Q4 2025 American Outdoor Brands Inc Earnings Call
Operator: Good day, everyone, and welcome to American Outdoor Brands, Inc. fourth quarter and full year fiscal 2025 financial results conference call. This call is being recorded.
Good day, everyone and welcome to American Outdoor brands, Inc, fourth quarter and full year fiscal 2025 financial results Conference call. This call is being recorded.
Elizabeth Sharp: 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. Thank you and good afternoon. Our comments today may contain predictions, estimates, and other forward-looking statements. 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. Forward-looking statements also include statements regarding our product development. Focus. Objectives, Strategies, and Vision, or Strategic Evolution. our market share and market demand for our products. Market and Inventory Conditions, Related to our Products and in our Industry in General, and Growth Opportunities and Trends.
Speaker Change: 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: Our comments today may contain predictions estimates and other forward looking statements. Our use of words like anticipate project estimate expect intend should could indicate suggest believe and other similar expressions is intense.
Speaker Change: To identify those forward looking statements.
Speaker Change: Forward looking statements also include statements regarding our product development.
Speaker Change: Okay.
Speaker Change: Objectives strategies and vision our.
Speaker Change: Our strategic evolution.
Speaker Change: Our market share and market demand for our products market and inventory conditions related to our products and in our industry in general and growth opportunities and trends.
Elizabeth Sharp: Our forward-looking statements represent our current judgment about the future, and they are subject to various risks and uncertainties. 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 AOB.com. 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: Our forward looking statements represent our current judgment about the future and they are subject to various risks and uncertainties 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.
Speaker Change: 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. Our actual results could differ materially from our statements today.
Elizabeth Sharp: I have a few important items to note about our comments on today's call. First, we referenced certain non-GAAP financial measures. Our non-GAAP results exclude amortization of acquired intangible assets, stock compensation, technology implementation, non-recurring inventory reserve adjustments, 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. Also, when we reference EPS, we are always referencing fully diluted EPS.
Speaker Change: I have a few important items to note about our comments on today's call first we reference certain non-GAAP financial measures are non-GAAP results exclude amortization of acquired intangible assets stock compensation technology implementation nonrecurring inventory reserve.
Speaker Change: Adjustments other costs and income tax adjustments.
Speaker Change: A 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: Also when we reference EPS, we are always referencing fully diluted EPS.
Elizabeth Sharp: Joining us on today's call is Brian Murphy, President and CEO, and Andy Fulmer, CFO. And with that, I'll turn the call over to Brian. Thanks, Liz. And thanks, everyone, for joining us today.
Speaker Change: Joining us on today's call is Brian Murphy, President and CEO, and Andy Palmer, CFO and with that I'll turn the call over to Brian.
Brian Murphy: Thanks, Liz and thanks, everyone for joining us today.
Brian Murphy: Fiscal 2025 marked a pivotal chapter in the American Outdoor Brand story. Our performance not only exceeded expectations, it delivered compelling evidence that the roots of our long term strategy have taken hold. Across all key metrics, we saw outperformance fueled by innovation, disciplined execution, and leveraging our Agile platform. Perhaps most importantly, we continue to demonstrate that our brands have significant runway for growth. expanding their reach into new categories, customers, and geography.
Speaker Change: Fiscal 'twenty twenty-five marked a pivotal chapter and the American outdoor brand story, our performance not only exceeded expectations. It delivered compelling evidence that the roots of our long term strategy have taken hold.
Speaker Change: Across all key metrics, we saw outperformance fueled by innovation disciplined execution and leveraging our agile platform.
Speaker Change: Perhaps most importantly, we continued to demonstrate that our brands have significant runway for growth expanding their reach into new categories customers and geographies.
Brian Murphy: At the core of everything we do is our mission. to deliver innovative solutions for the moments that matter. This could be on the lake, in the woods, or at home on the patio. This mission is anchored in a clear and compelling vision to reshape how consumers engage with and experience their favorite outdoor activities.
Speaker Change: At the core of everything we do is our mission.
Speaker Change: To deliver innovative solutions for the moments that matter. This.
Speaker Change: This could be on the lake in the woods or at home on the patio.
Speaker Change: This mission is anchored in a clear and compelling vision to.
Speaker Change: To reshape how consumers engage with an experience their favorite outdoor activities.
Brian Murphy: Since our spinoff in 2020, we've been dedicated to building a focused, agile business that brings our mission and vision to life. We've done this by creating repeatable innovation, expanding distribution, elevating awareness of our brands, strengthening margins. and laying the groundwork for long-term sustainable value, even in the face of a dynamic external environment.
Speaker Change: Since our spin off in 2020, we've been dedicated to building a focused agile business that brings our vision mission and vision to life.
Speaker Change: We've done this by creating repeatable innovation expanding distribution elevating awareness.
Speaker Change: Awareness of our brands strengthening margins and laying the groundwork for long term sustainable value even in the face of a dynamic external environment.
Brian Murphy: We believe fiscal 2025 clearly demonstrated the result of that focus. We achieved net sales growth of over 10%. Gross Margin Growth of 60 Bases Adjusted EBITDA growth of 81%. Double-Digit Growth in our Outdoor Lifestyle category. and double-digit growth in our traditional and international sales channels.
Speaker Change: We believe fiscal 2025, clearly demonstrated the result of that focus.
Speaker Change: We achieved net sales growth of over 10%.
Speaker Change: Gross margin growth of 60 basis points.
Speaker Change: Adjusted EBITDA growth of 81%.
Speaker Change: Double digit growth in our outdoor lifestyle category.
Speaker Change: And double digit growth in our traditional and international sales channels.
Brian Murphy: Our performance this year is the direct result of our relentless commitment to innovation. by continually introducing differentiated IP-protected products that resonate with outdoor consumers. We have not only fortified the strength of our brands, but also deepened our partnerships with key retailers who seek instant, turnkey access to a portfolio of brands that drive foot traffic and pull through.
Speaker Change: Our performance. This year is the direct result of our relentless commitment to innovation.
Speaker Change: By continually introducing differentiated IP protected products that resonate with outdoor consumers.
Speaker Change: We have not only fortify the strength of our brands, but also deepened our partnerships with key retailers, who seek instant turnkey access to our portfolio of brands that drive foot traffic and pull through.
Brian Murphy: Over the course of the year, we launched a range of standout new products that reflect both the strength and breadth of our innovation pipeline. Here are three highlights. Bubba SFS Lite. Our latest Smart Fish Scale introduces Bubba's gamification platform to a broader market of everyday anglers at an attractive price point. Designed to enhance Bubba's appeal as a lifestyle brand that crosses both fresh water and salt water markets, the SFS Lite extends the reach of our subscription model to over 50 million anglers in the U.S. Caldwell Clay Copter. This revolutionary new target system for shotgun sports combines a handheld electric thrower with biodegradable discs.
Speaker Change: Over the course of the year, we launched a range of standout new products that reflect both the strength and breadth of our innovation pipeline.
Speaker Change: Here are three highlights.
Speaker Change: Bubba Sfas light.
Speaker Change: Our latest smart Fishkill introduces bubbas gamification platform to a broader market of everyday anglers at an attractive price point.
Speaker Change: Designed to enhance Bubbas appeal as a lifestyle brand that crosses both freshwater and saltwater markets. The S. F. S life extended the reach of our subscription model to over 50 million anglers and the U S.
Speaker Change: Caldwell Clay copter.
Speaker Change: This revolutionary new target system for shotgun sports combines a handheld electric thrower with biodegradable desks.
Brian Murphy: making range visits easier, more exciting, and more environmentally friendly. Lastly, the Gorilla Pyro. Grilla's first pizza oven expands the brand into a new product category. The Pyro is the first self-monitoring, pellet-fed, outdoor pizza oven with a rotating stone. that eliminates burn spots and delivers true wood fired flavor and perfectly balanced baking with the push of a button. all in as little as two minutes.
