SPRINGFIELD, Mass.,
Aug. 29, 2019 /PRNewswire/ --
American Outdoor Brands Corporation (NASDAQ Global Select:
AOBC), one of the world's leading providers of firearms and quality
products for the shooting, hunting, and rugged outdoor enthusiast,
today announced financial results for the first quarter fiscal
2020, ended July 31, 2019.
First Quarter Fiscal 2020 Financial Highlights
- Quarterly net sales were $123.7
million compared with $138.8
million for the first quarter last year, a decrease of
10.9%.
- Gross margin for the quarter was 38.7% compared with 37.8% for
the comparable quarter last year.
- Quarterly GAAP net loss was $2.1
million, or $(0.04) per
diluted share, compared with net income of $7.6 million, or $0.14 per diluted share, for the comparable
quarter last year.
- Quarterly non-GAAP net income was $1.7
million, or $0.03 per diluted
share, compared with $11.7 million,
or $0.21 per diluted share, for the
comparable quarter last year. GAAP to non-GAAP adjustments to net
income exclude a number of acquisition-related costs and other
costs. For a detailed reconciliation, see the schedules that follow
in this release.
- Quarterly non-GAAP Adjusted EBITDAS was $17.5 million, or 14.1% of net sales, compared
with $28.4 million, or 20.4% of net
sales, for the comparable quarter last year.
James Debney, American Outdoor
Brands Corporation President and Chief Executive Officer,
commented, "Our results for the first quarter reflected our ability
to remain focused on executing our strategic plan, while addressing
the challenges of ongoing softness in the firearms market.
During the quarter, we achieved significant milestones at our new
Missouri Campus, which houses our Logistics & Customer Services
Division and Outdoor Products & Accessories Division, and
serves as the centralized logistics, warehousing, and distribution
operation for our entire business. Those milestones included
the successful transfer of our entire firearms shipping operations
to the new facility, as well as the consolidation and subsequent
shuttering of our Jacksonville,
Florida business. Our Missouri Campus is an important
strategic initiative that will ultimately allow us to lower our
costs, better serve our customers, and achieve our objective to be
the leading provider of quality products for the shooting, hunting,
and rugged outdoor enthusiast."
Jeff Buchanan, Executive Vice
President, Chief Financial Officer, and Chief Administrative
Officer, commented, "At the end of the quarter, our balance sheet
remained strong with cash of $30.7
million and total net borrowings of $149.1 million dollars. That, combined with our
twelve-month trailing EBITDAS, translates to a net leverage ratio
of just 1.5."
Financial Outlook
|
AMERICAN OUTDOOR
BRANDS CORPORATION
|
|
NET SALES AND
EARNINGS PER SHARE GUIDANCE, INCLUDING GAAP TO NON-GAAP
RECONCILIATION
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
Range for the
Three Months Ending October 31, 2019
|
|
Range for the Year
Ending April 30, 2020
|
|
|
Net sales (in
thousands)
|
$
140,000
|
|
$
150,000
|
|
$
630,000
|
|
$
650,000
|
|
|
|
|
|
|
|
|
|
|
|
GAAP (loss)/income
per share - diluted
|
$
(0.04)
|
|
$
—
|
|
$
0.41
|
|
$
0.49
|
|
|
Amortization of
acquired intangible assets
|
0.09
|
|
0.09
|
|
0.36
|
|
0.36
|
|
|
Diode
recall
|
—
|
|
—
|
|
(0.01)
|
|
(0.01)
|
|
|
Transition
costs
|
0.01
|
|
0.01
|
|
0.06
|
|
0.06
|
|
|
Tax effect of
non-GAAP adjustments
|
(0.03)
|
|
(0.03)
|
|
(0.11)
|
|
(0.11)
|
|
|
Non-GAAP income per
share - diluted
|
$
0.03
|
|
$
0.07
|
|
$
0.70
|
*
|
$
0.78
|
*
|
|
|
|
|
|
|
|
|
|
|
* Does not foot due
to rounding.
