Le Lézard
Classified in: Business, Sports and recreation
Subjects: ERN, CCA, ERP

American Outdoor Brands Corporation Reports Second Quarter Fiscal 2020 Financial Results


SPRINGFIELD, Mass., Dec. 5, 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 second quarter fiscal 2020, ended October 31, 2019.

American Outdoor Brands Corporation logo unveiled December 13, 2016.

Second Quarter Fiscal 2020 Financial Highlights

James Debney, American Outdoor Brands Corporation President and Chief Executive Officer, commented, "During the second quarter, we remained focused on innovation throughout our company.  In firearms, we began shipping into the channel a major new product, which will be available to our consumer customers on December 12.  In both our firearms and our outdoor products and accessories businesses, we prepared a large number of exciting new products for launch at SHOT Show in January 2020."

"Subsequent to the end of the second quarter, we announced a plan to spin-off our outdoor products and accessories business as a tax-free stock dividend to our stockholders. We expect to complete the transaction in the second half of calendar 2020, thereby creating two independent publicly traded companies: Smith & Wesson Brands, Inc. (the firearm business) and American Outdoor Brands, Inc. (the outdoor products and accessories business), each of which are leaders in their industries.  We believe the spin-off will drive long-term value for our stockholders by enabling the management team of each company to focus on its specific strategies, including structuring its business to take advantage of growth opportunities in its specific markets; tailoring its business operation and financial model to its specific long-term strategies; and aligning its external financial resources, such as stock, access to markets, credit, and insurance factors, with its particular type of business.  In order to provide our stockholders with better visibility into each of these businesses, we will begin providing revenue guidance for each business, beginning with today's financial results announcement."

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 $43.8 million and total net borrowings of $159.4 million. That, combined with our twelve-month trailing EBITDAS, translates to a net leverage ratio of approximately 1.7 to 1.0. We expect to substantially reduce that ratio by the end of the current fiscal year.  In preparation for the recently announced spin-off of our outdoor products and accessories business, and since the end of our second fiscal quarter, we have finalized an amendment to our existing revolving credit facility that supports our proposed spin-off without the need for further bank approvals.  As a result, in November, we repaid our bank term loan that was due in June 2020 from that amended credit facility, and we called our Senior Notes, due in August 2020.  Thus, all of our bank debt will be consolidated into the lower interest rate, revolving line of credit, which has a maturity date of October 2021."

The consummation of the spin-off is subject to final approval of the company's Board of Directors, customary regulatory approvals, and tax and legal considerations.

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 January 31, 2020


Range for the Year Ending April 30, 2020


Net sales (in thousands)

$ 180,000


$ 190,000


$ 680,000


$ 700,000











GAAP income per share - diluted

$        0.11


$        0.15


$        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

0.02


0.02


0.07


0.07


Spin-off costs

0.02


0.02


0.07


0.07


Tax effect of non-GAAP adjustments

(0.04)


(0.04)


(0.13)


(0.13)


Non-GAAP income per share - diluted

$        0.20


$        0.24


$        0.76

 * 

$        0.84

 * 










* Does not foot due to rounding.

The company is also providing full year revenue guidance for each of its business segments.  Accordingly, the company expects full year revenue for its Firearms segment to be between $520.0 million and $530.0 million and full year revenue for its Outdoor Products & Accessories segment to be between $180.0 million and $190.0 million. The full year revenue estimate for the Firearms segment includes additional revenue of $34.0 million to $36.0 million as a result of the change in timing of the federal excise tax assessment noted above and further discussed in the company's form 10-Q filed concurrently with this press release. Intercompany eliminations are expected to be approximately $20.0 million.

Conference Call and Webcast
The company will host a conference call and webcast today, December 5, 2019, to discuss its second 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 5626969.  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) change in contingent consideration; (vi) the tax effect of non-GAAP adjustments, (vii) net cash (used in)/provided by operating activities, (viii) net cash used in investing activities,  (ix) interest expense, (x) income tax expense, (xi) depreciation and amortization, and (xii) 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 Armstm, 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 and 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 Armstm 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 expectations regarding new products; our expectation to complete the spin-off of our outdoor products and accessories business as a tax-free stock dividend to our stockholders in the second half of calendar 2020, thereby creating two independent, publicly traded companies: Smith & Wesson Brands, Inc. (the firearm business) and American Outdoor Brands, Inc. (the outdoor products and accessories business), each of which are leaders in their industries; our belief that the spin-off will drive long-term value for our stockholders by enabling the management team of each company to focus on its specific strategies, including structuring its business to take advantage of growth opportunities in its specific markets; tailoring its business operation and financial model to its specific long-term strategies; and aligning its external financial resources, such as stock, access to markets, credit, and insurance factors, with its particular type of business; our expectation to substantially reduce the net leverage ratio by the end of the current fiscal year; our expectation of full year revenue for the firearms segment and the Outdoor Products & Accessories segment; our expectation of intercompany eliminations; and our belief that the presentation of non-GAAP 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.  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; the completion of our proposed spin-off and the operations and performance of the two separate companies thereafter; 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:


October 31, 2019


April 30, 2019


(In thousands, except par value and share data)

 ASSETS

 Current assets:




Cash and cash equivalents

$          43,846


$     41,015

Accounts receivable, net of allowance for doubtful accounts of $2,036 on October 31, 2019 and $1,823 on April 30, 2019

93,629


84,907

Inventories

201,213


163,770

Prepaid expenses and other current assets

8,904


6,528

Income tax receivable 

5,468


2,464

Total current assets

353,060


298,684

 Property, plant, and equipment, net

170,348


183,268

 Intangibles, net

82,562


91,840

 Goodwill

182,267


182,269

 Other assets

20,559


10,728


$        808,796


$   766,789

 LIABILITIES AND STOCKHOLDERS' EQUITY

 Current liabilities:




Accounts payable

$          36,102


$     35,584

Accrued expenses and deferred revenue

42,545


39,322

Accrued payroll and incentives

10,640


21,473

Accrued income taxes

265


175

Accrued profit sharing

1,198


2,830

Accrued warranty

4,475


5,599

Current portion of notes and loans payable

75,000


6,300

Total current liabilities

170,225


111,283

 Deferred income taxes 

9,640


9,776

 Notes and loans payable, net of current portion

127,800


149,434

 Finance lease payable, net of current portion

40,389


45,400

Other non-current liabilities

14,192


6,452

Total liabilities

362,246


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, 73,226,141 issued and 55,059,279 shares outstanding on October 31, 2019 and 72,863,624 shares issued and 54,696,762 shares outstanding on April 30, 2019

73


73

Additional paid-in capital 

266,582


263,180

Retained earnings

402,131


402,946

Accumulated other comprehensive income

139


620

Treasury stock, at cost (18,166,862 shares on October 31, 2019 and April 30, 2019)

(222,375)


(222,375)

Total stockholders' equity

446,550


444,444


$        808,796


$   766,789

 

AMERICAN OUTDOOR BRANDS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME/(LOSS)












For the Three Months Ended


For the Six Months  Ended



October 31, 2019


October 31, 2018


October 31, 2019


October 31, 2018



(Unaudited)



(In thousands, except per share data)

Net sales


$        154,388


$        161,703


$        278,057


$        300,536

Cost of sales


104,082


105,317


179,898


191,728

Gross profit


50,306


56,386


98,159


108,808

Operating expenses:









Research and development


2,988


3,251


6,217


6,062

Selling, marketing, and distribution


19,352


15,291


36,125


26,906

General and administrative


23,082


26,518


49,791


51,039

Total operating expenses


45,422


45,060


92,133


84,007

Operating income


4,884


11,326


6,026


24,801

Other (expense)/income, net:









Other income, net 


86


8


91


(9)

Interest expense, net


(3,039)


(2,274)


(5,666)


(4,274)

Total other (expense), net


(2,953)


(2,266)


(5,575)


(4,283)

Income from operations before income taxes


1,931


9,060


451


20,518

Income tax expense


638


2,395


1,266


6,208

Net Income/(loss)


$             1,293


$             6,665


$              (815)


$          14,310

Net Income/(loss) per share:









Basic


$               0.02


$               0.12


$             (0.01)


$               0.26

Diluted


$               0.02


$               0.12


$             (0.01)


$               0.26

Weighted average number of common shares outstanding:









Basic


54,912


54,444


54,847


54,395

Diluted


55,424


55,107


54,847


55,047

 

AMERICAN OUTDOOR BRANDS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)






For the Six Months Ended


October 31, 2019


October 31, 2018


(In thousands)

Cash flows from operating activities:




Net (loss)/income

$                 (815)


$              14,310

Adjustments to reconcile net income to net cash (used in)/provided by operating activities:




Depreciation and amortization 

27,993


25,994

Loss/(gain) on sale/disposition of assets

15


(1,038)

Provision for losses on notes and accounts receivable

392


146

Deferred income taxes

?