Speaker Change: Making range visits easier more exciting and more environmentally friendly.
Speaker Change: Lastly, the gorilla pyro.
Speaker Change: <unk> first pizza oven expands the brand into a new product category.
Speaker Change: Pyro was the first self monitoring pellet fad outdoor pizza oven with the rotating stone.
Speaker Change: That eliminates burns bobs and delivers true what fired flavor and perfectly bounce baking with the push of a button.
Speaker Change: All in as little as two minutes.
Brian Murphy: The momentum we experienced in fiscal 2025 wasn't isolated to any one product. It was consistent and broad based. The new products I just mentioned, combined with continued demand for established product offerings from our other leading brands, such as Meet Your Maker and Vogue. Joe Barnett sales results throughout the year.
Speaker Change: The momentum we experienced in fiscal 2025 wasn't isolated to any one product it was consistent and broad based.
Speaker Change: The new products I, just mentioned combined with continued demand for established product offerings from our other leading brands such as meet your maker and Borg.
Speaker Change: Drove our net sales results throughout the year.
Brian Murphy: This demand proved especially meaningful as the year progressed and broader concerns emerged around inflation, shifting consumer behavior. and the impact of tariff-driven price increases. We believe these external pressures prompted many retailers to accelerate order placements in the last few weeks of our fiscal year in April. These actions occurred after several new tariff policies were put into place that would likely lead to near-term price adjustments across our market. While some of this activity reflects a degree of demand pull-forward, we believe this dynamic also underscores the confidence retailers have in our ability to deliver innovation that drives store traffic and category growth.
Speaker Change: This demand proved especially meaningful as the year progressed and broader concerns emerged around inflation shifting consumer behavior.
Speaker Change: And the impact of tariff driven price increases.
Speaker Change: Okay.
Speaker Change: We believe these external pressures prompted many retailers to accelerate order placements in the last few weeks of our fiscal year in April.
Speaker Change: These actions occurred after several new tariff policies were put into place.
Speaker Change: Would likely lead to near term price adjustments across our markets.
Speaker Change: While some of this activity reflects a degree of demand pull forward. We believe this dynamic also underscores the confidence retailers have in our ability to deliver innovation that drive store traffic and category growth.
Speaker Change: Okay.
Brian Murphy: Despite certain macroeconomic factors, we believe the momentum from fiscal 2025 points to something deeper than short-term market noise. It reflects a durable consumer affinity for our brands and a growing recognition of the differentiated value we bring to the outdoor market.
Speaker Change: Despite certain macroeconomic factors, we believe the momentum from fiscal 2025 points to something deeper than short term market noise.
Speaker Change: It reflects a durable consumer affinity for our brands and a growing recognition of the differentiated value we bring to the outdoor market.
Speaker Change: Yeah.
Brian Murphy: It's August. We celebrate five years as a standalone public company. A milestone that reflects not just the passage of time, but the transformation we've achieved. Looking back, I'm incredibly proud of how far we've come.
Speaker Change: This August we celebrate five years as a standalone public company.
Speaker Change: Stone that reflects not just the passage of time.
Speaker Change: But the transformation we've achieved.
Speaker Change: Looking back I'm incredibly proud of how far we've come.
Brian Murphy: When we first set out on this journey, we were largely concentrated in the shooting sports industry, selling almost exclusively to the U.S. domestic market. and we distributed the bulk of our products through traditional brick-and-mortar retailers.
Speaker Change: When we first set out on this journey, we were largely concentrated in the shooting sports industry selling almost exclusively to the U S domestic market.
Speaker Change: And we distributed the bulk of our products through a traditional brick and mortar retailers.
Brian Murphy: We set a bold strategy to evolve into an innovation-driven company that delivers sustained growth with expanded reach into diverse markets and across multiple distribution channels. So let's look at where we are today. Lifestyle versus Shooting Sports. Outdoor lifestyle has grown from 46% of net sales in FY20 to 57%. International vs.
Speaker Change: We set a bold strategy to evolve into an innovation driven company that delivers sustained growth with expanded reach into diverse markets and across multiple distribution channels.
Speaker Change: So let's look at where we are today.
Speaker Change: Outdoor lifestyle versus shooting sports.
Speaker Change: Outdoor lifestyle has grown from 46% of net sales in FY 'twenty to 57% today.
Speaker Change: International versus domestic international has grown from 4% of net sales in FY 'twenty to six 5% today.
Brian Murphy: Domestic. International has grown from 4% of net sales in FY20 to 6.5%.
Brian Murphy: Ecom versus traditional. EECOM has grown from 32% in FY20 to 38% today.
Speaker Change: E comm versus traditional.
Speaker Change: E Com has grown from 32% in FY 'twenty to 38% today.
Brian Murphy: We've added two new brands to our portfolio, Meet Your Maker and Gorilla. One developed and launched entirely in-house. The other we acquired, and both of which significantly grew our D2C sales from roughly 3% to now representing over 13% of our total nut sales.
Speaker Change: We've added two new brands to our portfolio meet your maker and gorilla.
Speaker Change: <unk> developed and launched entirely in house the.
Speaker Change: The other we acquired.
Speaker Change: And both of which significantly grew our D to C sales from roughly 3% to now representing over 13% of our total net sales.
Brian Murphy: New products have proven to be a critical driver of growth. Sales from new products introduced after FY20 have delivered a five-year compound annual growth rate of over 40%. while combining to represent roughly 50% of our net sales in FY25.
Speaker Change: New products have proven to be a critical driver of growth.
Speaker Change: Sales from new products introduced after FY 'twenty have delivered a five year compound annual growth rate of over 40%.
Speaker Change: While combining to represent roughly 50% of our net sales in FY 'twenty five.
Brian Murphy: We took steps to protect future revenue, securing 170 new patents. growing our patent portfolio by over 65%. We have generated what I believe is the strongest new product pipeline in our company's history.
Speaker Change: We took steps to protect future revenue securing 170, new patents growing our patent portfolio by over 65%.
Speaker Change: We have generated what I believe is the strongest new product pipeline in our company's history.
Brian Murphy: And lastly, our business model, designed to be agile and asset light, is yielding meaningful operating leverage.
Speaker Change: And lastly, our.
Speaker Change: Our business model designed to be agile and asset light is yielding meaningful operating leverage.
Brian Murphy: So, as we look ahead, we acknowledge that the tariff landscape continues to evolve. While the broader policy environment remains fluid, we are proactively mitigating potential risks through a disciplined, multi-pronged approach, much like the playbook we developed to navigate the 301 tariffs first introduced in 2018. We partnered with our vast supply chain network to identify flexible sourcing solutions designed to preserve both product quality and margin integrity. At the same time, we've implemented selective pricing adjustments to help offset cost pressures where appropriate. We believe these efforts have not only strengthened our supplier relationships but also enhanced our ability to adapt to an increasingly complex global trade environment.
Speaker Change: So as we look ahead, we acknowledge that the tariff landscape continues to evolve while.
Speaker Change: While the broader policy environment remains fluid, we are proactively mitigating potential risks through a disciplined multi pronged approach much like the playbook redeveloped to navigate the 301 tariffs first introduced in 2018.
Speaker Change: We've partnered with our vast supply chain network to identify flexible sourcing solutions designed to preserve both product quality and margin integrity.
Speaker Change: At the same time, we've implemented selective pricing adjustments to help offset cost pressures where appropriate.
Speaker Change: We believe these efforts have not only strengthened our supplier relationships, but also enhanced our ability to adapt to an increasingly complex global trade environment.
Brian Murphy: As we noted last quarter, the core strengths of our operating model, namely our innovation velocity, operational agility, and deep vendor partnership position us well to manage uncertainty and near-term turbulence while staying focused on long-term execution. We remain committed to controlling what we can control, and we believe this mindset will continue to serve us well as we navigate fiscal 2026.
Speaker Change: As we noted last quarter, the core strengths of our operating model, namely our innovation velocity operational agility and deep vendor partnerships position.
