Q3 2025 American Outdoor Brands Inc Earnings Call
Started at this time I would like to turn the call over to Liz Sharp Vice President of Investor Relations for some information about today's call.
Speaker Change: Thank you and good afternoon.
Speaker Change: Comments today may contain predictions estimates and other forward looking statements.
Speaker Change: Our use of words like anticipate project estimate expect intend should could indicate suggest believe and other similar expressions is intended to identify those forward looking statements.
Speaker Change: Forward looking statements also include statements regarding our product development focus objectives strategies and vision.
Speaker Change: Our strategic evolution, our market share and market demand for our products.
Speaker Change: Market and inventory conditions related to our products and in our industry in general.
Speaker Change: And then should could indicate suggest believe and other similar expressions is intended to identify those forward looking statements.
Speaker Change: And growth opportunities and trends.
Speaker Change: Our forward looking statements represent our current judgment about the future and they are subject to various risks and uncertainties.
Speaker Change: Forward looking statements also include statements regarding our product development focus objectives strategies and vision.
Speaker Change: Risk factors and other considerations that could cause our actual results to be materially different are described in our securities filings you can find those documents as well as a replay of this call on our website at <unk> Dot com.
Speaker Change: Our strategic evolution.
Speaker Change: Our market share and market demand for our products.
Speaker Change: Market and inventory conditions related to our products and in our industry in general.
Speaker Change: Today's call contains time sensitive information that is accurate only as of this time and we assume no obligation to update any forward looking statements. Our actual results could differ materially from our statements today.
Speaker Change: And growth opportunities and threats.
Speaker Change: Our forward looking statements represent our current judgment about the future and they are subject to various risks and uncertainties.
Speaker Change: I have a few important items to note about our comments on today's call first we referenced certain non-GAAP financial measures are non-GAAP results exclude amortization of acquired intangible assets stock compensation technology implementation nonrecurring inventory reserve.
Speaker Change: Risk factors and other considerations that could cause our actual results to be materially different are described in our securities filings you can find those documents as well as a replay of this call on our website at <unk> Dot com.
Speaker Change: Today's call contains time sensitive information that is accurate only as of this time and we assume no obligation to update any forward looking statements.
Speaker Change: <unk> adjustments other costs and income tax adjustments.
Speaker Change: The reconciliation of GAAP financial measures to non-GAAP financial measures, whether they are discussed on today's call can be found in our filings as well as today's earnings press release, which are posted on our website.
Speaker Change: Our actual results could differ materially from our statements today.
Speaker Change: I have a few important items to note about our comments on today's call first we referenced certain non-GAAP financial measures are non-GAAP results exclude amortization of acquired intangible assets stock compensation technology implementation.
Speaker Change: Also when we reference EPS, we're always referencing fully diluted EPS.
Speaker Change: Joining us on today's call is Brian Murphy, President and CEO, and Andy former CFO and with that I will turn the call over to Brian.
Speaker Change: Non recurring inventory reserve adjustments and other costs and income tax adjustments.
The reconciliation of GAAP financial measures to non-GAAP financial measures, whether they are discussed on today's call can be found in our filings as well as today's earnings press release, which are posted on our website.
Speaker Change: Thanks, Luke and thanks, everyone for joining us.
Speaker Change: I'm extremely pleased with our third quarter results, which came in ahead of our expectations.
Speaker Change: We delivered net sales of over $58 million.
Speaker Change: 5% increase over last year, we delivered growth in both our outdoor lifestyle and our shooting sports categories supported by year over year increases in our traditional e-commerce and domestic sales channels.
Speaker Change: Also when we reference EPS, we are always referencing fully diluted EPS.
Speaker Change: Joining us on today's call is Brian Murphy, President and CEO, and Andy former CFO and with that I will turn the call over to Brian.
Speaker Change: We delivered a significant increase in non-GAAP, adjusted Ebitdas, which nearly doubled year over year.
Speaker Change: Thanks, Liz and thanks, everyone for joining us.
Speaker Change: And similar to last quarter, our growth was driven mostly by in line products.
Speaker Change: I'm extremely pleased with our third quarter results, which came in ahead of our expectations.
Speaker Change: We delivered net sales of over $58 million a night.
Speaker Change: Ahead of several new product launches that we teased out during our last call and showcased publicly in the third quarter.
Speaker Change: 5% increase over last year, we delivered growth in both our outdoor lifestyle and our shooting sports categories.
Speaker Change: We believe our strong performance demonstrates the effectiveness of our long term strategy.
Speaker Change: Supported by year over year increases in our traditional e-commerce and domestic sales channels.
Speaker Change: Leverage our innovation advantage to broaden our distribution opportunities expand awareness of our brands.
Speaker Change: We delivered a significant increase in non-GAAP, adjusted Ebitdas, which nearly doubled year over year.
Speaker Change: And strengthen our margins.
Speaker Change: Similar to last quarter, our growth was driven mostly by in line products.
Speaker Change: All while remaining agile and asset light.
Speaker Change: We delivered results in each of these areas in the third quarter, So let's jump in.
Speaker Change: Head of several new product launches that we teased out during our last call.
Speaker Change: First let me share how we're leveraging our innovation advantage.
Speaker Change: It's publicly in the third quarter.
Speaker Change: Yeah.
Speaker Change: At <unk>, we often say that the greatest opportunity is the one that's right in front of us.
Speaker Change: We believe our strong performance demonstrates the effectiveness of our long term strategy.
Speaker Change: And that means the growth potential in our existing brands.
Speaker Change: Average, our innovation advantage to broaden our distribution opportunities expand awareness of our brands.
Speaker Change: That growth potential comes from new products, which form the core of our innovation advantage.
Speaker Change: And strengthen our margins.
Speaker Change: All while remaining agile and asset life.
Speaker Change: New products provide the oxygen that allows our brands to grow and they create larger addressable markets to house that growth.
Speaker Change: We delivered results in each of these areas in the third quarter, So let's jump in.
Speaker Change: First let me share how we're leveraging our innovation advantage.
Speaker Change: They deepen consumer loyalty.
Speaker Change: And they attract entirely new consumers.
Speaker Change: And it'll be we often say that the greatest opportunity is the one that's right in front of us.
Speaker Change: They drive retail foot traffic and a drive retailers to choose us as a unique cross category innovation partner.
Speaker Change: And that means the growth potential in our existing brands.
Speaker Change: Growth potential comes from new products, which form the core of our innovation advantage.
And most importantly, new products fuel, our long term growth by adding layers of IP protected revenue to our platform that stacks up over time.
Speaker Change: New products provide the oxygen that allows our brands to grow and they create larger addressable markets to how's that growth.
Speaker Change: While I plan to highlight some of these new products on today's call I want to be clear that they represent just a couple of exciting examples in a very deep very wide pipeline that spans many brands and run several years into the future.
Speaker Change: They deepen consumer loyalty.
Speaker Change: And they attract entirely new consumers.
Speaker Change: They drive retail foot traffic and they drive retailers to choose us as a unique cross category innovation partner.
Speaker Change: Our internal teams are incredibly collaborative and resourceful and they drive a process that continually replenishing that pipeline, which is why new products typically generate over 20% of our net sales each year.