(1,519)

Change in fair value of contingent consideration

100



Stock-based compensation expense

3,016


3,952

Changes in operating assets and liabilities:




Accounts receivable

(9,114)


(7,278)

Inventories

(37,443)


(22,482)

Prepaid expenses and other current assets

(2,376)


(1,352)

Income taxes

(2,914)


3,786

Accounts payable

1,019


5,488

Accrued payroll and incentives

(10,833)


2,322

Accrued profit sharing

(1,632)


(369)

Accrued expenses and deferred revenue

(92)


(12,052)

Accrued warranty

(1,124)


(992)

Other assets

1,372


40

Other non-current liabilities

(2,170)


95

Net cash (used in)/provided by operating activities

(34,606)


9,051

Cash flows from investing activities:




Payments to acquire patents and software

(389)


(207)

Proceeds from sale of property and equipment

?


1,223

Payments to acquire property and equipment

(8,979)


(19,605)

Net cash used in investing activities

(9,368)


(18,589)

Cash flows from financing activities:




Proceeds from loans and notes payable

75,000


50,000

Payments on finance lease obligation

(431)


(323)

Payments on notes and loans payable

(28,150)


(53,150)

Proceeds from exercise of options to acquire common stock, including employee stock purchase plan

936


1,158

Payment of employee withholding tax related to restricted stock units

(550)


(600)

Net cash provided by/(used in) financing activities

46,805


(2,915)

Net increase/(decrease) in cash and cash equivalents

2,831


(12,453)

Cash and cash equivalents, beginning of period

41,015


48,860

Cash and cash equivalents, end of period

$              43,846


$              36,407

Supplemental disclosure of cash flow information




Cash paid for:




Interest

$                5,767


$                4,339

Income taxes

$                4,184


$                3,065

 

RECONCILIATION OF GAAP FINANCIAL MEASURES TO NON-GAAP FINANCIAL MEASURES
(Dollars in thousands, except per share data)
(Unaudited)


















For the Three Months Ended 


For the Six Months Ended


October 31, 2019


October 31, 2018


October 31, 2019


October 31, 2018


$


% of Sales


$


% of Sales


$


% of Sales


$


% of Sales

GAAP gross profit

$ 50,306


32.6%


$ 50,386


31.2%


$ 98,159


35.3%


$ 108,808


36.2%

Diode recall

?


?


?


?


(589)


-0.2%


?


?

Fair value inventory step-up

?


?


120


0.1%


?


?


270


0.1%

Transition costs

269


0.2%


?


?


872


0.3%


?


?

Non-GAAP gross profit

$ 50,575


32.8%


$ 50,506


31.2%


$ 98,442


35.4%


$ 109,078


36.3%

















GAAP operating expenses

$ 45,422


29.4%


$ 45,060


27.9%


$ 92,133


33.1%


$   84,007


28.0%

Amortization of acquired intangible assets

(4,775)


-3.1%


(5,444)


-3.4%


(9,545)


-3.4%


(10,890)


-3.6%

Transition costs

(416)


-0.3%


(382)


-0.2%


(899)


-0.3%


(382)


-0.1%

Non-GAAP operating expenses

$ 40,231


26.1%


$ 39,234


24.3%


$ 81,689


29.4%


$   72,735


24.2%

















GAAP operating income

$   4,884


3.2%


$ 11,326


7.0%


$   6,026


2.2%


$   24,801


8.3%

Fair value inventory step-up

?


?


120


0.1%


?


?


270


0.1%

Amortization of acquired intangible assets

4,775


3.1%


5,444


3.4%


9,545


3.4%


10,890


3.6%

Transition costs

685


0.4%


382


0.2%


1,771


0.6%


382


0.1%

Non-GAAP operating income

$ 10,344


6.7%


$ 17,272


10.7%


$ 16,753


6.0%


$   36,343


12.1%

















GAAP net income/(loss)

$   1,293


0.8%


$   6,665


4.1%


$     (815)


-0.3%


$   14,310


4.8%

Fair value inventory step-up

?


?


120


0.1%


?


?


270


0.1%

Amortization of acquired intangible assets

4,775


3.1%


5,444


3.4%


9,545


3.4%


10,890


3.6%

Diode recall

?