Speaker Change: Position us well to manage uncertainty and near term turbulence, while staying focused on long term execution.
Speaker Change: We remain committed to controlling what we can control.
Speaker Change: And we believe this mindset will continue to serve us well as we navigate fiscal 2026.
Speaker Change: Okay.
Brian Murphy: Before I close, I want to recognize the people behind our achievement. At AOB, our values of honesty, respect, responsibility, discipline, collaboration, open-mindedness, and resourcefulness are more than just words. These values shape how we operate, how we lead, and how we show up for one another and for our customers. I'm proud of our team's resilience, commitment, and drive to build something enduring. I believe their passion and purpose has created a unique culture of extreme ownership and performance. I've never been more energized by the talent around me, the values we share, and the breakthroughs we're preparing to deliver.
Speaker Change: Before I close I want to recognize the people behind our achievements at.
Speaker Change: At a O b R values of honesty respect responsibility discipline collaboration open mindedness and resourcefulness.
Speaker Change: Our more than just words these.
Speaker Change: These values shape, how we operate how we lead and how we show up for one another and for our customers.
Speaker Change: I am proud of our team's resilience commitment and drive to build something enduring.
Speaker Change: I believe their passion and purpose has created a unique culture of extreme ownership and performance.
Speaker Change: I've never been more energized by the talent around me.
Speaker Change: The values, we share in the breakthroughs, we're preparing to deliver.
Andy Fulmer: With that, I'll turn it over to Andy to walk through the financial results. Thanks, Brian. In fiscal 2025, we delivered net sales and profitability above our expectations, and maintained a strong balance sheet, all while continuing to return capital to shareholders through our share repurchase program.
Speaker Change: With that.
Speaker Change: I'll turn it over to Andy to walk through the financial results.
Andy Palmer: Thanks, Brian.
Andy Palmer: In fiscal 2025, we delivered net sales and profitability above our expectations and maintained a strong balance sheet.
Andy Palmer: All while continuing to return capital to shareholders through our share repurchase program.
Andy Fulmer: We ended the year with several achievements and highlights, so let me walk you through the details. Net sales for the year were $222.3 million, an increase of 10.6% compared to fiscal 2024, driven by growth in every sales channel and category. Our traditional channel net sales grew by 18.1%, and our e-commerce net sales increased slightly compared to last year. 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. Our direct-to-consumer net sales for Fiscal 25 were $29.6 million compared to $29.1 million last year.
Andy Palmer: We ended the year with several achievements and highlights so let me walk you through the details.
Andy Palmer: Net sales for the year were $222 $3 million, an increase of 10, 6% compared to fiscal 2024, driven by growth in every sales channel and category.
Andy Palmer: Our traditional channel net sales grew by 18, 1% and our E Commerce net sales increased slightly compared to last year.
Andy Palmer: As a reminder, our ecommerce 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.
Andy Palmer: Our direct to consumer net sales for fiscal 'twenty, five were $29 6 million compared to $29 $1 million last year.
Andy Fulmer: Domestic net sales increased by almost 10% while our international net sales grew 20% compared to fiscal 2020.
Andy Palmer: Domestic net sales increased by almost 10%, while our international net sales grew 20% compared to fiscal 2024.
Andy Fulmer: Turning now to our sales categories. In our Outdoor Lifestyle category, which consists of products relating to hunting, fishing, outdoor cooking, and rugged outdoor activities, Net sales grew by 16.2%, driven mainly by sales in our Bubba, Meet Your Maker, and Bob brands. in our shooting sports category, which includes solutions for target shooting, aiming solutions, safe storage, cleaning and maintenance, and personal protection. Net sales grew by 3.8% compared to last year, driven mainly by sales in our Caldwell brand. It's worth noting that one of our long-term strategic goals is to grow our shooting sports business by expanding it to more stable product categories, such as shotgun sports.
Andy Palmer: Turning now to our sales categories.
Andy Palmer: In our outdoor outdoor lifestyle category, which consist of products relating to hunting fishing outdoor cooking and rugged outdoor activities.
Andy Palmer: Net sales grew by 16, 2% driven mainly by sales in our Bubba meet your maker and <unk> brands.
Andy Palmer: And our shooting sports category, which includes solutions for target shooting aiming solutions safe storage cleaning and maintenance and personal protection.
Andy Palmer: Net sales grew by three 8% compared to last year, driven mainly by sales in our Caldwell brand.
Andy Palmer: It's worth noting that one of our long term strategic goals is to grow our shooting sports business by expanding into more stable product categories, such as shotgun sports.
Andy Fulmer: We made great progress on that objective in fiscal 2025 with the launch of our Caldwell Clay Copter, which is getting great traction at retail.
Andy Palmer: We made great progress on that objective in fiscal 2025 with a launch of our Caldwell Clay copter, which is getting great traction at retail.
Andy Fulmer: On a quarterly basis, net sales in Q4 came in well ahead of our expectations at $61.9 million, almost 34% above the prior year quarter. As Brian indicated, retailers accelerated their order placements in the last few weeks of our fourth quarter. We believe this effectively pulled forward approximately $8 to $10 million of net sales we had originally included in our fiscal 2026 outlook. Even without that acceleration, our fourth quarter still would have come in ahead of our expectations at about $53 million, a great result.
Andy Palmer: On a quarterly basis net sales in Q4 came in well ahead of our expectations at $61 $9 million.
Andy Palmer: Almost 34% above the prior year quarter.
Andy Palmer: As Brian indicated retailers accelerated their order placements in the last few weeks of our fourth quarter.
Andy Palmer: We believe this effectively pulled forward approximately $8 million to $10 million of net sales. We had originally included in our fiscal 2026 outlook.
Andy Palmer: Even without that acceleration our fourth quarter still would have come in ahead of our expectations at about $53 million a great result.
Andy Fulmer: We're also pleased that our Outdoor Lifestyle category delivered 53% year-over-year growth in Q4, and our Shooting Sports delivered 15.7% year-over-year growth.
Andy Palmer: We're also pleased that our outdoor lifestyle category delivered 53% year over year growth in Q4, and our shooting sports delivered 15, 7% year over year growth.
Andy Fulmer: Turning to Gross Margin. Fiscal 25 gross margins increased 60 basis points over fiscal 2024 to 44.6% as expected. The increase was mainly due to higher sales volumes, partially offset by higher tariff and freight costs. We're pleased with this result, which is consistent with our long-term target for gross margins in the mid-40s.
Andy Palmer: Turning to gross margin.
Andy Palmer: Fiscal 'twenty five gross margins increased 60 basis points over fiscal 2024 to 44, 6% as expected.
Andy Palmer: The increase was mainly due to higher sales volumes, partially offset by higher tariff and freight costs.
Andy Palmer: We're pleased with this result, which is consistent with our long term target for gross margins in the mid Forty's.
Andy Palmer: Yeah.
Andy Fulmer: Turning now to operating expenses. For the full year, GAP operating expenses totaled $99.4 million, a slight decrease from $100.9 million in the prior year. As a percentage of net sales, we improved efficiency by reducing operating expenses from 50% to 45%, reflecting strong operating leverage. This 500 basis point improvement was primarily driven by lower intangible amortization and reduced legal expenses. partially offset by increased variable costs in selling, distribution, and employee compensation. It's important to note that within variable cost, our labor component actually decreased as a percentage of sales. This improving labor efficiency is a validation of our decision to invest in our footprint by taking over the full lease at our Missouri facility in fiscal 2024.
Andy Palmer: Turning now to operating expenses for.
Andy Palmer: For the full year GAAP operating expenses totaled $99 4 million, a slight decrease from $109 million in the prior year.
Andy Palmer: As a percentage of net sales, we improved efficiency by reducing operating expenses from 50% to 45% reflect reflecting strong operating leverage.
Andy Palmer: It's 500 basis point improvement was primarily driven by lower intangible amortization and reduced legal expenses, partially offset by increased variable costs and selling distribution and employee compensation.
