American Outdoor Brands, Inc.

Current report

U.S. Tariff Developments

Current report

The current political and economic environment is dynamic and uncertain, as the current U.S. Administration has imposed tariffs such as Section 301 and Section 232 of the Trade Act, modified and paused tariffs, and granted exemptions from tariffs, on different countries and products multiple times recently.

Current report

In 2025, the U.S. Administration imposed a series of tariffs on nearly all U.S. trading partners pursuant to the International Emergency Economic Powers Act of 1977 (“IEEPA”). On February 20, 2026, the United States Supreme Court issued a ruling striking down tariffs previously imposed under IEEPA. Immediately following the Supreme Court ruling, the U.S. government initiated new tariffs under Section 122 of the Trade Act ("Section 122 tariffs") which have been in effect since February 24, 2026. We continue to monitor and evaluate these developments and assess their potential impact on our business, financial condition, and results of operations.

Current report

In March 2026, the U.S. Court of International Trade ("CIT") issued an order directing U.S. Customs and Border Protection ("CBP") to process refunds of certain IEEPA tariffs. In April 2026, the CBP released a new system to process IEEPA tariff refunds, allowing importers to submit refund claims. We believe it is probable that we will recover the IEEPA tariffs previously paid and have recognized an IEEPA tariff refund receivable under the loss recovery accounting model of $15.2 million as of April 30, 2026, which was recorded in other current assets. During the year ended April 30, 2026, we recognized a benefit of $4.4 million related to expected recoveries of previously paid IEEPA tariffs, which was recorded as a reduction of cost of goods sold, representing the expense for IEEPA tariffs on inventory sold to customers since the tariffs were enacted in February 2025. Additionally, we reduced the carrying value of inventory on hand as of April 30, 2026 by $10.7 million for tariffs previously capitalized as cost of inventory.

Current report

The ultimate timing and amount of recoveries remain subject to review and processing by governmental authorities and could be affected by future legal, regulatory, or administrative developments. In addition, there continues to be uncertainty regarding existing and proposed tariff regimes, including the potential imposition, modification, suspension, or invalidation of tariffs under various statutory authorities. The Company continues to monitor tariff-related developments and assess their potential impact on its business, financial condition, and results of operations.

Current report

Brand Divestiture

Current report

We concluded that the Disposal Group met the criteria for classification as held for sale under ASC 360-10 –Property, Plant, and Equipment during the year ended April 30, 2026 and does not qualify as discontinued operations under ASC 205-20 – Presentation of Financial Statements. The results of the Disposal Group will continue to be reported within continuing operations.

Current report

•Net sales were $190.5 million, a decrease of $31.8 million, or 14.3%, from the prior fiscal year.

Current report

Total net sales decreased $31.8 million, or 14.3%, from the prior fiscal year because of a decrease in all our channel and category sales primarily from reduced orders from the world's largest online retailer and our belief that a large portion of traditional channel sales were accelerated from our first fiscal quarter of 2026 into the fourth fiscal quarter of 2025, as mentioned below. The decrease in total net sales were partially offset by pricing actions taken on our products to mitigate additional tariff costs associated with tariffs imposed by the U.S. Administration starting in March and April of 2025.

Current report

E-commerce channel net sales decreased $13.2 million, or 15.6%, from the prior fiscal year primarily because of lower net sales to the world's largest online retailer in most of our product categories. We believe this decline reflects their inventory management actions, which reduced net sales across most of our products. In addition, we had lower direct-to-consumer net sales for products sold on our websites due to reduced consumer demand.

Current report

Net sales in our traditional channels decreased $18.6 million, or 13.5%, from the prior fiscal year. This decrease was driven by the majority of our product categories, partially offset by increased net sales of outdoor cooking equipment. We believe a large portion of the traditional channel decrease was a result of certain customers accelerating orders from our first fiscal quarter of 2026 into the fourth fiscal quarter of 2025. We believe this was due to the anticipated increased costs associated with tariffs imposed by the U.S. Administration in March 2025 and April 2025.

Current report

Gross margin for fiscal 2026 increased 10 basis points over the prior fiscal year, primarily from our pricing actions mentioned above as well as a higher percentage of new product sales that typically have higher gross margins, offset by sales of slow-moving inventory at lower margins, increased depreciation expense, and higher inbound freight and tariff costs.

