SPRINGFIELD, Mass., Sept. 7, 2017 /PRNewswire/ -- American Outdoor Brands Corporation (NASDAQ Global Select: AOBC), one of the world's leading providers of firearms and quality products for the shooting, hunting, and rugged outdoor enthusiast, today announced financial results for the first quarter fiscal 2018, ended July 31, 2017.

First Quarter Fiscal 2018 Financial Highlights

• Quarterly net sales were $129.0 million compared with $207.0 million for the first quarter last year, a decrease of 37.7%.
• Gross margin for the quarter was 31.5% compared with 42.3% for the first quarter last year.
• Quarterly GAAP net loss was $2.2 million, or $(0.04) per diluted share, compared with net income of $35.2 million, or $0.62 per diluted share, for the comparable quarter last year. First quarter 2018 and 2017 GAAP net (loss)/income per diluted share include expenses of $3.8 million and $1.7 million, respectively, for amortization, net of tax, related to acquisitions.
• Quarterly Non-GAAP net income was $1.2 million, or $0.02 per diluted share, compared with $37.7 million, or $0.66 per diluted share, for the comparable quarter last year. GAAP to non-GAAP adjustments to net income exclude a number of acquisition-related costs, including amortization, one-time transaction costs, and a change in contingent consideration liability, as well as discontinued operations. For a detailed reconciliation, see the schedules that follow in this release.
• Quarterly non-GAAP Adjusted EBITDAS was $12.9 million, or 10.0% of net sales, compared with $65.8 million, or 31.8% of net sales, for the comparable quarter last year.
• During the first quarter, the company announced the purchase of substantially all of the assets of Gemini Technologies, Incorporated ("Gemtech"), a provider of high quality suppressors and accessories for the consumer, law enforcement, and military markets, for $10.0 million.  The company also announced the purchase of Bubba Blade™, a premium brand of knives and tools for fishing and hunting, for approximately $12.0 million. Both transactions closed early in the second quarter of fiscal 2018.

James Debney, American Outdoor Brands Corporation President and Chief Executive Officer, commented, "Our financial results for the first quarter reflected lower than anticipated shipments in our Firearms business, consistent with a softening in wholesaler and retailer orders, partially offset by increased revenue from our Outdoor Products & Accessories business, which grew organically at 11.4% and which more than doubled inorganically. Total revenue for the quarter also faced a challenging comparison to last year's heightened level of firearms demand, which we believe was driven by concerns for personal safety and the potential for increased firearm legislation.

"In Firearms, we believe units shipped in the first quarter were impacted by an extremely successful promotion on our M&P Shield pistols that we initiated in our prior fourth quarter.  That promotion exceeded our expectations and we believe it pulled forward our shipments into the fourth quarter as wholesalers and retailers stocked up in preparation for the strong consumer demand for those products that they believed would occur – and that did in fact occur – over the ensuing 90 days. In addition, we believe that heightened channel inventory from multiple manufacturers at retail locations contributed to lower orders in the quarter.  Despite those heightened channel inventories, we were pleased that our inventory at distributors actually declined during the quarter. For the remainder of the year, our focus in Firearms will be on bringing Gemtech suppressors into our product line and on introducing several significant new firearms in the second half of this fiscal year.  We plan to further increase our internal inventory in preparation for new product launches, the upcoming fall hunting and holiday seasons, and the industry ordering shows that occur in January and February. In Outdoor Products & Accessories, we will focus on new product introductions, including offerings from our acquisition of Bubba Blade, a premium knife brand that is widely recognized among outdoor enthusiasts for some of the finest knives for fishing and hunting.  Bubba Blade products deliver features and benefits that are very popular with consumers, and are protected by strong intellectual property.  This acquisition also serves as our first step into the sizeable fishing market.  Overall, we remain focused on the execution of our long-term strategic growth initiatives, which support our vision of being the leading provider of quality products for the shooting, hunting, and rugged outdoor enthusiast," concluded Debney.