Andy Palmer: It's important to note that within variable costs are labor component actually decreased as a percentage of sales.
Andy Palmer: This improving labor efficiency as a validation of our decision to invest in our footprint by taking over the full lease at our Missouri facility in fiscal 2024.
Andy Fulmer: I'm pleased with our OPEX improvement in fiscal 2025, which reflects our disciplined approach to consistently avoiding unnecessary expenses. This philosophy helps us maintain a lean, agile, and asset light model that can adapt to change without requiring abrupt cost cuts. Non-GAAP operating expenses for fiscal 2025 were $86.9 million, compared to $84.1 million last year. Non-GAAP operating expenses exclude intangible amortization, stock compensation, and certain non-recurring expenses as they occur.
Andy Palmer: I am pleased with our Opex improvement in fiscal 2025, which reflects our disciplined approach to consistently avoiding unnecessary expenses.
Andy Palmer: This philosophy helps us maintain a lean agile and asset light model that can adapt to change without requiring abrupt cost cuts.
Andy Palmer: non-GAAP operating expenses for fiscal 2025 were $86 $9 million.
Andy Palmer: Compared to $84 $1 million last year.
Andy Palmer: non-GAAP operating expenses exclude intangible amortization stock compensation and certain nonrecurring expenses as they occur.
Andy Fulmer: Gap EPS for fiscal 25 was a loss of one cent compared to a loss of 94 cents in the prior year. while non-GAP EPS in fiscal 2025 was 76 cents compared to 32 cents in fiscal 2025. Our fiscal 25 figures are based on our fully diluted share count of approximately 12.8 million shares. And for fiscal 2026, we expect our fully diluted share count will be about 12.9 million shares outside of any share buybacks that may occur.
Andy Palmer: GAAP EPS for fiscal 'twenty, five was a loss of <unk> compared to a loss of 94 cents in the prior year.
Andy Palmer: While non-GAAP EPS in fiscal 2025 with 76 compared to 32 in fiscal 2024.
Andy Palmer: Our fiscal 'twenty five figures are based on our fully diluted share count of approximately $12 8 million shares and for fiscal 2026, we expect our fully diluted share count will be about $12 9 million shares outside of any share buybacks that may occur.
Andy Fulmer: Full year adjusted EBITDA in fiscal 2025 was $17.7 million, up 80.8% over fiscal 2024.
Andy Palmer: Full year adjusted EBITDA in fiscal 2025 was $17 $7 million up 88% over fiscal 2024.
Andy Fulmer: Turning to the balance sheet and cash flow. We continue to strengthen our balance sheet, ending the quarter with cash of $23.4 million and no debt, after repurchasing approximately $3.8 million of our common stock. During fiscal 2025, we generated cash from operations of $1.4 million, which was lower than last year. You'll recall that last year, we cleared out some slow-moving inventory in Q4, taking our inventories to fairly low levels. This year, we brought inventories up to more normal levels, and we purposely invested in the new products Brian described earlier. An increase of $13.6 million in accounts receivable resulted from the strong order volume we received in the last three weeks of the year.
Andy Palmer: Turning to the balance sheet and cash flow.
Andy Palmer: We continued to strengthen our balance sheet, ending the quarter with cash of $23 $4 million and no debt after repurchasing approximately $3 $8 million of our common stock.
Andy Palmer: During fiscal 2025, we generated cash from operations of $1 $4 million, which was lower than last year.
Andy Palmer: You'll recall that last year, we cleared out some slow moving inventory in Q4, taking our inventories to fairly low levels.
Andy Palmer: This year, we brought inventories up to more normal levels and we purposely invested in the new products, Brian described earlier.
Andy Palmer: An increase of $13 $6 million in accounts receivable resulted from the strong order volume we received in the last three weeks of the year.
Andy Fulmer: That order volume also drove our inventories down at year end to $104.7 million. Looking ahead to fiscal 2026, we expect inventory seasonality similar to fiscal 2025. We expect inventory to increase in Q1 and Q2 as we prepare for hunting and holiday season. and then decrease in Q3 and Q4 with a target to end fiscal 2026 at about $100 million. Our balance sheet remains strong and debt-free. We ended the year with no balance on our $75 million line of credit, so as of Q4, we have total available capital of roughly $115 million.
Andy Palmer: That order volume also drove our inventories down at year end to $104 $7 million.
Andy Palmer: Looking ahead to fiscal 2026, we expect inventory seasonality similar to fiscal 2025.
Andy Palmer: We expect inventory to increase in Q1, and Q2 as we prepare for hunting and holiday seasons.
Andy Palmer: And then decrease in Q3 and Q4 with a target to end fiscal 2026 at about $100 million.
Andy Palmer: Our balance sheet remains strong and debt free.
Andy Palmer: We ended the year with no balance on our $75 million line of credit. So as of Q4, we have total available capital of roughly $115 million.
Andy Fulmer: Turning to Capital Expenditures. We ended the year with CapEx of $3.9 million, and for fiscal 2026, we expect to spend about the same amount, mainly for product tooling, maintenance, and patent investment.
Andy Palmer: Turning to capital expenditures.
Andy Palmer: We ended the year with Capex of $3 $9 million and for fiscal 2026, we expect to spend about the same amount mainly for product tooling maintenance and patent investments.
Andy Fulmer: Lastly, we continue to return capital to our shareholders through our Share Repurchase Program. During fiscal 2025, we repurchased roughly 374,000 shares of common stock at an average price of $10.11 per share. And at year end, we still have roughly $7.2 million of availability remaining on our $10 million share repurchase program, which runs through September 2025.
Andy Palmer: Lastly, we continue to return capital to our shareholders through our share repurchase program.
Andy Palmer: During fiscal 2025, we repurchased roughly 374000 shares of common stock at an average price of $10 11 per share.
Andy Palmer: And at year end, we still have roughly $7 $2 million of availability remaining on our 10 million dollar share repurchase program, which runs through September 2025.
Andy Fulmer: Now turning to our Our POS trends have remained strong on a relative basis, reflecting ongoing underlying demand for our products and indicating that our innovation continues to break through. In fact, one key retail partner recently shared that our new clay copter has already generated more sales than all other clay throwers combined.
Andy Palmer: Now turning to our outlook.
Andy Palmer: Our Pos trends have remained strong on a relative basis, reflecting ongoing underlying demand for our products and indicating that our innovation continues to breakthrough.
Andy Palmer: In fact, one key retail partner recently shared that our new clay Copter has already generated more sales than all other clay throwers combined.
Andy Palmer: It's a great moment to be powered by a strong innovation engine.
Andy Fulmer: That said, the macro environment remains uncertain and tariff policies continue to evolve, and the impact of those factors on consumer behavior, particularly in the back half of the year, remains unknown. In addition, we believe many retailers across the consumer goods landscape have built up their inventories in anticipation of tariff-driven price increases from suppliers. As a result, we would not be surprised to see a more conservative posture from them. focusing on optimizing current inventory levels and closely monitoring consumer demand.
Andy Palmer: That said the macro environment remains uncertain and tariff policies continue to evolve and the impact of those factors on consumer behavior, particularly in the back half of the year remains unknown.
Andy Palmer: In addition, we believe many retailers across the consumer goods landscape have built up their inventories in anticipation of tariff driven price increases from suppliers.
Andy Palmer: As a result, we would not be surprised to see a more conservative posture from them focusing on optimizing current inventory levels.
Andy Palmer: And closely monitor and consumer demand.
Andy Fulmer: Given this uncertainty, alongside the acceleration of orders from Fiscal 2026 into our Fiscal 2025 results, we are suspending our previously issued Net Sales Guidance for Fiscal 2026. This decision reflects prudence, not a change in conviction. The strategic achievements Brian outlined, along with our strong balance sheet, debt-free position, and flexible capital allocation strategy, give us the agility we believe is critical in navigating the year ahead.