And most importantly, new products fuel, our long term growth by adding layers of IP protected revenue to our platform that stacks up overtime.
Speaker Change: In January we unveiled several new products that showcase our ability to leverage our innovation advantage.
Speaker Change: While I plan to highlight some of these new products on today's call I want to be clear that they represent just a couple of exciting examples in a very deep very wide pipeline that spans many brands and run several years into the future.
Speaker Change: To drive brand awareness and expand our markets by developing.
<unk> disruptive products that make outdoor activities more accessible to a broader audience of enthusiasm.
Speaker Change: Our internal teams are incredibly collaborative and resourceful and they drive a process that continually replenishes that pipeline, which is why new products typically generate over 20% of our net sales each year.
Speaker Change: Two prime examples come from our Bubba and Caldwell brands.
Speaker Change: First from Bubba.
Speaker Change: We're bringing fishing gamification to a much larger market.
Speaker Change: Of everyday anglers, allowing them to compete like the pros with the Bubba smart fish scale or sfas light.
Speaker Change: In January we unveiled several new products that showcase our ability to leverage our innovation advantage.
Speaker Change: To drive brand awareness and expand our markets by developing disruptive products that make outdoor activities.
Speaker Change: Originally our Bubba brand play to only in the saltwater market, which represents about $10 million anglers.
Speaker Change: <unk> to a broader audience of enthusiasm.
Speaker Change: So when we decided to expand into the much larger freshwater market of about $40 million anglers.
Speaker Change: Two prime examples come from our Bubba and Caldwell brands.
Speaker Change: We had a clear strategy in mind.
Speaker Change: Burst from Bubba.
Speaker Change: Develop a premium for scale and app with a level of accuracy and reliability the pros will trust.
Speaker Change: We're bringing fishing gamification to a much larger market.
Speaker Change: Of everyday anglers, allowing them to compete like the pros with the Bubba smart fish scale or sfas life.
Speaker Change: And then use that earn trust to win over the everyday engler.
We launched the pro series in June 2023, and by January 2024. It was named the official scale of major league fishing, putting bubba on the map with an achievement that set the stage for this year's launch of the <unk> light.
Speaker Change: Originally our Bubba brand played it only in the saltwater market, which represents about 10 million anglers.
Speaker Change: So when we decided to expand into the much larger freshwater market of about 40 million anglers.
Speaker Change: The new <unk> offer some of the same pro grade features and gamification capabilities for casual fishing trips with buddies.
Speaker Change: We had a clear strategy in mind.
Speaker Change: Develop a premium there scale, an app with a level of accuracy and reliability the pros will trust.
Speaker Change: All at a price that everyday anglers can appreciate.
They use that earn trust to win over the everyday engler.
Speaker Change: While it's still a premium product at $69.
Speaker Change: We launched the pro series in June 2023, and by January 2024. It was named the official scale of major league fishing, putting bubble on the map with an achievement that set the stage for this year's launch of the <unk> slide.
Speaker Change: It's a scale purposely designed and built to grow with anglers operating configurations that support their journey and push the boundaries of what's possible.
Speaker Change: Anglers can track their biggest catches and most successful days on the water or.
Speaker Change: The new asset first like offer some of the same pro grade features and gamification capabilities for casual fishing trips with buddies.
Speaker Change: Or they can turn their time on the lake into a competition with brands.
Speaker Change: And when it's time to level up anglers can upgrade their app to the Bubba pro subscription unleashing the full potential of the <unk> life.
Speaker Change: All at a price that everyday anglers can appreciate it.
Speaker Change: While it's still a premium product at $69.
Speaker Change: The strategy, we employed with Bubba is one that was several years in the making but only now is visible.
Speaker Change: It's a scale purposely designed and built to grow with anglers operating configurations that support their journey.
Speaker Change: With the launch of the <unk> life.
Speaker Change: Push the boundaries of what's possible.
Speaker Change: It's one example of our multi year product development approach, let me share one more.
Speaker Change: Anglers can track their biggest catches and most successful days on the water or they can turn their time on the lake into a competition with friends.
Speaker Change: Last quarter, you May recall, we said that <unk> was about to put a new spin on shotguns sports and.
Speaker Change: And when it's time to level up anglers can upgrade their app to the Bubba pro subscription unleashing the full potential of the <unk> life.
Speaker Change: And some of you probably wanted what we meant.
Speaker Change: Well Caldwell is reshaping how millions of clay shooters Tech game.
Speaker Change: The strategy, we employed with Bubba is one that was several years in the making but only now is visible.
Speaker Change: In Q3, we introduced a revolutionary new target system called the Clay Copter, which includes an easy to use handheld electronic launcher that propels a set of biodegradable desks up to 100 yards.
Speaker Change: With the launch of the first life.
Speaker Change: It's one example of our multi year product development approach, let me share one more.
Speaker Change: In an endless variety of flight patterns challenging shooters like never before.
Speaker Change: Last quarter, you May recall, we said that called La was about to put a new spin on shotgun sports.
Speaker Change: With the clay copter system, taking a thrower and targets to the range couldnt be easier and more fun.
Speaker Change: Some of you probably wanted but we met.
Speaker Change: Well Caldwell is reshaping how millions of player shooters Tech game.
Speaker Change: For nearly 150 years traditional clay targets have been the most practical option for shotgun sports enthusiasts.
Speaker Change: In Q3, we introduced a revolutionary new target system called the quake after which includes an easy to use handheld electronic launcher that propels our set of biodegradable desks up to 100 yards.
Speaker Change: <unk> to hone their wing shooting skills.
Speaker Change: But traditional clay targets typically require heavy throwers that are bulky and cumbersome to store and transport.
Speaker Change: And endless variety of flight patterns challenging shooters like never before.
Speaker Change: <unk> are notoriously fragile they flying predictable patterns and they come in heavy containers that often make transportation a real challenge.
Speaker Change: With the quake after system, taking a thrower and targets to the range couldn't be easier and more fun.
Speaker Change: In fact, clay's cannot be purchased at all online due to their weight and breakage.
Speaker Change: For nearly a 150 years traditional clay targets have been the most practical option for shotgun sports enthusiasts eager to hone their wing shooting skills.
Speaker Change: Enter the clay copter.
Speaker Change: Designed entirely in house and surrounded by pending IP the portable larger ways, just three pounds impacts the same power of a traditional thrower and handheld motorized design small enough to fit in our range bag or backpack.
Speaker Change: But traditional clay targets typically require heavy throwers that are bulky and cumbersome to store and transport.
Speaker Change: Clays are notoriously fragile they fly predictable patterns.
Speaker Change: The clay copter target discs are 70% lighter than traditional players and designed to break only one shot.
Speaker Change: And they come in heavy containers that often make transportation a real challenge.
Speaker Change: In fact clays cannot be purchased at all online due to their weight and breakage.
Speaker Change: That can be purchased in a lightweight compact to 50 desks and their inexpensive to transport freeing retailers and our Caldwell brand to ship directly to consumers and opening up a highly attractive consumable revenue stream.
Speaker Change: Or the Doctor.
Speaker Change: Designed entirely in house and surrounded by pending IP. The portable lots of ways, just three pounds and packs the same power of a traditional thrower in a handheld motorized design small enough to fit in a range bag or backpack.
