January 31, 2024 and 2023 (dollars in thousands):
Previous report — wording carried elsewhere
The following table sets forth certain information regarding trade channel net sales for the nine months ended January 31, 2024 and 2023 (dollars in thousands):
Previous report — wording carried elsewhere
The following table sets forth certain information regarding geographic makeup of net sales included in the above table for the nine months ended January 31, 2024 and 2023 (dollars in thousands):
Previous report — wording carried elsewhere
The following table sets forth certain information regarding net sales categories for the nine months ended January 31, 2024 and 2023 (dollars in thousands):
Previous report — wording carried elsewhere
New products, which we define as any SKU introduced over the prior two fiscal years, represented 23.0% of net sales for the nine months ended January 31, 2024.
Previous report — wording carried elsewhere
The following table sets forth certain information regarding operating expenses for the nine months ended January 31, 2024 and 2023 (dollars in thousands):
Previous report — wording carried elsewhere
The following table sets forth certain information regarding net loss and the related per share data for the nine months ended January 31, 2024 and 2023 (dollars in thousands, except per share data):