Andy Palmer: Given this uncertainty alongside the acceleration of orders from fiscal 2026 into our fiscal 2025 results.
Andy Palmer: We are suspending our previously issued net sales guidance for fiscal 2026.
Andy Palmer: This decision reflects prudent not a change in conviction.
Speaker Change: The strategic achievements, Brian outlined along with our strong balance sheet debt free position and flexible capital allocation strategy gives us the agility. We believe is critical in navigating the year ahead.
Andy Fulmer: Let me share some thoughts on how we're approaching fiscal 2020. First, Seasonality. Our business is seasonal in nature, with Q1 typically coming in as our lowest net sales quarter, Q2 and Q3 as the highest net sales quarters, and Q4 coming in higher than Q1. We expect this pattern will continue in fiscal 2026. However, the acceleration of orders that we experienced at the end of Q4 will have an outsized impact on our first quarter net sales, and to a lesser degree, the remainder of the year.
Andy Palmer: Let me share some thoughts on how we're approaching fiscal 2026.
Andy Palmer: First seasonality.
Andy Palmer: Our business is seasonal in nature with Q1 typically coming in is our lowest net sales quarter.
Andy Palmer: Q2, and Q3 is the highest net sales quarters in Q4 coming in higher than Q1.
Andy Palmer: We expect this pattern will continue in fiscal 2026.
Andy Palmer: However, the acceleration of orders that we experienced at the end of Q4, we will have an outsized impact on our first quarter net sales and to a lesser degree the remainder of the year.
Andy Fulmer: Next, turning to gross margins. I'll begin by discussing the current tariff landscape and our existing efforts to minimize the impact of additional tariffs on our gross margin. As we've discussed before, the majority of our products are manufactured in China by supply chain partners with whom we have longstanding relationships. Some of our products are impacted by the Section 301 China Tariffs, which were enacted in 2018 with tariff rates of 7.5% or 25%. More recently, we're impacted by two additional tariffs. First, the steel and aluminum tariffs under Section 232 with a rate set at 50%. These tariffs impact a small number of our products, mainly grills.
Andy Palmer: Next turning to gross margins.
Andy Palmer: I'll begin by discussing the current tariff landscape and our existing efforts to minimize the impact of additional tariffs on our gross margins.
Andy Palmer: However, as we've discussed before the majority of our products are manufactured in China by supply chain partners, with whom we have long standing relationships.
Andy Palmer: Some of our products are impacted by the section 301, China tariffs, which were enacted in 2018 with tariff rates of seven 5% or 25%.
Andy Palmer: More recently were impacted by two additional tariffs.
Andy Palmer: First the steel and aluminum tariffs under section 232, with a rate set at 50%.
Andy Palmer: These tariffs impact a small number of our products mainly grills.
Andy Fulmer: Second, the IEPA tariffs, which are set at an incremental 30%. That includes 10% reciprocal and 20% fentanyl. These tariffs impact the remainder of our China-sourced products that are not subject to the Section 232 tariff. We've assessed all of our products, and we've moved the small number of those that we know today will clearly benefit from long-term production outside of China. However, since the majority of our products are impacted by the IEPA tariffs, and those are not yet finalized, outcomes from ongoing tariff negotiations could greatly drive a preference shift across multiple countries of origin. So, we've worked closely with our suppliers and we've mapped out transition plans for the balance of our product portfolio.
Andy Palmer: Second the IEP tariffs, which are set at an incremental 30%.
Andy Palmer: And that includes 10% reciprocal and 20% fat and all these.
Andy Palmer: These tariffs impact the remainder of our China sourced products that are not subject to the section 232 tariffs.
Andy Palmer: We've assessed all of our products and we've moved the small number of those that we know today will clearly benefit from long term production outside of China.
Andy Palmer: However, since the majority of our products are impacted by the tariffs and those are not yet finalized outcomes from ongoing tariff negotiations could greatly drive a preference preference shift across multiple countries of origin.
Andy Palmer: So we've worked closely with our suppliers and we've mapped out transition plans for the balance of our product portfolio.
Andy Fulmer: positioning us to rapidly shift production, as needed, to countries outside of China. such as Vietnam, Cambodia, Indonesia, and Thailand, among others, within six to 12 months of making that decision. As a reminder, the higher tariff costs are capitalized as variances into inventory at the time of purchase, and these variances are amortized to the P&L based on inventory terms. As such, for fiscal 2026, we expect that higher tariff costs will begin to have a larger impact on our income statement in Q3 and into Q4. Our supply chain efforts are currently focused on sourcing products that preserve our strong margins while meeting our high quality standards.
Andy Palmer: Positioning us to rapidly shift production as needed to countries outside of China, such as Vietnam, Cambodia, Indonesia, and Thailand, among others within six to 12 months of making that decision.
Andy Palmer: As a reminder, the higher tariff costs are capitalized variances into inventory at the time of purchase.
Andy Palmer: These variances are amortized to the P&L based on inventory turns.
Andy Palmer: As such for fiscal 2026, we expect that higher tariff costs will begin to have a larger impact on our income statement in Q3 and into Q4.
Andy Palmer: Our supply chain efforts are currently focused on sourcing products that preserve our strong margins, while meeting our high quality standards.
Andy Fulmer: We benefit from longstanding collaborative relationships with suppliers who have helped share in the additional tariff burden and supported our efforts to explore sourcing opportunities outside of China, an initiative that may help mitigate the effects of the IEPA tariffs. As we assess those opportunities, our Asset Light Model, which includes ownership of our intellectual property and tooling, gives us the agility to make timely adjustments across our supply chain. That flexibility allows us to remain focused on sourcing high-quality products at the most competitive total cost, regardless of country of origin. In addition to our supply chain efforts, we've implemented price increases to help offset the higher tariff costs.
Andy Palmer: We benefit from long standing collaborative relationships with suppliers, who have helped chair and the additional tariff burden and supported our efforts to explore sourcing opportunities outside of China.
Andy Palmer: And initiatives that may help mitigate the effects of the IEP tariffs.
Andy Palmer: As we assess those opportunities our asset light model, which includes ownership of our intellectual property and tooling.
Andy Palmer: Gives us the agility to make timely adjustments across our supply chain.
Andy Fulmer: That flexibility allows us to remain focused on sourcing high quality products at the most competitive total cost regardless of country of origin.
Andy Palmer: In addition to our supply chain efforts, we have implemented price increases to help offset the higher tariff costs.
Andy Fulmer: Looking ahead, we will continue to monitor our product categories to ensure our pricing remains competitive. We believe our strong IP-protected products afford us a level of protection at the retail counter.
Andy Palmer: Looking ahead, we will continue to monitor our product categories to ensure our pricing remains competitive.
Andy Palmer: We believe our strong IP protected products afford us a level of protection at the retail counter.
Andy Fulmer: Lastly, with regard to OPEX. We remain committed to disciplined cost management, focusing on what we can control while continuing to invest in R&D, sales, and marketing to drive long-term growth.
Andy Palmer: Lastly, with regard to Opex.
Andy Palmer: We remain committed to disciplined cost management, focusing on what we can control, while continuing to invest in R&D sales and marketing to drive long term growth.
Andy Fulmer: As a reminder, with our fifth anniversary, we will no longer qualify as an emerging growth company. As such, we expect to incur approximately $1 million in additional annual public company costs beginning in fiscal 2026.
Andy Palmer: As a reminder, with our fifth anniversary, we will no longer qualify as an emerging growth company.
Andy Palmer: As such we expect to incur approximately $1 million in additional annual public company costs beginning in fiscal 2026.
Andy Fulmer: In a related note, I'm happy to share that based on a preliminary list of additions posted on June 6th, we are slated to join the Russell 3000 Index and the small cap Russell 2000 Index effective when the U.S. stock market opens on June 30th. We are honored to rejoin the Russell. Our inclusion enhances our visibility within the investment community and reflects our continued focus on creating lasting, sustainable value for our shareholders.