Speaker Change: Next let me turn to our achievements and widening our distribution and expanding awareness of our brands.
Speaker Change: The quake after target disk SAR, 70% lighter than traditional clays and designed to break only one shot.
Speaker Change: We continued to gain traction and momentum with retailers in the third quarter proving our value as a cross category innovation partner by demonstrating our ability to provide them with instant access to innovation and excitement.
Speaker Change: They can be purchased in a lightweight compact to a 50 desks and their inexpensive to transport freeing retailers and our Caldwell brand the ship directly to consumers and opening up a highly attractive consumable revenue stream.
Speaker Change: This capability is a true differentiator for us since we're often competing against organizations.
Speaker Change: That can provide great efficiency across multiple categories.
Next let me turn to our achievements and widening our distribution and expanding awareness of our brands.
Speaker Change: But often lack innovation.
Speaker Change: Or that can provide the innovation, but only in a single category.
Speaker Change: We continued to gain traction and momentum with retailers in the third quarter proving our value as a cross category innovation partner by demonstrating our ability to provide them with instant access to innovation and excitement.
Speaker Change: We've cracked that code and found a way to get retailers both efficiency.
Speaker Change: And innovation across an entire portfolio.
Speaker Change: This provides new distribution opportunities for our brands and products for example, during the quarter, we secured new and expanded retail placement for our Borg Caldwell Gorilla and meet your makeup brands.
Speaker Change: This capability is a true differentiator for us since we're often competing against organizations.
Speaker Change: That can provide great efficiency across multiple categories.
This broader distribution is important because it generates brand awareness among consumers, who often represent entirely new audiences.
Speaker Change: But often lack innovation.
Speaker Change: Or that can provide the innovation, but only in a single category.
Speaker Change: We have cracked that code and found a way to get retailers, both efficiency and innovation across an entire portfolio.
Speaker Change: Lastly.
Speaker Change: I will address our focus on increasing profitability, while remaining agile and asset light both of which are equally important to our growth strategy.
Speaker Change: This provides new distribution opportunities for our brands and products for example, during the quarter, we secured new and expanded retail placement for our Borg Caldwell Gorilla and meet your maker brands.
Speaker Change: We continued to embrace our long term model for net sales and profitability and I am extremely pleased with our ability to demonstrate growth and margin expansion in the third quarter.
Speaker Change: This broader distribution is important because it generates brand awareness among consumers, who often represent entirely new audiences.
Speaker Change: Particularly given the recent environment of inflation consumer uncertainty and ever evolving tariffs.
Speaker Change: Lastly.
Speaker Change: Despite these environmental challenges, we believe we have a number of levers available to us in support of our model.
Speaker Change: I'll address our focus on increasing profitability, while remaining agile and asset life.
Speaker Change: Of which are equally important to our growth strategy.
Speaker Change: First.
Speaker Change: Because the new products are such a high percentage of our revenue they are tremendous tool in preserving and strengthening our margin profile by allowing us to feather in new higher margin often IP protected products.
Speaker Change: We continue.
Speaker Change: To embrace our long term model for net sales and profitability and I am extremely pleased with our ability to demonstrate growth and margin expansion in the third quarter.
Speaker Change: Particularly given the recent environment of inflation consumer uncertainty and ever evolving tariffs.
Speaker Change: As well as subscription revenue services, such as the Bubba App that accompanies the fish skills, we discussed today.
Speaker Change: Despite these environmental challenges, we believe we have a number of levers available to us in support of our model.
Speaker Change: Second we continue to maintain a healthy direct to consumer business, which is complementary to our <unk> strategy and gives us the option to introduce new products directly to consumers when appropriate.
Speaker Change: Burst.
Speaker Change: Because of the new products are such a high percentage of our revenue they are tremendous tool in preserving and strengthening our margin profile by allowing us to feather in new higher margin.
Speaker Change: Building loyalty and demand prior to introducing them into the retail channel.
Speaker Change: It's a strategy we've successfully executed in the past with our gorilla and meet your maker brands.
Speaker Change: Often IP protected products.
Speaker Change: As well as subscription revenue services, such as the Bubba App that accompanies the fish scales, we discussed today.
Speaker Change: Third because we own our product designs and the tooling required to make those products. We have some flexibility with regard to where those products are made.
Speaker Change: Second.
Speaker Change: We continued to maintain a healthy direct to consumer business, which is complementary to our <unk> strategy and gives us the option to introduce new products directly to consumers when appropriate.
Speaker Change: That said, we have strong and long lasting supplier partnerships. Those partnerships are proving valuable as we work together to assess our optimal responses to the dynamic tariff landscape.
Speaker Change: Building loyalty and demand prior to introducing them into the retail channel.
Speaker Change: Lastly.
It's a strategy we've successfully executed in the past with our gorilla and meet your maker brands.
Speaker Change: Our strong balance sheet and asset light model provides agility.
Speaker Change: Third because we own our product designs and the tooling required to make those products. We have some flexibility with regard to where those products are made.
Speaker Change: Allowing us to make those decisions that are best for the long term health of our business.
Speaker Change: We believe we have the tools necessary to successfully navigate the future.
Speaker Change: That said, we have strong and long lasting supplier partnerships. Those partnerships are proving valuable as we work together to assess our optimal responses to the dynamic tariff landscape.
Speaker Change: We have encountered tariffs before and demonstrated that we have levers we can pull and have pulled.
Speaker Change: As a result, we believe we have optionality as we continue to grow while embracing our long term model for profitability.
Speaker Change: Lastly.
Our strong balance sheet and asset light model provides agility.
Speaker Change: With our innovation advantage in hand, and our flexible asset light platform already in place.
Speaker Change: Allowing us to make those decisions that are best for the long term health of our business.
Speaker Change: We remain excited about our ability to deliver sustainable growth.
Speaker Change: We believe we have the tools necessary to successfully navigate the future we.
Speaker Change: Profitability in fiscal 2025 and beyond.
Speaker Change: We havent counterterrorists before and demonstrated that we have levers we can pull and have built.
Speaker Change: With that I'll turn it over to Andy to discuss our financial results.
Speaker Change: As a result, we believe we have optionality as we continue to grow while embracing our long term model for profitability.
Andy: Thanks, Brian we're very pleased with our results for the third quarter net sales and profitability came in ahead of our expectations.
Speaker Change: With our innovation advantage in hand, and our flexible asset light platform already in place.
Andy: We further strengthened our balance sheet.
Andy: And we continued to return capital to shareholders through our share repurchase program.
Speaker Change: We remain excited about our ability to deliver sustainable growth.
Andy: Let me walk you through some of the details.
Andy: Net sales for Q3 were $58 5 million.
Speaker Change: Profitability in fiscal 2025 and beyond.
Andy: A nine 5% increase over Q3 last year.
Speaker Change: With that I'll turn it over to Andy to discuss our financial results.
Andy: We delivered growth in both our outdoor lifestyle category and our shooting sports category.
Andy: Thanks, Brian we're very pleased with our results for the third quarter net sales and profitability came in ahead of our expectations.
And benefited from the timing of approximately $1 million in orders that were originally slated for the fourth quarter.