|
Conference Call and Webcast
The company will host a conference call and webcast today,
August 29, 2019, to discuss its first
quarter fiscal 2020 financial and operational results. Speakers on
the conference call will include James
Debney, President and Chief Executive Officer, and
Jeffrey D. Buchanan, Executive Vice
President, Chief Financial Officer, and Chief Administrative
Officer. The conference call may include forward-looking
statements. 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
(844) 309-6568 and reference conference identification number
3384868. 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," "Adjusted EBITDAS," and "free cash
flow" are presented. From time-to-time, the company considers and
uses these 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) transition costs, (iii) fair value inventory step-up
expense, (iv) recall related expenses, (v) the tax effect of
non-GAAP adjustments, (vi) net cash (used in)/provided by operating
activities, (vii) net cash used in investing activities, (viii)
acquisition of businesses, net of cash acquired, (ix) receipts from
note receivable, (x) interest expense (xi) income tax expense,
(xii) depreciation and amortization, and (xiii) stock-based
compensation expenses, ; 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. 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 Corporation
American Outdoor Brands Corporation (NASDAQ Global Select: AOBC) is
a provider of quality products for shooting, hunting, and rugged
outdoor enthusiasts in the global consumer and professional
markets. The Company reports two segments: Firearms and Outdoor
Products & Accessories. Firearms manufactures handgun,
long gun, and suppressor products sold under the iconic Smith &
Wesson®, M&P®, Thompson/Center Arms™, and Gemtech® brands, as
well as provides forging, machining, and precision plastic
injection molding services. AOB Outdoor Products & Accessories
is an industry leading provider of shooting, reloading,
gunsmithing, gun cleaning supplies, specialty tools and cutlery,
and electro-optics products and technology for firearms. This
segment produces innovative, top quality products under the brands
Caldwell®; Crimson Trace®; Wheeler®; Tipton®; Frankford Arsenal®;
Lockdown®; BOG®; Hooyman®; Smith & Wesson® Accessories;
M&P® Accessories; Thompson/Center Arms™ Accessories;
Performance Center® Accessories; Schrade®; Old Timer®; Uncle
Henry®; Imperial®; BUBBA®; UST®; and LaserLyte. For more
information on American Outdoor Brands Corporation, call (844)
363-5386 or log on to 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. Such forward-looking statements
include, among others, our long-term strategy of being the leading
provider of quality products for the shooting, hunting, and rugged
outdoor enthusiast market; our belief that our new Logistics &
Customer Services facility in Missouri, which will serve as the centralized
logistics, warehousing, and distribution operation for all of our
products, will allow us to lower our costs, better serve our
customers, and achieve our objective to be the leading provider of
quality products for the shooting, hunting, and rugged outdoor
enthusiast; and our expectations for net sales, GAAP income per
diluted share, acquisition-related costs, amortization of acquired
intangible assets, fair value inventory step-up and backlog
expense, tax effect of non-GAAP adjustments, and non-GAAP income
per diluted share for the second quarter of fiscal 2020 and for
fiscal 2020. 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, economic, social, political, legislative, and regulatory
factors; the potential for increased regulation of firearms and
firearm-related products; actions of social activists that could
have an adverse effect on our business; the impact of lawsuits; the
demand for our products; the state of the U.S. economy in general
and the firearm industry in particular; general economic conditions
and consumer spending patterns; our competitive environment; the
supply, availability and costs of raw materials and components; the
impact of protectionist tariffs and trade wars; speculation
surrounding fears of terrorism and crime; our anticipated growth
and growth opportunities; our ability to increase demand for our
products in various markets, including consumer, law enforcement,
and military channels, domestically and internationally; our
penetration rates in new and existing markets; our strategies; our
ability to maintain and enhance brand recognition and reputation;
risks associated with the establishment of our new 630,000 square
foot Logistics & Customer Services facility in Missouri; our ability to introduce new
products; the success of new products; our ability to expand our
markets; our ability to integrate acquired businesses in a
successful manner; the general growth of our outdoor products and
accessories business; the potential for cancellation of orders from
our backlog; and other risks detailed from time to time in our
reports filed with the SEC, including our Annual Report on Form
10-K for the fiscal year ended April 30,
2019.