Andy Palmer: And a related note I'm happy to share that based on a preliminary list of additions posted on June 6th we are slated to join the Russell 3000 index and the small cap Russell 2000 index effective when the U S stock market opens on June 30th.
Andy Palmer: We are honored to rejoin the Russell.
Andy Palmer: Our inclusion enhances our visibility within the investment community and reflects our continued focus on creating lasting sustainable value for our shareholders.
Andy Fulmer: In closing, we are extremely pleased with the degree of strength and flexibility we've built into the business. As we navigate fiscal 2026, we believe we have the tools to remain agile, responsive, and well-positioned for long-term growth.
Andy Palmer: In closing we are extremely pleased with the degree of strength and flexibility we've built into the business.
Andy Palmer: As we navigate fiscal 2026, we believe we have the tools to remain agile responsive and well positioned for long term growth.
Operator: And with that, operator, please open the call for questions from our analysts. We will now begin the question and answer session. To ask a question, you may press star, then 1 on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the key. If at any time your question has been addressed, and you would like to withdraw your question, please press star then 2.
Andy Palmer: And with that operator, please open the call for questions from our analysts.
Andy Palmer: We will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone.
Andy Palmer: If you are using a speakerphone please pick up your handset before pressing the keys.
Andy Palmer: If at any time. Your question has been addressed and you would like to withdraw your question. Please press Star then two at.
Operator: At this time, we will pause momentarily to assemble our roster.
Andy Palmer: At this time, we will pause momentarily to assemble our roster.
Alex Sturnieks: And your first question today will come from Mark Smith with Lake Street Capital Markets. Please go ahead. Hey, guys. Yeah, Alex Sturnieks on the line for Mark Smith today. Thanks for taking my questions. First one for me, you mentioned a little bit about the $8 to $10 million of fiscal 26 demand that was pulled into Q4. Could you provide some more color on that? And then given that pull forward into Q4, what else are you seeing early on in Q1 in terms of consumer discretionary spend?
Speaker Change: And your first question today will come from Mark Smith with Lake Street Capital markets. Please go ahead.
Speaker Change: Hey, guys.
Speaker Change: Yes, Alex to earnings on a line for margin Smiths today. Thanks for taking my question first one for me you mentioned, a little bit about the $8 million to $10 million of physical 26 demand that was pulled into Q4 could you provide some more color on that and then given that pull forward into Q4, you know what else are you seeing early on in Q1 in terms of consumer discretion.
Andy Palmer: Is that.
Andy Fulmer: Yeah, Alex, this is this is Andy, I'll take part of this and then Brian can jump in too. So yeah, the eight to 10 million Again, when we look back at Q4, our retailers, to the best of our knowledge, were kind of faced with future price increases from suppliers across the board. So many of our retailers were giving their buyers an allotment of open-to-buy dollars to invest in key brand inventory prior to those prices going up. So we benefited from that. So if you take a look at kind of our workhorse brands, those were the brands that were in high demand and we're seeing really good pull-through now at retail.
Andy Palmer: Yeah. Alex. This is this is Andy I'll take part of this and then Brian can jump in too so yeah, the $8 million to $10 million.
Andy Palmer: Again, we.
Andy Palmer: When we when we look back at Q4.
Andy Palmer: Our retailers to the best of our knowledge, we're kind of faced with.
Andy Palmer: Future price increases from suppliers across the board so many of our retailers, where given the giving their buyers and allotment of open to buy dollars to invest in key brand inventory prior to that those prices going up.
Andy Palmer: So we benefited from that so our if you take a look at kind of our workhorse brands those are the brands that.
Andy Palmer: Were in high demand and we're seeing really good pull through now at retail. So if you think about.
Andy Fulmer: So if you think Bubba, Caldwell, BOG, those were the brands. And it's kind of a mixture of both in-line replens and some of the new products that Brian talked about.
Andy Palmer: Caldwell bog, those where those where the brands and it's kind of a mixture of both inline re plans and some of the new products that Brian talked about.
Andy Fulmer: Okay, and then the early Q1 trends for consumer discretionary spend. Yes, so are you set for consumer discretionary, Spence? Correct. Yeah, I'll start there. So the like we alluded to in the prepared remarks, the RPOS is very strong. and it's across the board. And so we're seeing a healthy trend that continued from last year into now this new fiscal year. So that's a great sort of underlying foundation for us. It's more of the sort of, I'll call it the bumpiness, you know, that's happening at the surface related to how retailers are trying to defend their inventory positions and kind of navigate their way through the policy changes.
Andy Palmer: Okay and then.
Andy Palmer: Early Q1 trends for consumer discretionary spend.
Andy Palmer: Yes, so our.
Speaker Change: Oh, sorry, you said for consumer discretionary spend.
Andy Palmer: Correct, yes.
Andy Palmer: I'll start there so the.
Speaker Change: Like we alluded to in the prepared remarks, the our Pos is very strong.
Andy Palmer: And it's across the board.
Andy Palmer: And so we're seeing a healthy trend that continued from last year into into now this new fiscal year. So.
Andy Palmer: So that's a great sort of underlying foundation for us.
Andy Palmer: It's more of the sort of I'll call. It the bumping US you know that's happening at the surface related to how retailers are trying to defend their inventory positions and kind of navigate them navigate their way through the policy changes, but overall our.
Alex Sturnieks: But overall, our products are clearly resonating with consumers and couldn't be happier about that. That's helpful.
Andy Palmer: Our products are clearly resonating with consumers.
Andy Palmer: And couldn't be happier about that.
Speaker Change: That's helpful. And then next one for me this quarter it looks like.
Andy Fulmer: And then next one for me, you know, this court looks like traditional really outperformed. Can you help unpack what drove the strength in that channel? Was this more load in related or something more structural? You know what, it's a little bit of two things. So it is load-in, part of that is load-in related. where traditionally when we launch new products, traditional retailers actually do the best job of launching those products. Whereas on e-commerce, think of like an Amazon, for example, so much of that buying behavior and those decisions are made via social proof, right? If it has a large number of reviews and it's got five stars, I'm more likely to buy it.
Speaker Change: Traditional really outperform can you help unpack what drove the strength in that channel.
Andy Palmer: This is more load in related or something more structural.
Andy Palmer: Yeah, you know, what it's a little bit of of two things.
Andy Palmer: So look it is loaded part of that is load and related.
Andy Palmer: Where traditionally when we launch new products.
Andy Fulmer: Traditional retailers actually do the best job of launching those products, whereas.
Andy Palmer: On E Commerce think of like an Amazon for example, so much of that buying behavior and those decisions are made via social proof right. If it as a large number of reviews and it's got five stars I'm more likely to buyer and so traditionally E. Com is just not done as good a bit.
Andy Fulmer: And so traditionally, e-com has just not done as good of a job launching new products. So traditional usually takes the lead when it comes to some of the newer ones, especially some of the foundational ones we just launched.
Andy Palmer: Job of launching new products.
Andy Palmer: So traditional usually takes the lead when it comes to some of the newer ones, especially some of the foundational once we just launched.
Andy Fulmer: So I think it's just the nature of that dynamic for now, although I fully expect EECOM will catch up to that. And then what was the second part of the question? Sorry if I missed it. No, you hit that one on the head there.
Andy Palmer: So that I think it's just a nature of that dynamic for now although I fully expect E comm will catch up to that.
Andy Palmer: And then what was the second part of the question sorry, if I missed it.
Andy Palmer: No you hit that one.
Brian Murphy: And then just last one for me, previously you've mentioned there's some opportunities on M&A to bolster the outdoor lifestyle products. Just curious on your thoughts around the current M&A environment, your appetite there, and then also are you looking at any other additional uses of capital? Yeah, great question. We absolutely pride ourselves in having a clean balance sheet and capacity to go do some deals. We've been waiting very patiently, you know, we didn't get caught up in the flurry. That probably was very exciting to get caught up into, you know, a few years ago. knowing that at some point things would have to level out.