Current report

We recorded an operating loss of $9.0 million for fiscal 2026 compared to an operating loss of $154,000 in fiscal 2025. This decrease was primarily driven by lower net sales volume, partially offset by $5.2 million decrease in operating expenses.

Current report

Interest (Expense)/Income, Net

Current report

Fiscal 2026 Interest (Expense)/Income Compared with Fiscal 2025

Current report

Cash generated in operating activities was $6.3 million for fiscal 2026 compared to cash generation of $1.4 million for the prior fiscal year. Cash generated in operating activities for fiscal 2026 was primarily impacted by a $10.5 million decrease in accounts receivable driven by timing of customer payments and product shipments as certain traditional channel customers were believed to have accelerated orders from our first fiscal quarter of 2026 into the fourth fiscal quarter of 2025. In addition, inventory decreased $9.4 million primarily because of the recognition of an IEEPA tariff refund that reduced the carrying value of our inventory; the reclassification of approximately $3.5 million of inventory to assets held for sale for the planned divestiture of the Disposal Group; and lower inventory purchases as a result of a planned reduction of our overall inventory balance. Cash generated in fiscal 2026 was partially offset by $15.2 million of increased other current assets because of a $15.2 million IEEPA tariff refund receivable recorded for our initial claim of previously paid IEEPA tariffs from tariffs enacted by the U.S. Administration starting in February 2025. Subsequent to April 30, 2026, we received $2.9 million of the $15.2 million IEEPA refund receivable. In addition, we recorded $4.2 million of lower accrued payroll and incentives because of lower variable-related compensation expenses, $2.2 million of lower accrued expenses from lower tariff and duty accruals, and $1.6 million of lower accounts payable due to timing of supplier shipments

Current report

During fiscal 2026, we recorded a $3.4 million non-cash impairment charge related to the write-down of the Disposal Group assets to estimated fair value less costs to sell. The impairment charge was non-cash and did not impact our liquidity, cash flows from operations, or compliance with debt covenants. We expect the transaction to close within the next twelve months; however, the timing and ultimate proceeds remain subject to market conditions and buyer negotiations. Proceeds from the sale, if completed, are expected to be used for general corporate purposes.

Current report

Cash used in investing activities was $2.5 million for fiscal 2026, compared with cash usage of $3.9 million for the prior fiscal year. This was largely attributable to reduced expenditures on product tooling purchases. We expect to spend approximately $3.5 million to $4.0 million of capital expenditures in fiscal 2027.

Current report

As of April 30, 2026, we had approximately $75.0 million available under our revolving credit facility, which matures in March 2031. We were in compliance with all financial covenants under the facility as of April 30, 2026.

Current report

We lease warehouse, manufacturing, distribution and office facilities under long-term operating lease arrangements. Additional information regarding lease obligations is included in Note 5 — Leases to the consolidated financial statements.

Current report

In the ordinary course of business, we enter into inventory purchase commitments with suppliers to support forecasted customer demand. These commitments are generally short-term in nature and are not individually material. We also maintain commitments under certain service and information technology arrangements entered into in the normal course of business.

Current report

Valuation of Long-lived Assets

Previous report

•Net sales were $222.3 million, an increase of $21.2 million, or 10.6%, over the prior fiscal year, primarily because of an increase in net sales in our traditional channel.

Previous report

Total net sales increased $21.2 million, or 10.6%, over the prior fiscal year primarily because of an increase in hunting, shooting accessories, meat processing, and fishing product net sales in our domestic channel as well as an increase in shooting accessories product net sales to international retailers.

Previous report

E-commerce channel net sales increased primarily because of higher hunting and fishing product net sales in our outdoor lifestyle category, partially offset by lower net sales in our shooting sports category.

Previous report

Net sales in our traditional channels increased $21.1 million, or 18.1%, over the prior fiscal year. During our fourth fiscal quarter, we experienced increased orders resulting in higher shipments of our products to our traditional channel customers. Traditional channel net sales increased primarily because of higher net sales of shooting accessories in our shooting sports category and higher net sales of our hunting, fishing, and meat processing products in our outdoor lifestyle category. In addition, our international net sales increased $2.4 million, or 20.0%, over the prior fiscal year as a result of increased sales in Canada and European countries. We believe a portion of the traditional channel increase was a result of certain customers accelerating orders that we had originally planned to receive in our first fiscal quarter of 2026, which we believe was due to the anticipated increased costs associated with tariffs imposed by the U.S. administration in March and April of 2025.