Contact: Liz Sharp, VP Investor Relations
American Outdoor Brands Corporation
(413) 747-6284
lsharp@aob.com
|
AMERICAN OUTDOOR
BRANDS CORPORATION AND SUBSIDIARIES
|
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
|
(Unaudited)
|
|
|
As
of:
|
|
July 31,
2019
|
|
April 30,
2019
|
|
(In thousands, except
par value and share data)
|
|
ASSETS
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
$
30,732
|
|
$
41,015
|
|
Accounts receivable,
net of allowance for doubtful accounts of $2,294 on July 31,
2019 and $1,899 on April 30, 2019
|
70,242
|
|
84,907
|
|
Inventories
|
195,448
|
|
163,770
|
|
Prepaid expenses and
other current assets
|
9,350
|
|
6,528
|
|
Income tax
receivable
|
2,140
|
|
2,464
|
|
Total current
assets
|
307,912
|
|
298,684
|
|
Property,
plant, and equipment, net
|
174,355
|
|
183,268
|
|
Intangibles,
net
|
87,113
|
|
91,840
|
|
Goodwill
|
182,267
|
|
182,269
|
|
Other
assets
|
20,808
|
|
10,728
|
|
$ 772,455
|
|
$
766,789
|
|
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|
Current
liabilities:
|
|
|
|
|
Accounts
payable
|
$
29,549
|
|
$
35,584
|
|
Accrued expenses and
deferred revenue
|
35,750
|
|
39,322
|
|
Accrued payroll and
incentives
|
10,598
|
|
21,473
|
|
Accrued income
taxes
|
248
|
|
175
|
|
Accrued profit
sharing
|
3,516
|
|
2,830
|
|
Accrued
warranty
|
4,987
|
|
5,599
|
|
Current portion of
notes and loans payable
|
79,800
|
|
6,300
|
|
Total current
liabilities
|
164,448
|
|
111,283
|
|
Deferred income
taxes
|
9,683
|
|
9,776
|
|
Notes and loans
payable, net of current portion
|
99,467
|
|
149,434
|
|
Finance lease
payable, net of current portion
|
40,708
|
|
45,400
|
|
Other non-current
liabilities
|
15,091
|
|
6,452
|
|
Total
liabilities
|
329,397
|
|
322,345
|
|
Commitments and
contingencies
|
|
|
|
|
Stockholders'
equity:
|
|
|
|
|
Preferred stock,
$.001 par value, 20,000,000 shares authorized, no shares
issued or outstanding
|
—
|
|
—
|
|
Common stock,
$.001 par value, 100,000,000 shares authorized,
72,987,388 shares issued and 54,820,526 shares outstanding on July
31, 2019 and 72,863,624 shares issued and54,696,762 shares
outstanding on April 30, 2019
|
73
|
|
73
|
|
Additional paid-in
capital
|
264,230
|
|
263,180
|
|
Retained
earnings
|
400,838
|
|
402,946
|
|
Accumulated other
comprehensive income
|
292
|
|
620
|
|
Treasury stock, at
cost (18,166,862 shares on July 31, 2019 and April 30,
2019)
|
(222,375)
|
|
(222,375)
|
|
Total stockholders'
equity
|
443,058
|
|
444,444
|
|
$ 772,455
|
|
$
766,789
|
|
AMERICAN OUTDOOR
BRANDS CORPORATION AND SUBSIDIARIES
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF INCOME
|
|
|
|
|
|
|
|
For the Three
Months Ended
|
|
|
July 31,
2019
|
|
July 31,
2018
|
|
|
(Unaudited)
|
|
|
(In thousands, except
per share data)
|
|
Net sales
|
|
$ 123,665
|
|
$ 138,833
|
|
Cost of
sales
|
|
75,811
|
|
86,411
|
|
Gross
profit
|
|
47,854
|
|
52,422
|
|
Operating
expenses:
|
|
|
|
|
|
Research and
development
|
|
3,229
|
|
2,810
|
|
Selling, marketing,
and distribution
|
|
16,773
|
|
11,615
|
|
General and
administrative
|
|
26,709
|
|
24,521
|
|
Total operating
expenses
|
|
46,711
|
|
38,946
|
|
Operating
income
|
|
1,143
|
|
13,476
|
|
Other
(expense)/income, net:
|
|