Speaker Change: We further strengthened our balance sheet.
Speaker Change: And we continued to return capital to shareholders through our share repurchase program.
Andy: In our outdoor lifestyle category, which consists of products related to hunting fishing outdoor cooking and rugged outdoor activities.
Speaker Change: Let me walk you through some of the details.
Net sales for Q3 were $58 $5 million, a 9% increase over Q3 last year.
Net sales grew by 15, 1% driven mainly by sales in our meet your maker and bogs brands as well as our knife and tool brands.
Speaker Change: We delivered growth in both our outdoor lifestyle category and our shooting sports category.
Andy: And our shooting sports category, which includes solutions for target shooting aiming solutions safe storage cleaning and maintenance and personal protection.
Speaker Change: And benefited from the timing of approximately $1 million in orders that were originally slated for the fourth quarter.
Speaker Change: Yes.
Speaker Change: In our outdoor lifestyle category, which consists of products related to hunting fishing outdoor cooking and rugged outdoor activities.
Andy: Net sales grew by almost 3% compared to our third quarter last year.
Andy: Within the category shooting accessories sales increased due in part to promotional sales of some slower moving inventory.
Speaker Change: Net sales grew by 15, 1% driven mainly by sales in our meet your maker and bogs brands as well as our knife and tool brands.
Andy: Personal protection product sales were down slightly compared to last year consistent with the decrease in adjusted Nix checks for the same period.
Speaker Change: And our shooting sports category, which includes solutions for target shooting aiming solutions safe storage cleaning and maintenance and personal protection.
Turning now to our distribution channels.
Andy: Our traditional channel net sales increased by nine 6% and our E. Commerce net sales increased by nine 5% compared to Q3 last year.
Speaker Change: Net sales grew by almost 3% compared to our third quarter last year.
Within the category shooting accessories sales increased due in part to a promotional sales of some slower moving inventory.
Andy: As a reminder, our E Commerce channel includes direct to consumer sales from our own website as well as sales by online retailers that do not have brick and mortar stores.
Speaker Change: Personal protection product sales were down slightly compared to last year consistent with the decrease in adjusted Nix checks for the same period.
Andy: We believe this high single digit growth across both categories continues to underscore that connection that our brands have both at retail and with consumers.
Speaker Change: Turning now to our distribution channels.
Speaker Change: Our traditional channel net sales increased by nine 6% and our E. Commerce net sales increased by nine 5% compared to Q3 last year.
Andy: With regard to gross margin.
Andy: GAAP gross margin for Q3 was 44, 7% a 200 basis point increase from 42, 7% in Q3 last year.
Speaker Change: As a reminder, our E Commerce channel includes direct to consumer sales from our own websites as well as sales by online retailers that do not have brick and mortar stores.
Andy: On a non-GAAP basis gross margin for Q3 was 45%.
Andy: The increase was driven largely by higher sales volumes and lower inbound freight costs in the quarter, partially offset by the sale of the slower moving inventory I mentioned before.
We believe this high single digit growth across both categories continues to underscore the connection that our brands have both at retail and with consumers.
Andy: Turning to operating expenses.
Speaker Change: With regard to gross margin.
Andy: GAAP operating expenses for the quarter were relatively flat compared to Q3 of last year at $25 8 million.
Speaker Change: GAAP gross margin for Q3 was 44, 7% a 200 basis point increase from 42, 7% in Q3 last year.
Andy: On a non-GAAP basis, which removes amortization stock compensation and nonrecurring expenses.
Speaker Change: On a non-GAAP basis gross margin for Q3 was 45%.
Speaker Change: The increase was driven largely by higher sales volumes and lower inbound freight costs in the quarter, partially offset by the sale of the slower moving inventory I mentioned before.
Andy: Operating expenses in Q3 were up slightly in terms of dollars to $22 7 million compared to $21 5 million in Q3 of last year.
Andy: However, non-GAAP opex decreased as a percentage of net sales to 38, 8% compared to 43% last year a great result.
Speaker Change: Turning to operating expenses.
Speaker Change: GAAP operating expenses for the quarter were relatively flat compared to Q3 of last year at $25 $8 million.
Andy: We remain disciplined with our cost management philosophy, we employ in the ordinary course of business as we look for ways to avoid building and unnecessary costs.
Speaker Change: On a non-GAAP basis, which removes amortization stock compensation and nonrecurring expenses.
Speaker Change: Operating expenses in Q3 were up slightly in terms of dollars to $22 $7 million compared to $21 $5 million in Q3 of last year.
Andy: It's an approach that helps us maintain a lower level of expense over the long term allow.
Andy: Allowing us to be agile and asset light when responding to changes in our environment without resorting to large and sudden cost cuts.
Speaker Change: However, non-GAAP opex decreased as a percentage of net sales to 38, 8% compared to 43% last year a great result.
Andy: Turning to EPS.
Andy: GAAP EPS was <unk> <unk> for the third quarter compared to a negative 23 in the third quarter last year.
Speaker Change: We remain disciplined with our cost management philosophy, we employ in the ordinary course of business as we look for ways to avoid building an unnecessary costs.
Andy: On a non-GAAP basis EPS was <unk> 21 in Q3 compared to <unk> <unk> in the prior year.
Speaker Change: It's an approach that helps us maintain a lower level of expense over the long term allow.
Andy: Our Q3 figures are based on our fully diluted share count of approximately $13 1 million shares and we expect that share count to remain consistent through fiscal year end outside of any share buybacks that may occur.
Speaker Change: Allowing us to be agile and asset light when responding to changes in our environment without resorting to large and sudden cost cuts.
Speaker Change: Turning to EPS.
Andy: Adjusted EBITDA for the quarter was $4 7 million.
GAAP EPS was one <unk> for the third quarter compared to a negative 23 cents in the third quarter last year.
Andy: Compared to $2 $4 million last year.
Andy: On a trailing 12 month basis, adjusted EBITDA was $15 $2 million up an impressive 45% from $10 5 million for the trailing 12 month period a year ago.
Speaker Change: On a non-GAAP basis EPS was <unk> 21 in Q3 compared to eight in the prior year.
Speaker Change: Our Q3 figures are based on our fully diluted share count of approximately $13 1 million shares and we expect that share count to remain consistent through fiscal year end outside of any share buybacks that may occur.
Andy: Turning now to the balance sheet and cash flow.
Andy: We continue to strengthen our balance sheet, ending the quarter with cash of $17 1 million and no debt.
Speaker Change: Adjusted EBITDA for the quarter was $4 $7 million compared to $2.4 million last year.
Andy: After repurchasing approximately one $2 million of our common stock.
Andy: We generated cash from operations of $5 9 million in Q3, driven by a decrease in accounts receivable of $11 6 million, which was partially offset by a decrease in accounts payable and a planned increase in inventory.
Speaker Change: On a trailing 12 month basis, adjusted EBITDA was $15 $2 million up an impressive 45% from $10 5 million for the trailing 12 month period a year ago.
Speaker Change: Turning now to the balance sheet and cash flow.
Andy: We continue to expect our inventory levels to end the fiscal year at approximately $110 million to support net sales growth in fiscal 2026.