Speaker Change: And then just last one for me I know previously you've mentioned there is some opportunities on M&A to bolster the outdoor lifestyle products. Just curious on your thoughts around the current M&A environment and your appetite. There and then also are you looking at any other additional uses of capital.
Andy Palmer: Yeah, Great question.
Andy Palmer: We absolutely pride ourselves in having a clean balance sheet and capacity to go do some deals.
Andy Palmer: We've been waiting very patiently you know we didn't get caught up in the flurry that.
Speaker Change: He was very exciting to get caught up into you know a few years ago.
Speaker Change: Knowing that at some point things.
Brian Murphy: Things would have to level out and so we're actually we're in a great position to continue to look at acquisitions.
Brian Murphy: And so we're in a great position to continue to look at acquisitions. We are seeing a pickup in volume. less so banker-led deals, more, you know, companies that we have facilitated a direct relationship with. who are just honestly out of their skis. You know, they're struggling with their supply chain side, they're struggling with maintaining shelf space, they're struggling with innovation. And I think there's a lot they see that there's a lot we can bring to the table there as an acquirer. So we actually have quite a few ongoing conversations currently. And a number of those, you know, would make nice tuck in acquisitions for us at very, very attractive prices.
Andy Palmer: We are seeing.
Andy Palmer: A pickup in volume.
Andy Palmer: Less so banker led deals more.
Andy Palmer: Companies that we have facilitated a direct relationship with.
Andy Palmer: Who are just honestly out over their skis you know they are struggling with their supply chain side. They are struggling with maintaining shelf space theyre struggling with innovation.
Andy Palmer: And I think there's a lot they see that there's a lot we can bring to the table there as an acquirer. So we actually have quite a few ongoing conversations currently.
Andy Palmer: And a number of those.
Andy Palmer: It would make nice tuck in acquisitions for us at very very attractive prices.
Brian Murphy: So certainly there's opportunity there, but again, like we always do, we don't go after everything. We want to be very cautious and make sure that one plus one equals three or more. Perfect.
Andy Palmer: So certainly there's opportunity there, but again like we always do.
Andy Palmer: We don't go after everything we want to be very cautious and make sure that one plus one equals three or more.
Alex Sturnieks: That's helpful and that's all from me today. Thanks, guys. Yep. Thanks, Alex.
Andy Palmer: Perfect. That's helpful and that's all for me Thanks, guys Yeah. Thanks al.
Matt Koranda: And your next question today will come from Matt Koranda with Roth Capital. Please go ahead. Hi, guys. Just wanted to make sure I understand the, you know, the or can pinpoint the reason for the withdrawn guidance. So after the pull forward and orders that you saw, did you actually see a pause in retail order flow and call it, you know, the late April, May, early June timeframe? What what is sort of order activity look like with your retail customers currently?
Speaker Change: And your next question today will come from Matt Koranda with Roth Capital. Please go ahead.
Matt Koranda: Hey, guys.
Matt Koranda: Just wanted to make sure I understand the or can pinpoint the reason for the withdrawn guidance.
Matt Koranda: So after the pull forward in orders that you saw did you actually see a pause in our retail order flow and call. It the.
Matt Koranda: Late April May early June time frame.
Matt Koranda: What is sort of order activity looked like with your retail customers currently.
Brian Murphy: Hey Matt, it's Brian. That's pretty accurate. I would say, you know, the three weeks of of orders towards the end of our fiscal year, those were orders that we had anticipated receiving in the first few months of Q1. So they really were accelerated into our Q4. With that said, Q1 was off to a slower start, because those orders obviously took place just before that. You know, with that said, the underlying POS trends, again, remain very, very strong. So as those two begin to converge, as retailers continue to see the sell-through of our products, you know, Andy alluded to one large retailer, you know, just giving a hat tip to the Caldwell Clay Copter, outselling their other clay throwers combined.
Brian Murphy: Hey, Matt it's Brian.
Brian Murphy: So.
Brian Murphy: That's pretty accurate I would say.
Brian Murphy: The three weeks of of orders towards the end of our fiscal year those were orders that we had anticipated.
Brian Murphy: <unk> in the first few months of Q1.
Brian Murphy: So they really were accelerated into our Q4 with that said Q Q1 was off to a slower start because those orders obviously took place just before that.
Brian Murphy: With that said the underlying Pos trends again remain remained very very strong. So as those two begin to converge as retailers continue to see the sell through of our products.
Andy Palmer: Now Andy alluded to one large retailer.
Brian Murphy: I'm, just giving a hat tip to the Caldwell clay copter outselling their other clay throwers combined.
Brian Murphy: So the strength is there, I think it's just going to take them kind of selling that through and then coming back. I think they're also just from their perspective, from the retailers, they're trying to, again, navigate this environment with their own balance sheets. And one of the key themes we've seen coming out of the de-stocking that occurred two years ago. is generally they want to maintain lower levels of inventory. They don't want to get, you know, they don't want to have too high like they did before. And we're also seeing them shift their preference towards a fewer number of brands, but where they're seeing a lot of traction, especially where that they bring in foot traffic.
Brian Murphy: So the strength is there I think it's just going to take them kind of selling that through and then coming back I think theyre also just from their perspective from the retailers that they're trying to again navigate this environment with their own balance sheets.
Brian Murphy: And one of the key themes, we've seen coming out of the Destocking that occurred two years ago.
Brian Murphy: Is generally they want to maintain lower levels of inventory. They don't want to get you know they want to have too high like they did before and.
Brian Murphy: And we're also seeing them shifting their preference towards a fewer number of brands, but where they're seeing a lot of traction, especially where that they bring in foot traffic.
Brian Murphy: So that's where we believe we're very, very well positioned. We actually see it as a positive that we were, you know, our retailers came to us off the bat asking for these opportunities. which by the way came without any discounting and things like that, it was just purely organic. So I'm not worried about it per se, but certainly in Q1 we started off a little bit slower just because of the differences in timing. Okay, that helps clarify a little bit. Also curious, I guess you alluded to it in your answer just now, but So POS has been strong.
Brian Murphy: So that's what we believe we're very very well positioned we actually see it as a positive that we were you know our retailers came to us off about asking for these opportunities.
Brian Murphy: By the way it came without any discounting and things like that which is purely organic.
Brian Murphy: So I'm not I'm not worried about it per se, but.
Brian Murphy: Certainly in Q1, we started off a little bit slower just because of the differences in timing.
Brian Murphy: Okay that helps clarify a little bit.
Brian Murphy: Also curious I guess you alluded to it in your answer just now but.
Brian Murphy: So a pls has been strong and there's been a pause in sort of order activity I guess that maybe creates a little bit of an air pocket in the first quarter.
Matt Koranda: There's been a pause in sort of order activity, I guess, that maybe creates a little bit of an air pocket in the first quarter. like, what do your retail customers need to see before they come back to the well? Is it just a thinning out of inventory? And so as they cycle through stuff over a quarter or so, they'll come back to the well, as long as POS looks normal, they need other things to be happening, maybe just a little bit more on what you think drives them back for kind of the replenishment, you know, later in the fiscal year in 2016.
Brian Murphy: Like what do your retail customers need to see before they come back to the well is it just a thinning out of inventory and so as they cycle through stuff over a quarter or so.
Brian Murphy: They'll come back to the well as long as Pls looks normal they need other things to be happening, maybe just a little bit more on <unk>.
Speaker Change: What you think drives them back for kind of the replenishment.
Brian Murphy: Later in the fiscal year in 2006.
Brian Murphy: Yeah, I think they're trying to balance You know, obviously, these retailers sell, you know, thousands and thousands of different products from different vendors, and they're trying to manage that overall portfolio. Again, I think it goes back to which of the brands and products that I have strong sell through, those are going to take the priority. And then I think they also go down to the price, right? Am I seeing a significant increase in price here, or, you know, can I get it close to where I could three or six months ago? And I think that's driving a lot of their repurchase behavior.