|
|
|
|
Other
income/(expense), net
|
|
5
|
|
(18)
|
|
Interest expense,
net
|
|
(2,627)
|
|
(2,001)
|
|
Total other
(expense)/income, net
|
|
(2,622)
|
|
(2,019)
|
|
(Loss)/income from
operations before income taxes
|
|
(1,479)
|
|
11,457
|
|
Income tax
expense
|
|
629
|
|
3,812
|
|
Net
(loss)/income
|
|
(2,108)
|
|
7,645
|
|
Net (loss)/income per
share:
|
|
|
|
|
|
Basic
|
|
$
(0.04)
|
|
$
0.14
|
|
Diluted
|
|
$
(0.04)
|
|
$
0.14
|
|
Weighted average
number of common shares outstanding:
|
|
|
|
|
|
Basic
|
|
54,783
|
|
54,345
|
|
Diluted
|
|
54,783
|
|
54,931
|
|
AMERICAN OUTDOOR
BRANDS CORPORATION AND SUBSIDIARIES
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
(Unaudited)
|
|
|
|
|
|
For the Three
Months Ended
|
|
July 31,
2019
|
|
July 31,
2018
|
|
(In
thousands)
|
|
Cash flows from
operating activities:
|
|
|
|
|
Net
(loss)/income
|
$
(2,108)
|
|
$
7,645
|
|
Adjustments to
reconcile net income to net cash (used in)/provided by operating
activities:
|
|
|
|
|
Depreciation and
amortization
|
14,346
|
|
12,852
|
|
Loss on
sale/disposition of assets
|
—
|
|
7
|
|
Provision for losses
on notes and accounts receivable
|
634
|
|
55
|
|
Deferred income
taxes
|
—
|
|
(1,520)
|
|
Stock-based
compensation expense
|
1,588
|
|
1,990
|
|
Changes in operating
assets and liabilities:
|
|
|
|
|
Accounts
receivable
|
14,031
|
|
15,208
|
|
Inventories
|
(31,678)
|
|
(13,538)
|
|
Prepaid expenses and
other current assets
|
(2,822)
|
|
(2,363)
|
|
Income
taxes
|
397
|
|
3,892
|
|
Accounts
payable
|
(6,015)
|
|
(3,921)
|
|
Accrued payroll and
incentives
|
(10,875)
|
|
(653)
|
|
Accrued profit
sharing
|
686
|
|
254
|
|
Accrued expenses and
deferred revenue
|
(6,675)
|
|
(8,568)
|
|
Accrued
warranty
|
(612)
|
|
(656)
|
|
Other
assets
|
428
|
|
(62)
|
|
Other non-current
liabilities
|
(463)
|
|
17
|
|
Net cash (used
in)/provided by operating activities
|
(29,138)
|
|
10,639
|
|
Cash flows from
investing activities:
|
|
|
|
|
Payments to acquire
patents and software
|
(123)
|
|
(190)
|
|
Proceeds from sale of
property and equipment
|
—
|
|
1
|
|
Payments to acquire
property and equipment
|
(3,695)
|
|
(6,919)
|
|
Net cash used in
investing activities
|
(3,818)
|
|
(7,108)
|
|
Cash flows from
financing activities:
|
|
|
|
|
Proceeds from loans
and notes payable
|
25,000
|
|
—
|
|
Payments on finance
lease obligation
|
(214)
|
|
(161)
|
|
Payments on notes and
loans payable
|
(1,575)
|
|
(26,575)
|
|
Proceeds from
exercise of options to acquire common stock
|
—
|
|
139
|
|
Payment of employee
withholding tax related to restricted stock units
|
(538)
|
|
(556)
|
|
Net cash provided
by/(used in) financing activities
|
22,673
|
|
(27,153)
|
|
Net decrease in cash
and cash equivalents
|
(10,283)
|
|
(23,622)
|
|
Cash and cash
equivalents, beginning of period
|
41,015
|
|
48,860
|
|
Cash and cash
equivalents, end of period
|
$
30,732
|
|
$
25,238
|
|
Supplemental
disclosure of cash flow information
|
|
|
|
|
Cash paid
for:
|
|
|
|
|
Interest
|
$
1,690
|
|
$
1,220
|
|
Income
taxes
|
$
235
|
|
$
484
|
|
RECONCILIATION OF
GAAP FINANCIAL MEASURES TO NON-GAAP FINANCIAL MEASURES
(Dollars in thousands, except per share data)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