Speaker Change: We continue to strengthen our balance sheet, ending the quarter with cash of $17 $1 million and no debt after repurchasing approximately $1 $2 million of our common stock.
Andy: Turning to capital expenditures.
Speaker Change: We generated cash from operations of $5 $9 million in Q3, driven by a decrease in accounts receivable of $11 6 million, which was partially offset by a decrease in accounts payable and a planned increase in inventory.
Andy: We spent $1 $8 million on Capex for ongoing product tooling and patent costs in the third quarter and the completion of the factory outlet store in our Missouri facility.
Andy: For full year fiscal 2025, we expect to spend four to $4 $5 million.
Speaker Change: We continue to expect our inventory levels to end the fiscal year at approximately $110 million to support net sales growth in fiscal 2026.
Andy: Our operating model is designed to require annual capex of roughly 2% of net sales for patents tooling and maintenance investments and our expectations for fiscal 2025 are right in line with that model.
Speaker Change: Turning to capital expenditures.
Speaker Change: We spent $1.8 million on capex for ongoing product tooling and patent costs in the third quarter and the completion of the factory outlet store in our Missouri facility.
Andy: We've discussed in the past, our three capital allocation priorities, which are.
Andy: Organic growth.
Speaker Change: For full year fiscal 2025, we expect to spend four to $4 $5 million.
Andy: Disciplined M&A.
Andy: And returning capital to stockholders with share repurchases.
Andy: With regard to organic growth.
Speaker Change: Our operating model is designed to require annual capex of roughly 2% of net sales for patents tooling and maintenance investments and our expectations for fiscal 2025 are right in line with that model.
Andy: As Brian detailed in his remarks, the investments we make in innovation form the core of our growth strategy.
Andy: Those investments strengthen our brands with consumers deepen our relationships with retailers and broaden our distribution opportunities there.
Speaker Change: We've discussed in the past, our three capital allocation priorities, which are.
Andy: They drove the growth we have delivered in Q3 and throughout the year.
Speaker Change: Organic growth.
Andy: As a result organic growth remains our top priority.
Speaker Change: Disciplined M&A.
Speaker Change: And returning capital to stockholders with share repurchases.
Next we seek out M&A opportunities that fit our criteria and supplement that growth.
Speaker Change: With regard to organic growth as Brian detailed in his remarks, the investments we make in innovation form the core of our growth strategy.
Andy: And lastly, we Opportunistically return capital to our stockholders through buybacks.
Speaker Change: Those investments strengthen our brands with consumers deepen our relationships with retailers and broaden our distribution opportunities.
Andy: Now turning to our outlook.
Andy: We remain excited about the opportunities that lie ahead, given the strength in our existing product lines to success of our recent new product launches and incremental distribution opportunities that we've secured.
Speaker Change: They drove the growth we have delivered in Q3 and throughout the year.
As a result organic growth remains our top priority.
As we approach the end of fiscal 2025, we are narrowing the range of our net sales guidance and raising the midpoint.
Speaker Change: Next we seek out M&A opportunities that fit our criteria and supplement that growth in.
Speaker Change: And lastly, we Opportunistically return capital to our stockholders through buybacks.
Andy: We expect net sales for fiscal 2025, and a range of $207 million to $210 million.
Speaker Change: Now turning to our outlook.
Speaker Change: We remain excited about the opportunities that lie ahead, given the strength in our existing product lines. The success of our recent new product launches and incremental distribution opportunities that we've secured.
Andy: Net sales at the midpoint of that range would imply growth of three 7% for the full year.
Andy: Turning to gross margins.
Andy: We expect GAAP gross margins for the full full year fiscal 2025 to come in at approximately 45% right on target.
Speaker Change: As we approach the end of fiscal 2025, we're narrowing the range of our net sales guidance and raising the midpoint.
As expected second half gross margins will be lower than first half gross margins driven by the increased amortization of tariff and freight variances in the fourth quarter related to higher inventory purchases. We made in the first half of the year.
Speaker Change: We expect net sales for fiscal 2025, and a range of $207 million to $210 million.
Speaker Change: Net sales at the midpoint of that range would imply growth of three 7% for the full year.
Andy: As a reminder, in our business tariff and freight variances are capitalized when inventory is purchased and amortized based on inventory turns.
Speaker Change: Turning to gross margins.
Speaker Change: We expect GAAP gross margins for the full full year fiscal 2025 to come in at approximately 45% right on target.
Andy: While I'm on the subject of tariffs I want to point out here that our strong profit performance. This year incorporates tariffs already embedded into our business for many years now.
Speaker Change: As expected second half gross margins will be lower than first half gross margins driven by the increased amortization of tariff and freight variances in the fourth quarter related to higher inventory purchases. We made in the first half of the year.
Andy: So while we're not yet giving gross margin guidance for fiscal 2026, we remain confident in our ability to utilize the levers we have built into our business as Brian outlined to address ongoing tariff developments.
Speaker Change: As a reminder, in our business tariff and freight variances are capitalized when inventory is purchased and amortized based on inventory turns.
Andy: With regard to operating expense, we expect overall opex in fiscal 2025 to increase slightly over the prior year due to higher variable selling and distribution costs driven by the higher net sales we expect.
Speaker Change: While I'm on the subject of tariffs I want to point out here that our strong profit performance. This year incorporates tariffs already embedded into our business for many years now.
Speaker Change: So well we are not yet, giving gross margin guidance for fiscal 2026, we remain confident in our ability to utilize the levers we have built into our business as Brian outlined to address ongoing tariff developments.
Andy: Based on all of these factors, we are increasing the range of our estimate for adjusted EBITDA for fiscal 2025.
Andy: We now expect adjusted EBITDA will be between $14 5 million and $15 5 million.
Speaker Change: With regard to operating expense, we expect overall opex in fiscal 2025 to increase slightly over the prior year due to higher variable selling and distribution costs driven by the higher net sales and we expect.
Andy: At the midpoint this would represent year over year adjusted EBITDA growth of almost 54%.
Andy: Turning now to fiscal 2026.
Andy: Last quarter, we discussed that early order indications, we received from retailers for both our in line products and our new products provided us greater visibility into the future and supported our fiscal 2026 growth expectations.
Speaker Change: Based on all of these factors, we are increasing the range of our estimate for adjusted EBITDA for fiscal 2025.
Speaker Change: We now expect adjusted Ebitdas will be between $14 5 million and $15 $5 million.
Andy: Since then we've attended shot show where positive feedback reinforced our expectation for net sales of between $220 million and $230 million for fiscal 2026.
Speaker Change: At the midpoint this would represent year over year adjusted EBITDA growth of almost 54%.
Speaker Change: Yeah.
Speaker Change: Turning now to fiscal 2026.
Andy: Which would represent growth of seven 9% from the midpoint of fiscal 'twenty five to the midpoint of fiscal 'twenty six.
Speaker Change: Last quarter, we discussed that early order indications, we received from retailers for both our in line products and our new products provided us greater visibility into the future and supported our fiscal 2026 growth expectations.
Andy: We believe this acceleration in growth rate demonstrates the potential of our innovation advantage to deliver long term sustainable growth.
