American Outdoor Brands Corporation (NASDAQ:AOBC) Q2 2019 Earnings Conference Call Transcript

Dec 06, 2018 • 05:00 pm ET


American Outdoor Brands Corporation (NASDAQ:AOBC) Q2 2019 Earnings Conference Call Transcript


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Good day, ladies and gentlemen, and welcome to the American Outdoor Brands Second Quarter 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. (Operator Instructions) Later, we will conduct a question-and-answer-session, and instructions will follow at that time. As a reminder, today's conference is being recorded.

I'd now like to introduce your host for today's conference, Ms. Liz Sharp, VP of IR. Ma'am, please go ahead.

Liz Sharp

Thank you, and good afternoon.

(Forward-Looking Cautionary Statements)

I have a few important items to note with regard to our comments on today's call. First, we reference certain non-GAAP financial measures on this call. Our non-GAAP results and guidance exclude acquisition-related costs, including amortization, one-time transition costs, a change in contingent consideration liability, fair value inventory step up and the tax effect related to all those adjustments. The reconciliations of GAAP financial measures to non-GAAP financial measures, whether or not they are discussed on today's call, can be found in today's Form 8-K filing, as well as today's earnings press release, which are posted on our website.

Also, when we reference EPS, we are always referencing fully diluted EPS. For detailed information on our results, please refer to our quarterly report on Form 10-Q for the period ended October 31, 2018 and our annual report on Form 10-K for the year ended April 30, 2018.

I will now turn the call over to James Debney, President and CEO of American Outdoor Brands.

James Debney

Thank you, Liz. Good afternoon and thanks everyone for joining us. With me on today's call is Jeff Buchanan, our CFO. Later in the call, Jeff will provide a recap of our financial performance, as well as our updated guidance.

We are pleased with our second quarter operational and financial results, which reflect year-over-year increases in revenue and profitability in both our Outdoor Products & Accessories segment and our Firearms segment. In addition to delivering a solid quarter, we also made good progress on several initiatives that support our strategic plan. I will elaborate on that, as I take you through our results, so please bear with me, as I provide you with a bit more detail than usual on today's call.

With that, let's get started. Our Outdoor Products & Accessories segment, a strategically important market that we first entered just four years ago with our acquisition of Battenfeld Technologies, grew 10.2% year-over-year and generated gross margins of 45%, more than 30% of our total revenue in the quarter. Sales growth occurred in both our Hunting & Shooting product categories, as well as our Cutlery & Tool product categories and came from a variety of retailers, particularly our online retailers, a result of good work by the sales team in partnering with key customers to focus on several of our growth brands and our strong product portfolio.

In our Firearms segment, year-over-year growth in revenue of 10.2% and higher gross margins reflected a consumer preference for many of our products, including our very popular M&P Shield 380