Brian Murphy: Yes, I think they're trying to balance.
Brian Murphy: You know obviously these retailers sell thousands and thousands of different products from different vendors and they are trying to manage that overall portfolio.
Brian Murphy: I think it goes back to which of the brands and products that have strong sell through those are going to take the priority and then I think they also go down to the price right am I seeing a significant increase in price here, sorry can I get it close to where I could three or six months ago, and I think that's driving a lot of their or their repurchase behavior.
Brian Murphy: I think that we're well-positioned there to continue to capture that, but, you know, going back to the, you know, suspending guidance. It's what they've communicated to us is that, look, there's going to be some lumpiness ahead, you know, as we continue to navigate this. Not sure what's going to happen with the IEPA tariffs. A lot of, remember too, a lot of these retailers have their own private label businesses, you know, and they can range from anywhere from 5% of their total net sales to I've seen as high as 30 to 40% of their net. So they're also sourcing a lot of this product directly.
Brian Murphy: I think that we're well positioned there to continue to capture that but.
Brian Murphy: Going back to the suspending guidance.
Brian Murphy: They've what they've communicated to us is that look there's going to be some lumpiness.
Brian Murphy: As we continue to navigate this now.
Brian Murphy: Not sure what's going to happen with the IEP tariffs a lot of remember too a lot of these retailers have their own private label businesses, you know and they can range from anywhere from 5% of their total net sales two I've seen as high as 30% to 40% of their net sales.
Brian Murphy: There are also sourcing a lot of this product directly and they in some cases have just limited supply chains and an ability to move things so they're trying to manage those pieces.
Brian Murphy: And they, in some cases, have just limited supply chains and ability to move things. So they're trying to manage those pieces. But going back to AOB, where do we fit in with that? I think if possible, we'll see some lumpiness, which just gives us a little bit less visibility. But overall, again, I'm I'm encouraged by that underlying strength and what we're seeing with the consumer pull Okay.
Brian Murphy: But going back to <unk>, where do we fit in with that I think it's I think it's possible, we'll see some some lumpiness you know, which just gives us a little bit less less visibility, but overall again I'm.
Brian Murphy: I'm encouraged by that underlying strengths and what we're seeing with the consumer pull through.
Matt Koranda: Maybe just one other one on the near-term sales commentary that you gave. I guess just so you level set everybody that's on the call, maybe if we think about first quarter in a normal environment, probably would have been kind of in line with the prior guidance in the mid-single digit percentage growth range. If we just take that and then strip out sort of the 8 to 10 and pull forward that we saw, is that directionally the right way to think about the first quarter as things stand? Yeah, I think that, directionally, you're right with that, Matt.
Brian Murphy: Okay.
Speaker Change: Maybe just one other one on the near term sales commentary that you gave but I guess, just so you level set everybody that's on the call maybe.
Brian Murphy: If we think about first quarter in normal environments, probably would've been kind of in line with the prior guidance in the mid single digit percentage growth range. If we just take that and then strip out sort of the $8 million to $10 million and pull forward that we saw is that directionally the right way to think about the first.
Brian Murphy: Quarter.
Dan: Thanks, Dan.
Matt Koranda: Yes, I think that's directionally, you're right with that Matt.
Matt Koranda: Okay, I appreciate that.
Matt Koranda: Okay, Alright, I appreciate that and then just maybe the last one is on tariffs and just kind of get a sense for.
Matt Koranda: And then just maybe the last one is on tariffs and just kind of get a sense for if you're willing to talk about how much exposure you have within your cost of goods. to China. How should we think about that in 25? Are we making any incremental sourcing decisions that move some of that away from China in 26 that would sort of materially change the percentage of your cogs coming from China?
Matt Koranda: If you're willing to talk about how much exposure you have within your cost of goods.
Matt Koranda: How should we think about that in 25 are we making any.
Brian Murphy: Incremental sourcing decisions that move some of that away from China.
Brian Murphy: In 26 that would sort of materially change the percentage of your Cogs coming from China.
Brian Murphy: Sure.
Brian Murphy: So, this is Brian again. So the way that we're thinking about the year is, if you recall, we did build up our inventory position in anticipation that there may be some moves, right? And we saw that on Liberation Day on April 2nd. And so we're in a much, I think we're in a much better inventory position than others in our space, which we're also benefiting from because we have that inventory that retailers can purchase. And that's going to give us some breathing room, you know, out through the next few months. With that said, we're waiting to see what happens July 9th in the IE Pateros.
Brian Murphy: So this is Brian again.
Brian Murphy: So the way the way that we're thinking about the year as you know.
Brian Murphy: If you recall, we did build up our inventory position too in anticipation that there may be some moves right and we saw that on liberation day on April 2nd.
Brian Murphy: And so we're in a much I think we're in a much better inventory position than others in our space, which we're also benefiting from because we have that inventory that retailers can purchase.
Brian Murphy: And that's going to give us.
Brian Murphy: Some breathing room, you know out through the next few months with that said, we're waiting to see what happens on July nine.
Brian Murphy: In IEP tariffs.
Brian Murphy: Like I said, we have a playbook in place, vendors identified, many of whom we already work with, where we can move capacity very, very quickly. And so we have the ability to move. We have moved some of our products, like Andy alluded to. But it really comes down to just what are the facts and circumstances we're presented with as we move forward, and then controlling what we can control. But like Andy said, the impact of the tariffs, the increased tariffs, really won't start hitting until the back half of this year for us, back half of the fiscal year.
Brian Murphy: We have a playbook in place REIT, our vendors identified many of whom we already work with.
Brian Murphy: Where we can move capacity very very quickly.
Andy Palmer: And so we have the ability to move we have moved some of our products like Andy alluded to fight.
Andy Palmer: But it really comes down to just what what are the facts and circumstances were presented with as we move forward and then controlling what we can control.
Brian Murphy: But like Andy said the impact of the tariffs.
Brian Murphy: Greece tariffs really won't start hitting until the back half of this year for us back half of the fiscal year.
Brian Murphy: So from a, you know, full year, you know, kind of income statement perspective, there'll be some impact, but, you know, we're going to do our best to try to mitigate even what impact there might be. Again, through taking price where we can, I think we're in a good spot there, bleeding off our good inventory that we have right now, and then just being agile, you know, let's just, let's get the products in the right places with the right quality and ultimately everything that we do is going to be through the long term lens.
Brian Murphy: So from.
Brian Murphy: Full year kind of income statement perspective.
Brian Murphy: There'll be some impact, but you know we're going to do our best to try to mitigate even what impact there might be again, we're taking price where we can I think we're in a good spot there bleeding off our good inventory that we have right now.
Brian Murphy: And then just being agile, let's just let's get the products in the right places with the right quality and ultimately everything that we do is going to be through the long term loans, we're not going to do anything in the short term that's going to jeopardize the long term.
Operator: We're not going to do anything in the short term that's going to jeopardize the long Alright, appreciate it guys, I'll leave it there. Concludes our question and answer session.
Brian Murphy: Yeah.
Brian Murphy: Alright appreciate it guys I'll leave it there.
Brian Murphy: Matt.
Speaker Change: This concludes our question and answer session I would now like to turn the conference back over to Mr. Brian Murphy for any closing remarks.
Brian Murphy: I would like to turn the conference back over to Mr. Brian Murphy for any closing remarks. I want to thank our employees, whose tireless commitment to innovation allows us to remain focused on executing our long-term vision. and thank you to everyone who joined us today. We look forward to speaking with you again next quarter. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
Brian Murphy: Thank you operator.
Brian Murphy: I want to thank our employees, whose tireless commitment to innovation allows us to remain focused on executing our long term vision.
Brian Murphy: And thank you to everyone, who joined US today, we look forward to speaking with you again next quarter.
Brian Murphy: Yes.
Speaker Change: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Yes.
Speaker Change: [music].
Speaker Change: Hum.
Speaker Change: Yes.
Speaker Change: Yeah.