Previous report

Gross margin for fiscal 2025 increased 60 basis points over the prior fiscal year, primarily from higher net sales volumes, partially offset by product and customer mix and higher tariff, freight, and duty expenses from increased inventory purchases earlier in fiscal 2025.

Previous report

We had a decrease of $12.2 million in operating loss from the prior fiscal year primarily because of increased net sales and lower operating expenses partially offset from an increase in cost of goods sold.

Previous report

Interest Income/(Expense), Net

Previous report

Fiscal 2025 Interest Income/(Expense) Compared with Fiscal 2024

Previous report

Cash generated in operating activities was $1.4 million for fiscal 2025 compared to cash generation of $24.5 million for the prior fiscal year. Cash generated in operating activities for fiscal 2025 was primarily impacted from a $12.2 million lower net loss than the prior fiscal year, $4.2 million higher accrued expenses from increased tariff costs, lower prepaid and other current assets of $2.4 million as a result of lower deposits on inventory, and $1.7 million of increased accrued payroll and incentives because of higher compensation-related accruals, partially offset by an increase in accounts receivable of $13.6 million as a result of timing of customer shipments as we believe certain customers accelerated orders into our fourth fiscal quarter, which we believe was due to increased costs associated with tariffs imposed by the U.S. administration. In addition, we increased our inventory by $11.4 million to plan for new product introductions that will be released in our next fiscal year and increased inbound freight associated with heightened tariff costs.

Previous report

We expect our inventory balance to increase in our first quarter of fiscal 2026 because of increased inventory purchases to support the fall hunting and winter holiday shopping seasons as well as inventory for new products that we expect to launch later in the year. In addition, we believe our inventory balances will increase as a result of the impact of additional tariffs imposed by the U.S. administration.

Previous report

Cash used in investing activities was $3.9 million for fiscal 2025 compared with cash usage of $6.0 million for the prior fiscal year. The decrease in cash used in investing activities is because of the lease assignment in the prior fiscal year, as mentioned below, that required additional racking and equipment in our warehouse in fiscal 2024.

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, Missouri. We 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 fiscal year ended April 30, 2024, we recorded a right-of-use asset and lease liability of $10.6 million for the additional space provided under the Assignment Agreement.

Previous report

Contractual Obligations and Commercial Commitments

Previous report

The following table sets forth a summary of our material contractual obligations and commercial commitments as of April 30, 2025 (in thousands):

Previous report

As of April 30, 2025, we had no borrowings outstanding on our revolving line of credit. We are required to make interest payments for the unused portion of our revolving line of credit in accordance with the financing arrangement. Future unused loan fee obligations are not included above, which could accumulate up to approximately $185,000 per year, under certain circumstances, until the maturity date in fiscal 2027.

Previous report

Interest on debt is based on outstanding debt as of April 30, 2025, and includes debt issuance costs to be amortized over the life of the financing arrangement.

Previous report

Operating lease obligations represent required minimum lease payments during the noncancelable lease term. Most real estate leases also require payments of related operating expenses such as taxes, insurance, utilities, and maintenance, which are not included above. See Note 4, Leases, for additional information.

Previous report

Purchase obligations represent binding commitments to purchase raw materials, contract production, and finished products that are payable upon delivery of the inventory. This obligation excludes the amount included in accounts payable at April 30, 2025 related to inventory purchases. Other obligations, included in our purchase obligations represent other binding commitments for the expenditure of funds, including (i) amounts related to contracts not involving the purchase of inventories, such as operating expenses, (ii) capital spending, and (iii) advertising.

Current report — wording carried from elsewhere

Our future capital requirements will depend on many factors, including net sales, the timing and extent of spending to support product development efforts, the expansion of sales and marketing activities, the timing of introductions of new products and enhancements to existing products, any acquisitions or strategic investments that we may determine to make, and changes in consumer spending, which is sensitive to economic conditions and other factors. Further equity or debt financing may not be available to us on acceptable terms or at all. If sufficient funds are not available or are not available on acceptable terms, our ability to take advantage of unexpected business opportunities or to respond to competitive pressures could be limited or severely constrained.

Current report — wording carried from elsewhere

We had $21.4 million of cash equivalents on hand as of April 30, 2026 and had $23.4 million in cash and cash equivalents on hand as of April 30, 2025.