Speaker Change: Since then we've attended shot show where positive feedback reinforced our expectation for net sales of between $220 million and $230 million for fiscal 2026.
Andy: With that operator, please open the call for questions from our analysts.
Andy: Thank you we will now begin the question and answer session to ask a question you May Press Star then one on your telephone keypad.
Speaker Change: Which would represent growth of seven 9% from the midpoint of fiscal 'twenty five to the midpoint of fiscal 'twenty six.
Andy: Youre using a speakerphone please pick up your handset before pressing the keys.
Andy: Withdraw your question you May Press Star then two.
Speaker Change: We believe this acceleration in growth rate demonstrates the potential of our innovation advantage to deliver long term sustainable growth.
Andy: At this time, we will pause momentarily to assemble our roster.
Mark Smith: Today's first question comes from Mark Smith with Lake Street Capital markets. Please go ahead.
Speaker Change: With that operator, please open the call up for questions from our analysts.
Speaker Change: Thank you we will now begin the question and answer session to ask a question you May Press Star then one on your telephone keypad, if youre using a speakerphone. Please pick up your handset before pressing the keys.
Mark Smith: Hi, guys.
Mark Smith: Apologize if if some of my questions are you hit on the call as I missed some of it but.
Mark Smith: I wanted to just ask broadly about new products.
Mark Smith: Any insight you can give us on kind of the mix impact of the sales.
Speaker Change: Jay Your question you May Press Star then two at this time, we will pause momentarily to assemble our roster.
Mark Smith: But also I want to hear just kind of long term kind of how the pipeline looks and how you think about new product introductions and kind of the planning process behind that.
Speaker Change: Today's first question comes from Mark Smith with Lake Street Capital markets. Please go ahead.
Mark Smith: Sure Hey, Mark it's Brian.
Mark Smith: Hi, guys I'll apologize if if some of my questions are you hit on the call as I missed some of it but.
Mark Smith: Yes, it's a new part new products, obviously is a big part of our go forward plan being an innovation company.
Mark Smith: And.
I wanted to just ask broadly about new products you know in any insight you can give us on kind of the mix impact of sales.
Mark Smith: Historically for US has represented between 20 and 25% of our total net sales.
Mark Smith: And and we have the slide in our investor deck that shows the stacking of that over time, so going forward pipeline continues to be a major contributor for us.
Mark Smith: But also I wanted to just kind of a long term kind of how the pipeline looks and how you think about new product introductions and kind of the planning process behind that.
Mark Smith: And frankly as a big.
Mark Smith: Contributor going forward into this next year, just showing an acceleration of some of that growth.
Brian Murphy: Sure Hey, Mark it's Brian.
Brian Murphy: Yeah, So new part new products, obviously, the big part of our go forward plan being an innovation company.
Mark Smith: And in terms of.
Mark Smith: Sales mix things like that.
Brian Murphy: And you know historically for US has represented between 20 and 25% of our total net sales.
Mark Smith: We've talked about.
Mark Smith: Our lifestyle, becoming a bigger part of our overall portfolio just given the nature of the opportunity and the size of some of those markets. So that continues to be the case.
Brian Murphy: And ER and we have the neat slide in our investor deck that shows the stacking about overtime. So going forward pipeline continues to be a major contributor for us.
Mark Smith: With that said coming out of shot show last month.
And it frankly is a big contributor going forward into this next year, just showing an acceleration of some of that growth.
Speaker Change: You were there and saw some of that need products that we had in particular, the clay copter and.
Speaker Change: Some other other products from Caldwell and Tipton, we alert.
Brian Murphy: And in terms of you know sales mix things like that.
Speaker Change: Is is really in the shooting sports side is continuing to diversify into large markets that are more sustainable and over time have less fluctuation and frankly, a strong user base.
Brian Murphy: We've talked about outdoor lifestyle, becoming a bigger part of our overall portfolio. It's.
Brian Murphy: Just given the nature of the opportunity and the size of some of those markets. So that continues to be the case with that said coming out of shot show last month, which you were there and saw some of that need products that we had in particular, the clay copter and.
Speaker Change: Overall continue to move towards outdoor lifestyle, but in the meantime also have some very exciting good long term categories that we continue to expand into.
Speaker Change: Excellent.
Speaker Change: And then it might be a repeat from some of the script, but.
Brian Murphy: Some other other products from Caldwell and Tipton, we alert.
Speaker Change: If you want to talk about kind of the topic du jour here of tariffs.
Brian Murphy: Is is really in the shooting sports side is continuing to diversify into large markets that are more sustainable and over time have less fluctuation and frankly, a strong user base.
Speaker Change: It's changing daily, but maybe talk about your expected exposure, especially as we think about.
Speaker Change: The mix of China, Canada, Mexico.
Brian Murphy: Overall continue to move towards outdoor lifestyle, but in the meantime also have some very exciting good long term are categories that we continue to expand it to.
Speaker Change: It sounds like it's maybe built into guidance, but walk us through kind of how youre looking at that and anything that maybe changes in your strategy going forward.
Brian Murphy: Excellent.
Brian Murphy: And then you know it might be a repeat from some of the script, but if you want to talk about kind of the topic does your heroes of tariffs.
Speaker Change: Yeah. So.
Brian Murphy: Brian again, obviously.
Brian Murphy: Yes, tariffs are continuing to change or.
Brian Murphy: Not only daily but by the minute. It seems if you're if you're tracking the wall Street Journal, they've got to live life coverage, an update by the minute I think thats. How you know that this is a fast evolving situation.
Brian Murphy: It's changing daily, but but maybe talk about your expected exposure, especially as we think about you know a mix of China, Canada, Mexico.
Brian Murphy: It sounds like it's maybe built into guidance, but but walk us through kind of how youre looking at that and anything that maybe changes in your strategy going forward.
Brian Murphy: So I think our approach just taking a step back remains the same which is.
Brian Murphy: We've tried to make ourselves as nimble as possible and built up a V.
Brian Murphy: Yeah, So Brian again, obviously.
Brian Murphy: Very strong balance sheet, where we can make the right long term decision. That's part of what we've talked about in the prepared remarks, because ultimately we're seeing there might be tariffs and there is right now increased tariffs on Chinese goods.
Speaker Change: Yeah tariffs are continuing to change.
Speaker Change: Not only daily but by the minute. It seems if you're if you're tracking the wall Street Journal they've got our lives life coverage an update by the minute I think that's how you know that this is a.
Brian Murphy: And now we're going back and forth on Canada versus Mexico, and there is even talk of potentially some other insurers.
Fast evolving situation.
Speaker Change: So I think our approach just taking a step back remains the same which is.
Brian Murphy: So ultimately we want to we want to measure twice and cut once.
Speaker Change: You know, we tried to make ourselves as nimble as possible and built up a very strong balance sheet, where we can make the right long term decision. That's part of what we talked about in the prepared remarks.
Brian Murphy: And make the right long term decision because you know moving our supply chain and making some of those changes.
Brian Murphy: It's not it's not a switch you can just flip.
Brian Murphy: There are other things you need to take into consumer.
Speaker Change: Ultimately you know we're seeing you know there might be you know tariffs and there is right now increased tariffs on Chinese goods.
<unk>, which is the big one.
