American Outdoor Brands Corporation (NASDAQ:AOBC) Q2 2020 Earnings Conference Call - Final Transcript

Dec 05, 2019 • 05:00 pm ET

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American Outdoor Brands Corporation (NASDAQ:AOBC) Q2 2020 Earnings Conference Call - Final Transcript

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Q & A
Operator
Operator

Thank you. [Operator Instructions] Our first question comes from Cai von Rumohr with Cowen & Co. Your line is open.

Analyst
Jeff Molinari

Good evening, James and Jeff. This is Jeff Molinari on for Cai today. Thank for taking my question.

Executive
James Debney

Hi, Jeff.

Analyst
Jeff Molinari

Hi. Yes. So thanks for taking my question here. To start off, can you update us on what your guidance assumes for negative impacts from tariffs on Chinese imports? And specifically kind of what are your assumptions around the Phase I -- potential Phase I deal if that's going to provide any relief? And then I have one follow-up after that. Thank you.

Executive
Jeffrey D. Buchanan

Well, an easy answer is that the forecast assumes that tariffs in place right now like stay in place. So, we're not making any guesses as to what's going to happen or not happen.

Analyst
Jeff Molinari

And what is the negative impact that -- what otherwise would mean? Could you quantify that?

Executive
Jeffrey D. Buchanan

So, I mean part of the reason that the gross margin, for example, in outdoor product was lower this quarter was tariffs. We haven't got into specific numbers on tariffs. But in general, obviously, like some of those tariffs are in inventory. And as the products are sold, it's reflecting a lower gross margin and the forecast assumes that everything in place stays in place.

Analyst
Jeff Molinari

Okay. That makes sense. And what -- can you remind us what percent of outdoor product is manufactured in China like roughly?

Executive
Jeffrey D. Buchanan

Not 100%, but it's in the 80s probably.

Executive
James Debney

Yeah, it's 80% plus.

Analyst
Jeff Molinari

Okay. And just switching gears to the other segment, the major new product that's coming on December 12, it kind of -- is that a long gun? It seems kind of like you imply that with -- when you said that you were letting an old inventory -- let the old inventory on an old product go through, is that what we should expect? Or anything else you can provide on that?

Executive
James Debney

Yeah. I'm really not going to comment much. But when we were talking about the inventory that we had let's say pushed out into the channel in the last quarter, because we wanted that inventory to move through before the new product launch that was referencing a different product launch that will actually take place in January at SHOT Show.

Analyst
Jeff Molinari

Okay. Thanks guys.

Operator
Operator

Thank you. And our next question comes from James Hardiman with Wedbush Securities. Your line is open.

Analyst
James Hardiman

Hi, good evening. A couple of questions from me. So let's start with outdoor. It seems like there's a lot of moving parts there. You talked about big purchases from discount retailers that didn't repeat in this year's second quarter. But coming into the quarter there also seem to be at least what I thought was going to be a benefit, because if memory serves there were some delayed shipments that moved from 1Q to 2Q. So is there any way to think about the outdoor sort of trajectory excluding those sort of unusual items?

Executive
James Debney

Yeah, I