For the Three
Months Ended
|
|
July 31,
2019
|
|
July 31,
2018
|
|
$
|
|
% of
Sales
|
|
$
|
|
% of
Sales
|
|
GAAP gross
profit
|
$ 47,854
|
|
38.7%
|
|
$ 52,422
|
|
37.8%
|
|
Diode
recall
|
(589)
|
|
-0.5%
|
|
—
|
|
—
|
|
Fair value inventory
step-up
|
—
|
|
—
|
|
150
|
|
0.1%
|
|
Transition
costs
|
620
|
|
0.5%
|
|
—
|
|
—
|
|
Non-GAAP gross
profit
|
$ 47,885
|
|
38.7%
|
|
$ 52,572
|
|
37.9%
|
|
|
|
|
|
|
|
|
|
GAAP operating
expenses
|
$ 46,711
|
|
37.8%
|
|
$ 38,946
|
|
28.1%
|
|
Amortization of
acquired intangible assets
|
(4,770)
|
|
-3.9%
|
|
(5,446)
|
|
-3.9%
|
|
Transition
costs
|
(466)
|
|
-0.4%
|
|
—
|
|
0.0%
|
|
Non-GAAP operating
expenses
|
$ 41,475
|
|
33.5%
|
|
$ 33,500
|
|
24.1%
|
|
|
|
|
|
|
|
|
|
GAAP operating
income
|
$
1,143
|
|
0.9%
|
|
$ 13,476
|
|
9.7%
|
|
Fair value inventory
step-up
|
—
|
|
0.0%
|
|
150
|
|
0.1%
|
|
Diode
recall
|
(589)
|
|
-0.5%
|
|
—
|
|
—
|
|
Amortization of
acquired intangible assets
|
4,770
|
|
3.9%
|
|
5,446
|
|
3.9%
|
|
Transition
costs
|
1,086
|
|
0.9%
|
|
—
|
|
—
|
|
Non-GAAP operating
income
|
$
6,410
|
|
5.2%
|
|
$ 19,072
|
|
13.7%
|
|
|
|
|
|
|
|
|
|
GAAP net
(loss)/income
|
$
(2,108)
|
|
-1.7%
|
|
$
7,645
|
|
5.5%
|
|
Fair value inventory
step-up
|
—
|
|
—
|
|
150
|
|
0.1%
|
|
Amortization of
acquired intangible assets
|
4,770
|
|
3.9%
|
|
5,446
|
|
3.9%
|
|
Diode
recall
|
(589)
|
|
-0.5%
|
|
—
|
|
—
|
|
Transition
costs
|
1,086
|
|
0.9%
|
|
—
|
|
—
|
|
Tax effect of
non-GAAP adjustments
|
(1,422)
|
|
-1.1%
|
|
(1,550)
|
|
-1.1%
|
|
Non-GAAP net
income
|
$
1,737
|
|
1.4%
|
|
$ 11,691
|
|
8.4%
|
|
|
|
|
|
|
|
|
|
GAAP net income per
share - diluted
|
$
(0.04)
|
|
|
|
$
0.14
|
|
|
|
Fair value inventory
step-up
|
—
|
|
|
|
—
|
|
|
|
Amortization of
acquired intangible assets
|
0.09
|
|
|
|
0.10
|
|
|
|
Diode
recall
|
(0.01)
|
|
|
|
—
|
|
|
|
Transition
costs
|
0.02
|
|
|
|
—
|
|
|
|
Tax effect of
non-GAAP adjustments
|
(0.03)
|
|
|
|
(0.03)
|
|
|
|
Non-GAAP net income
per share - diluted
|
$
0.03
|
|
|
|
$
0.21
|
|
|
|
AMERICAN OUTDOOR
BRANDS CORPORATION AND SUBSIDIARIES
|
|
RECONCILIATION OF
NET OPERATING CASH FLOW TO FREE CASH FLOW
(In thousands)
(Unaudited)
|
|
|
|
|
|
For the Three
Months Ended
|
|
July 31,
2019
|
|
July 31,
2018
|
|
Net cash (used
in)/provided by operating activities
|
$
(29,138)
|
|
$
10,639
|
|
Net cash used in
investing activities
|
(3,818)
|
|
(7,108)
|
|
Free cash
flow
|
$
(32,956)
|
|
$
3,531
|
|
AMERICAN OUTDOOR
BRANDS CORPORATION AND SUBSIDIARIES
|
|
RECONCILIATION OF
GAAP NET (LOSS)/INCOME TO NON-GAAP ADJUSTED EBITDAS
|
|
(in
thousands)
|
|
(Unaudited)
|
|
|
|
|
|
|
For the Three
Months Ended
|
|
|
July 31,
2019
|
|
July 31,
2018
|
|
|
|
|
|
|
GAAP net
(loss)/income
|
|
$
(2,108)
|
|
$
7,645
|
|
Interest
expense
|
|
2,763
|
|
2,031
|
|
Income tax
(benefit)/expense
|
|
629
|
|
3,812
|
|
Depreciation and
amortization
|
|
14,092
|
|
12,744
|
|
Stock-based
compensation expense
|
|
1,588
|
|
1,989
|
|
Diode
Recall
|
|
(589)
|
|
—
|
|
Fair value inventory
step-up
|
|
—
|
|
150
|
|
Transition
costs
|
|
1,086
|
|
—
|
|
Non-GAAP Adjusted
EBITDAS
|
|
$
17,461
|
|
$
28,371
|
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SOURCE American Outdoor Brands Corporation