Brian Murphy: We want to make sure we maintain our reputation of no recalls.
Brian Murphy: For a company that produces as many new products as we do each year, it's imperative that we maintain our quality standards and the team does a phenomenal job with that so.
Speaker Change: And now we're going back and forth on Canada versus Mexico, and there's even talk of potentially some other drillers.
Speaker Change: So ultimately we want to we want a measure twice and cut once.
Brian Murphy: For US tariffs is obviously very very top of mind.
And make the right long term decision because you know moving our supply chain and making some of those changes.
Brian Murphy: And we do because we are an asset light company, we do manufacture our products overseas and in China, Our Chinese partners play a big part of that.
Speaker Change: It's not it's not a switch you can just flip them. There are other things you need to take into account.
Speaker Change: I'll, let <unk>, which is a big one.
Brian Murphy: But we truly are leveraging our innovation advantage and we've got a number of levers to pull whether its feathering add new feathering in margin with new products, because new products are such a large percentage for us.
Speaker Change: We wanted to make sure we maintain our reputation of no recalls.
Speaker Change: For a company that produces as many new products as we do each year, it's imperative that we maintain our quality standards and the team does a phenomenal job with that so.
Brian Murphy: Our IP protection gives us tremendous.
Speaker Change: For US you know tariffs, there's obviously very very top of mind.
Brian Murphy: Protection for our for our existing lines, and obviously future ones, we've got a meaningful direct to consumer business.
Speaker Change: And we do because we are an asset light company, we do manufacture our products overseas and in China, Our Chinese partners play a big part of that.
Brian Murphy: We've got some very exciting recurring revenue streams that are high margin.
Brian Murphy: So we feel really good.
Speaker Change: But we truly are leveraging our innovation advantage and we've got a number of levers to pull whether its feathering out new feathering in margin with new products, because new products are such a large percentage for us.
Brian Murphy: And.
Brian Murphy: As the situation continues to unfold we will we.
Brian Murphy: We have plenty of levers that we can pull.
Brian Murphy: Okay, perfect and then kind of the other hot topic obviously.
Speaker Change: Or IP protection gives us tremendous.
Speaker Change: Protection for our for our existing lines, and obviously future ones, we've got a meaningful direct to consumer business.
Brian Murphy: Consumer behavior.
Brian Murphy: Update on changes anything that you've seen even as we think about maybe the last 30 days. Obviously, we've seen next fluctuate a fair amount here January to February.
Speaker Change: We've got some very exciting recurring revenue streams that are high margin. So we feel really good you know and and well you know as the situation continues to unfold we'll.
Brian Murphy: Any thoughts around on the ground changes in consumer behavior that you guys are seeing.
Speaker Change: Yes, we are.
Speaker Change: We have plenty of levers that we can pull.
Speaker Change: I mean, just coming out of shot show and talking with retailers, we are hearing and seeing.
Speaker Change: Okay, perfect and then kind of the other hot topic, obviously, you know consumer.
Speaker Change: <unk> continued to be cautious in making their purchases but.
Speaker Change: Her behavior.
Any update on changes anything that you've seen even as we think about maybe the last 30 days you know obviously, we've seen next fluctuate a fair amount here January to February.
Speaker Change: But it's also on the flip side one of the reasons we've been so successful.
Speaker Change: And seeing that strong pull through in Pos.
Speaker Change: At the stores is because.
Speaker Change: And any thoughts around you know on the ground changes in consumer behavior that you guys are seeing.
Speaker Change: Consumers continue to be starved of innovation and they are really being selective about where they are where they are buying so we're benefiting from that fact, but certainly there is some cautiousness.
Speaker Change: Yeah, we're seeing just coming out of shot show and talking with retailers. You know we are hearing and seeing consumers continue to be cautious in making their purchases.
Speaker Change: And then I think specifically do you think about the kind of low mid high level price point.
Speaker Change: Structure, we play in that higher price point, most of our products are premium.
Speaker Change: But it's also on the flip side one of the reasons we've been so successful at.
Speaker Change: And so we have a little bit of installation there that is less price sensitive.
Speaker Change: And in seeing that strong pull through in P. O S. A at the stores is because you know consumers continue to be starved of innovation and and they're really being selective about where they are where they're buying so we're benefiting from that fact, but certainly there is some cautiousness.
Speaker Change: Tends to be more affluent consumer and that consumer is still shows strong signs of resiliency.
Speaker Change: Excellent. Thank you guys.
Mark Smith: Thanks Mark.
Speaker Change: And then I think specifically do you think about the kind of low mid high level price point.
Speaker Change: The next question comes from Matt Koranda with Roth Capital. Please go ahead.
Structure, we play in that higher price point, you know most of our products are premium.
Speaker Change: Hi, it's Joseph on for Matt today.
Speaker Change: We're just looking at your guidance I wanted to see.
Speaker Change: And so we have a little bit of installation there that is less price sensitive and.
Speaker Change: Seems like a slight step up.
Speaker Change: This guidance for 2025, Patrick Thank you outperformance then.
Speaker Change: Tends to be more affluent consumer and and that consumer is still shows strong signs of resiliency.
Speaker Change: Which would growth might slow down a bit sequentially. So.
Speaker Change: Yeah.
Speaker Change: I just wanted to ask about quarter to date trends in both channels and where youre seeing.
Speaker Change: Excellent. Thank you guys.
Speaker Change: Thanks Mark.
The next question comes from Matt Koranda with Roth Capital. Please go ahead.
Speaker Change: This mid single digit growth.
Andy: Hey, Joe its Andy.
Speaker Change: Hi, it's Joseph on for Matt today.
Andy: So yes, so overall on the net sales side.
Speaker Change: We're just looking at your guidance I wanted to see does it seems like a slight step up does this guidance for 2025 cap character turnkey outperformance and.
Andy: Kind of narrowed the range to 270 to $2 10, so the midpoint is up about 1 million Bucks.
Andy: In the quarter, we talked about kind of some timing of about $1 million that we thought was going to ship in Q4 that.
Speaker Change: What growth might slow down a bit sequentially. So I.
Speaker Change: I just wanted to ask about quarter to date trends in both channels and where you're seeing a this mid single digit growth.
Andy: We shipped in Q3, and thats kind of normal quarter to quarter timing.
Andy: But yes overall, we feel really good about the year that 207 to $2 10, we're able to.
Andy: Hey, Joe its Andy.
So yeah. So overall on the net sales side, you know, we kind of narrowed the range to 207% to 10, so that the midpoint is up about a million bucks.
Andy: Increased.
Andy: <unk> adjusted EBITDA guidance as well so.
Andy: We're really happy with the quarter.
Andy: And then just staying on the consumer and then guidance.
Andy: In the quarter, we talked about kind of some timing of about $1 million that we felt was going to ship in Q4 that are that we shipped in Q3, and that's kind of normal quarter to quarter timing.
Andy: We see that you're reiterating your 2026 guidance is there any visibility you can give us.
Terms of long term growth for your retail excuse me for your retail partners in your order books.
Andy: But yes overall, we felt really good about the year that 207% to 10, we're able to.
Speaker Change: What do you mean, when you say long term growth what are you are referring to that.
Andy: Post FY 'twenty six or.
