Matt Kuranda

Matt Kuranda from Roth Capital inquired about American Outdoor Brands' visibility into point-of-sale (POS) data, specifically what percentage of revenue is tracked by POS and which brands exceeded or fell below the 4% sell-through metric. He also asked about the discrepancy between strong November outdoor lifestyle POS (up 13%) and the Q3 revenue guidance (down 8%), seeking clarification on potential factors like shooting sports weakness or inventory overhang. Additionally, Kuranda questioned strategies to mitigate softness from a large e-commerce customer and sought details on EBITDA seasonality and the cadence of tariff impacts on gross margin for the remainder of the fiscal year.

Answer

Brian Murphy, President and CEO, stated that POS data provides visibility into roughly two-thirds of revenue, covering most large retailers and direct-to-consumer business. He noted that the outdoor lifestyle category performed very well, while shooting sports, except for Caldwell, faced pressure aligning with NICS trends. Murphy explained the Q3 guide discrepancy by citing choppy demand, retailers managing lower inventory, and variable ordering patterns based on capital allocation and seasonality. Regarding the e-commerce channel, Murphy attributed volatility to the nature of the large online-only customer but expects reduced volatility over time as the direct-to-consumer business grows and traditional retailers expand omnichannel presence. Andy Fulmer, CFO, clarified that Q2 and Q3 are typically the highest net sales quarters, and the 42%-43% gross margin guide for Q3 and full year reflects the start of incremental tariff amortization from December into January, with a further drop expected in Q4 due to higher tariffs and lower sales. Murphy added that the company has a clear path to offset tariffs by FY27 through pricing, supplier negotiations, tariff-efficient product designs, and new product velocity.

Matt Kuranda asked when the current order choppiness from retailers is expected to normalize, which brands are exhibiting the strongest point-of-sale (POS) performance, and for an update on the company's M&A funnel and acquisition pipeline.

Answer

Brian D. Murphy, President and CEO, stated that retailers are ordering cautiously despite strong POS, expecting normalization as tariff uncertainty settles. He highlighted Caldwell, BUBBA, BOG, Grilla, and MEAT! Your Maker as brands with strong POS, noting other brands are outperforming peers. Murphy also provided an update on M&A, mentioning fewer targets, more distressed assets, and the exploration of launching new brands internally.