?


?


?


(589)


-0.2%


?


?

Transition costs

685


0.4%


382


0.2%


1,771


0.6%


382


0.1%

Change in contingent consideration

(100)


-0.1%


?


?


(100)


0.0%


?


?

Tax effect of non-GAAP adjustments

(1,447)


-0.9%


(1,570)


-1.0%


(2,869)


-1.0%


(3,120)


-1.0%

Non-GAAP net income

$   5,206


3.4%


$ 11,041


6.8%


$   6,943


2.5%


$   22,732


7.6%

















GAAP net income/(loss) per share - diluted

$      0.02




$      0.12




$    (0.01)




$        0.26



Fair value inventory step-up

?




?




?




?



Amortization of acquired intangible assets

0.09




0.10




0.17




0.20



Diode recall

?




?




(0.01)




?



Transition costs

0.01




0.01




0.03




0.01



Change in contingent consideration

?




?




?




?



Tax effect of non-GAAP adjustments

(0.03)




(0.03)




(0.05)




(0.06)



Non-GAAP net income per share - diluted

$      0.09




$      0.20




$      0.13




$        0.41



 

AMERICAN OUTDOOR BRANDS CORPORATION AND SUBSIDIARIES

RECONCILIATION OF NET OPERATING CASH FLOW TO FREE CASH FLOW
(In thousands)
(Unaudited)










For the Three Months Ended


For the Six Months Ended


October 31, 2019


October 31, 2018


October 31, 2019


October 31, 2018

Net cash (used in)/provided by operating activities

$           (5,468)


$           (1,589)


$         (34,606)


$             9,051

Net cash used in investing activities

(5,550)


(11,481)


(9,368)


(18,589)

Free cash flow

(11,018)


$         (13,070)


$         (43,974)


$           (9,538)

 

AMERICAN OUTDOOR BRANDS CORPORATION AND SUBSIDIARIES

RECONCILIATION OF GAAP NET INCOME/(LOSS) TO NON-GAAP ADJUSTED EBITDAS
(In thousands)
(Unaudited)











For the Three Months Ended


For the Six Months Ended



October 31, 2019


October 31, 2018


October 31, 2019


October 31, 2018










GAAP net income/(loss)


$             1,293


$             6,665


$              (815)


$          14,310

Interest expense


3,266


2,352


6,029


4,382

Income tax expense


638


2,395


1,266


6,208

Depreciation and amortization


13,761


12,816


27,777


25,560

Stock-based compensation expense


1,369


1,963


3,016


3,952

Fair value inventory step-up


?


120


?


270

Transition costs


685


382


1,771


382

Diode recall


?


?


(589)


?

Change in contingent consideration


(100)


?


(100)


?

Non-GAAP Adjusted EBITDAS


$          20,912


$          26,693


$          38,355


$          55,064










 

SOURCE American Outdoor Brands Corporation


These press releases may also interest you

at 15:28
Today, we became aware of reports of criminal attempts to sell some customer payment card information potentially involved in the previous Data Security Incident announced by Wawa on December 19, 2019.  We have alerted our payment card processor,...

at 15:28
Kirkland Lake Gold Ltd. ("Kirkland Lake Gold" or the "Company")    is pleased to announce that at a special meeting of shareholders held earlier today (the "Meeting"), Kirkland Lake Gold shareholders voted overwhelmingly in favour of the resolution...

at 15:23
Fairwinds Recruiting, a San Francisco Bay Area leader in talent acquisition announces today the company will change its name to FairwindslogiX www.fairwindslogix.com. The new name, FairwindslogiX, is inspired by the company's vision of providing fast...

at 15:16
MoneyGram International, Inc. , a global leader in cross-border P2P payments and money transfers, announced today that it is partnering with Industrialbank, to create a new bank deposit service in Ukraine. MoneyGram is the first company in the...

at 15:13
ABB is proud to announce it has been selected as one of Canada's Best Employers by Forbes Magazine for the fourth year in a row. In 2020, ABB increased its placement to #14 (up from #26 in 2019). Additionally, ABB ranked #1 within the industry...

at 15:10
An appearance has been scheduled before a Hearing Panel of the Investment Industry Regulatory Organization of Canada (IIROC) for the purpose of setting a date for the disciplinary hearing in the matter of Patrick John Lilly. The discipline hearing...



News published on 5 december 2019 at 16:05 and distributed by: