American Outdoor Brands Corporation Reports Third Quarter Fiscal 2017 Financial Results

SPRINGFIELD, Mass., March 2, 2017 /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 third quarter of fiscal 2017, ended January 31, 2017.

Third Quarter Fiscal 2017 Financial Highlights

• Quarterly net sales were $233.5 million compared with $210.8 million for the third quarter last year, an increase of 10.8%.

• Gross margin for the quarter was 42.5% compared with 41.1% for the third quarter last year.

• Quarterly GAAP net income was $32.5 million, or $0.57 per diluted share, compared with $31.4 million, or $0.56 per diluted share, for the comparable quarter last year.

• Quarterly non-GAAP net income was $37.6 million, or $0.66 per diluted share, compared with $33.2 million, or $0.59 per diluted share, for the comparable quarter last year. GAAP to non-GAAP adjustments in net income exclude a number of acquisition-related costs, including amortization, one-time transaction costs, inventory valuation adjustments, and a one-time holding company rebranding expense.  For a detailed reconciliation, see the schedules that follow in this release.

• Quarterly non-GAAP Adjusted EBITDAS was $67.6 million, or 28.9% of net sales, compared with $61.5 million, or 29.2% of net sales, for the comparable quarter last year.

• The company completed the acquisition of substantially all of the assets of Ultimate Survival Technologies, Inc. ("UST"), a provider of high-quality survival and camping products, for $33.0 million in cash and up to $2.0 million, due over two years, contingent upon the financial performance of the acquired business.  UST is included in the company's Outdoor Products & Accessories segment.

James Debney, American Outdoor Brands Corporation President and Chief Executive Officer, said, "Today we are pleased to report our third quarter results, which include a strategic acquisition in the rugged outdoor space, several new product introductions, revenue growth that was on target, and profitability that exceeded the high-end of our guidance range.  Toward the end of the quarter, consumer firearm purchasing began to cool – a trend that underscores the importance of remaining focused on our strategy to continue growing and balancing our business across the shooting, hunting, and rugged outdoor enthusiast markets.  In our Firearms segment, we attended the SHOT Show in January where we launched our next generation, full size M&P M2.0 pistol, significantly strengthening our growing family of innovative polymer pistols.  Higher year-over-year revenue in the Outdoor Products & Accessories segment was driven largely by our acquisitions of Taylor Brands, LLC, Crimson Trace Corporation, and UST, all of which occurred in the current fiscal year, combined with organic segment revenue growth of 4.8%.  During the quarter, we hired Brian Murphy, an industry veteran, who will focus on increasing our presence in the rugged outdoor recreation market, in areas such as camping, hiking and fishing - all of which resonate strongly with many of our core firearms consumers and retailers."

"Lastly, during the quarter, we successfully rebranded our holding company as American Outdoor Brands Corporation, a name that better represents our strategic direction as we explore markets outside of our core firearms business. Overall, we remain committed to creating long-term shareholder value by innovating, preserving and selectively acquiring strong brands that best meet the needs and lifestyles of our valued customers," concluded Debney. 

Jeffrey D. Buchanan, Executive Vice President, Chief Financial Officer, and Chief Administrative Officer, said, "During our third quarter, strong November results more than offset late-quarter declines in both NICS background checks and firearm product shipments.  That late quarter shift in consumer demand patterns has since carried forward into our fiscal fourth quarter.  Accordingly, we have updated our full year guidance."

"Operating cash flow during the quarter was $48.2 million and we invested $33.0 million in acquisitions and paid off the $25 million outstanding on our line of credit.  We ended the quarter with cash of $54.3 million, outstanding long-term debt of $170.6 million, and no borrowings on our $350 million banking line of credit, which is expandable to $500 million. Our strong balance sheet provides us with opportunities to activate our unused $50 million stock buyback authorization, and to further diversify our company by investing in our future – both organically and through highly selective, strategic acquisitions," concluded Buchanan.

Financial Outlook

Conference Call and Webcast

The company will host a conference call and webcast today, March 2, 2017, to discuss its third quarter fiscal 2017 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 code 73634765.  No RSVP is necessary.  The conference call audio webcast can also be accessed live and for replay on the company's website at www.aob.com, under the Investor Relations section. The company will maintain an audio replay of this conference call on its website for a period of time after the call. No other audio replay will be available.

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) accessories transition costs, (iii) discontinued operations, (iv) DOJ and SEC costs including insurance recovery costs, (v) acquisition-related costs, (vi) fair value inventory step-up and backlog expense, (vii) bond premium paid, (viii) debt extinguishment costs, (ix) the tax effect of non-GAAP adjustments, (x) net cash provided by operating activities, (xi) net cash used in investing activities, (xii) acquisition of businesses, net of cash acquired, (xiii) receipts from note receivable, (xiv) interest expense (xv) income tax expense, (xvi) depreciation and amortization, (xvii) corporate rebranding expenses, and (xviii) stock-based compensation expense; 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 and long gun products sold under the Smith & Wesson®, M&P®, and Thompson/Center Arms™ brands as well as provides forging, machining, and precision plastic injection molding services. Outdoor Products & Accessories provides shooting, hunting, and outdoor accessories, including reloading, gunsmithing, and gun cleaning supplies, tree saws, vault accessories, knives, laser sighting systems, tactical lighting products, and survival and camping equipment. Brands in Outdoor Products & Accessories include Smith & Wesson®, M&P®, Thompson/Center Arms™, Crimson Trace®, Caldwell® Shooting Supplies, Wheeler® Engineering, Tipton® Gun Cleaning Supplies, Frankford Arsenal® Reloading Tools, Lockdown® Vault Accessories, Hooyman® Premium Tree Saws, BOG POD®, Golden Rod® Moisture Control, Schrade®, Old Timer®, Uncle Henry®, UST®, and Imperial™. 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 our belief that toward the end of the year, consumer firearm purchasing began to cool; our belief that such trend underscores the importance of remaining focused on our strategy to continue growing and balancing our business across the shooting, hunting, and rugged outdoor enthusiast market; our belief that the launch of our next generation, full size M&P M2.0 pistol significantly strengthens our growing family of innovative polymer pistols; our belief that higher year-over-year revenue in the Outdoor Products & Accessories segment was driven largely by our acquisitions of Taylor Brands, LLC, Crimson Trace Corporation, and UST, all of which occurred in the current fiscal year, combined with organic segment revenue growth; our plans to have Brian Murphy focus on increasing our presence in the rugged outdoor recreation markets, in areas such as camping, hiking, and fishing – all of which resonate strongly with many of our core firearms consumers and retailers; our belief that we successfully rebranded our holding company as American Outdoor Brands Corporation, a name that we think better represents our strategic direction as we explore markets outside of our core firearms business; our commitment to creating long-term shareholder value by innovating, preserving, and selectively acquiring strong brands that best meet the needs and lifestyles of our valued customers; our belief that our strong balance sheet provides us with opportunities to activate our unused, $50 million stock buyback authorization, and to further diversify our company by investing in our future – both organically and through highly selective, strategic acquisitions; 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 fourth quarter of fiscal 2017 and for fiscal 2017.  We caution that these statements are qualified by important factors that could cause actual results to differ materially from those reflected by such forward-looking statements.  Such factors include the demand for our products; the costs and ultimate conclusion of certain legal matters; the state of the U.S. economy in general and the firearm industry in particular; general economic conditions and consumer spending patterns; the potential for increased regulation of firearms and firearm-related products; speculation surrounding fears of terrorism and crime; our growth opportunities; our anticipated growth; our ability to increase demand for our products in various markets, including consumer, law enforcement, and military channels, domestically and internationally; the position of our hunting products in the consumer discretionary marketplace and distribution channel; our penetration rates in new and existing markets; our strategies; 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, 2016.

Contact:Liz Sharp, VP Investor Relations
American Outdoor Brands Corporation
(413) 747-6284
lsharp@aob.com

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SOURCE American Outdoor Brands Corporation