Andy: Increase the the adjusted EBITDA guidance as well so.
Speaker Change: Sorry, just for F 'twenty six.
Andy: We're really happy with the quarter.
Brad: Yes. This is Brad.
Andy: And then just staying on the consumer and then guidance.
Speaker Change: I mean, the best detail I can give you is.
Andy: We see that you're reiterating your 2026 guidance is there any visibility you can give us in terms of long term growth for your retail excuse me for your retail partners in your order books.
Speaker Change: We had coming out of line reviews last quarter, we have some strong indications from our retail partners that they were going to.
Speaker Change: Double down on.
Speaker Change: And really sought to bring on more innovation into their stores.
Speaker Change: What do you mean by long when you say a long term growth. What are you are you afraid that.
Speaker Change: And so the story is.
Speaker Change: Thought in the prepared remarks.
Andy: Post FY 'twenty six or.
Speaker Change: The story of really giving them instant access to innovation and excitement.
Speaker Change: Sorry, just forgetting F 'twenty six.
Brad: Yeah. This is Brad.
Speaker Change: It's real.
Speaker Change: I mean, the best detail I can give you is.
Speaker Change: They're seeing that success so.
Speaker Change: Coming out of shot show, which would have been would have been between our last call and where we are today.
Speaker Change: You know we had coming out of line reviews last quarter, we have some strong indications from our retail partners that they were going to.
Speaker Change: Those same retailers, just really reiterated and strengthened their commitment to bringing in these products.
Speaker Change: Double down on a O b and really start to bring on more innovation into their stores.
Speaker Change: Many of them are new and will hit in FY 'twenty six.
Speaker Change: And so the story is.
Speaker Change: Thought in the prepared remarks was the the story of really giving them instant access to innovation and excitement.
Speaker Change: Not really a change of any kind there other than just more conviction.
Speaker Change: That those orders are there and there is strong demand for them.
Speaker Change: It is real.
Speaker Change: And they're seeing that that success, so coming out of shot show, which would have been would have been between our last call in and where we are today.
Speaker Change: Got it and then just my final question here on your.
Speaker Change: Concerning M&A funnel I'm just wondering if you guys can provide us any commentary on what youre seeing out there in the M&A market then.
Speaker Change: Those same retailers, just really reiterated and strengthened their commitment to bringing in these products.
Speaker Change: Could provide any color on what youre looking for and what.
You know many of them are new and will hit in FY 'twenty six so I I.
Speaker Change: Yes, the best interest for Al.
Speaker Change: Yes.
Speaker Change: No not really a change of any kind there although that just more conviction.
Brian Murphy: So Bryan Bryan here I'll answer first native feel free to chime in.
Speaker Change: <unk> is near and Dear to our heart.
Speaker Change: That those orders are there and there's strong demand for them.
A big part of my background and we've done a lot of a few deals here together and Eni.
Speaker Change: Got it and then just my final question here on your.
Speaker Change: We just will continue to be very disciplined we looked at a ton of deals we've seen.
Speaker Change: Concerning M&A funnel just wanted to see if you guys could provide us any commentary on what you're seeing out there in the M&A market than <unk>.
Speaker Change: The icebreaker little bit.
Speaker Change: <unk> the tariffs with more companies seeming to come to market, so more sell side deals with investment bankers.
Speaker Change: Could provide any color on what youre looking for and what.
Speaker Change: It's the best interest for payout.
Speaker Change: I do think that the tariff.
Speaker Change: Yeah.
Speaker Change: So Bryan Bryan here I'll answer first native feel free to chime in yeah, M&A is near and Dear to our heart I mean, it's a big part of my background and we've done a lot of a few deals here together and Eni.
Speaker Change: No.
Speaker Change: I think there are lots of companies out there that have not really protected themselves I think that <unk> have as many levers to pull.
Speaker Change: And so we are seeing I think a little bit of a maybe a stutter step.
Speaker Change: We just will continue to be very disciplined we look at a ton of deals we've seen the icebreaker little bit before the tariffs with more companies seeming to come to market.
Speaker Change: Where they need to figure some things out first before they officially come to market.
Speaker Change: But ultimately I think it is going to continue to.
Speaker Change: So more of a sell side deals with our investment bankers.
Speaker Change: To unfold honestly I think the next three years is just going to continue to be an evolution in new things will emerge. So it's how how adaptable or the companies.
Speaker Change: I do think that the tariffs you know.
I think there are lots of companies out there that have not really protected themselves I think that I have as many levers to pull.
Speaker Change: <unk> and when they come to market.
Speaker Change: So I wouldn't be surprised if there is a little bit of a.
Speaker Change: And so we are seeing I think a little bit of a maybe a stutter step you know where that they need to figure some things out first before they officially come to market.
Speaker Change: Kind of pause on some deals coming to market.
Speaker Change: But.
Speaker Change: We are still ready, we're very excited looking at deals.
Speaker Change: We love Love deals that have.
Speaker Change: But ultimately I think it's going to continue to unfold honestly I think the next three years is just going to continue to be an evolution and new things will emerge so its how it how adaptable or the companies I'm out how adaptable are they and when they come to market.
Speaker Change: Perspective on recurring revenue subscription revenue.
Speaker Change: We have more in our own pipeline related to subscription revenue and recurring revenue.
Speaker Change: So really just trying to find the right deal that fits for our model and allow us to maintain ASUR agile asset light infrastructure.
Speaker Change: So I wouldn't be surprised if there's a little bit of a kind of pause on on some deals coming to market.
Speaker Change: But we're.
Speaker Change: We're still ready.
Speaker Change: We're excited looking at deals we love love deals that have a perspective on recurring revenue subscription revenue.
Speaker Change: Appreciate it thank you I'll take the rest offline.
Speaker Change: This concludes our question and answer session I would now like to turn the call back over to Mr. Murphy for closing remarks.
Speaker Change: You know we have more in our own pipeline related to subscription revenue and recurring revenue.
Speaker Change: Thank you operator before we close I want to let everyone know that we'll be participating in the Roth conference in California on March 17th and.
Speaker Change: So really just trying to find the right deal that fits for our model and allow us to maintain asset agile asset light infrastructure.
Speaker Change: And the Lake Street Virtual conference on April <unk>, and we hope to see some either.
Speaker Change: I want to thank our employees, whose tireless commitment to innovation allows us to remain focused on executing our long term vision.
Speaker Change: I appreciate it thank you I'll take the rest offline.
Speaker Change: Yeah.
Speaker Change: This concludes our question and answer session I would now like to turn the call back over to Mr. Murphy for closing remarks.
Speaker Change: Thank you to everyone, who joined US today, we look forward to speaking with you again next quarter.
Speaker Change: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your line.
Murphy: Thank you operator before we close I wanted to let everyone know that we'll be participating in the Roth conference in California on March 17th.
Murphy: And the Lake Street Virtual conference on April three and we hope to see somebody together.
Murphy: I want to thank our employees, whose tireless commitment to innovation allows us to remain focused on executing our long term vision.
Murphy: Thank you to everyone, who joined US today, we look forward to speaking with you again next quarter.
Murphy: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.
Murphy: Okay.
Murphy: [music].
Murphy: Yeah.