Jeff Buchanan, Executive Vice President, Chief Financial Officer, and Chief Administrative Officer, commented, "We ended the quarter with cash of $43.4 million and net debt of approximately $199 million. Although operating cash flow for our first quarter was negative, and we are forecasting neutral operating cash flow for our second quarter, we expect the current fiscal year to deliver positive operating cash flow of $70 million to $90 million. In addition, based on our guidance and current cash flow forecast, we do not expect our Net Debt-to-Adjusted EBITDAS trailing twelve month ratio to rise above 1.6, and we expect that ratio to be below 1.2 by the end of our current fiscal year."

Financial Outlook

Conference Call and Webcast

The company will host a conference call and webcast today, September 7, 2017, to discuss its first quarter fiscal 2018 financial and operational results. Speakers on the conference call will include James Debney, President and Chief Executive Officer, and Jeffrey D. Buchanan, Executive Vice President, Chief Financial Officer, and Chief Administrative Officer. The conference call may include forward-looking statements. The conference call and webcast will begin at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time). Those interested in listening to the conference call via telephone may call directly at (844) 309-6568 and reference conference code 73063180.  No RSVP is necessary.  The conference call audio webcast can also be accessed live and for replay on the company's website at www.aob.com, under the Investor Relations section. The company will maintain an audio replay of this conference call on its website for a period of time after the call. No other audio replay will be available.

Reconciliation of U.S. GAAP to Non-GAAP Financial Measures

In this press release, certain non-GAAP financial measures, including "non-GAAP net income," "Adjusted EBITDAS," and "free cash flow" are presented. From time-to-time, we consider and use these supplemental measures of operating performance in order to provide the reader with an improved understanding of underlying performance trends.  We believe it is useful for our company and the reader to review, as applicable, both (1) GAAP measures that include (i) amortization of acquired intangible assets, (ii) transition costs, (iii) discontinued operations, (iv) changes in contingent consideration liabilities, (v) acquisition-related costs, (vi) tax effect of non-GAAP adjustments, (vii) net cash (used in)/provided by operating activities, (viii) net cash used in investing activities, (ix) receipts from note receivable, (x) interest expense (xi) income tax (benefit)/expense, (xii) depreciation and amortization, and (xiii) stock-based compensation expense; and (2) the non-GAAP measures that exclude such information. We present these non-GAAP measures because we consider them an important supplemental measure of our performance. Our definition of these adjusted financial measures may differ from similarly named measures used by others. We believe these measures facilitate operating performance comparisons from period to period by eliminating potential differences caused by the existence and timing of certain expense items that would not otherwise be apparent on a GAAP basis.  These non-GAAP measures have limitations as an analytical tool and should not be considered in isolation or as a substitute for our GAAP measures.  The principal limitations of these measures are that they do not reflect our actual expenses and may thus have the effect of inflating our financial measures on a GAAP basis.

About American Outdoor Brands Corporation

American Outdoor Brands Corporation (NASDAQ Global Select: AOBC) is a provider of quality products for shooting, hunting, and rugged outdoor enthusiasts in the global consumer and professional markets. The company reports two segments: Firearms and Outdoor Products & Accessories.  Firearms manufactures handgun and long gun products sold under the Smith & Wesson®, M&P®, Thompson/Center Arms™, and Gemtech® brands as well as provides forging, machining, and precision plastic injection molding services. Outdoor Products & Accessories provides shooting, hunting, and outdoor accessories, including reloading, gunsmithing, and gun cleaning supplies, tree saws, vault accessories, knives, laser sighting systems, tactical lighting products, and survival and camping equipment. Brands in Outdoor Products & Accessories include Smith & Wesson®, M&P®, Thompson/Center Arms™, Crimson Trace®, Caldwell® Shooting Supplies, Wheeler® Engineering, Tipton® Gun Cleaning Supplies, Frankford Arsenal® Reloading Tools, Lockdown® Vault Accessories, Hooyman® Premium Tree Saws, BOG POD®, Golden Rod® Moisture Control, Schrade®, Old Timer®, Uncle Henry®, UST™,  Imperial™, and Bubba Blade™.  For more information on American Outdoor Brands Corporation, call (844) 363-5386 or log on to www.aob.com.

Safe Harbor Statement

Certain statements contained in this press release may be deemed to be forward-looking statements under federal securities laws, and we intend that such forward-looking statements be subject to the safe-harbor created thereby.  Such forward-looking statements include, among others, our strategy to continue growing and balancing our business across the shooting, hunting, and rugged outdoor enthusiast market; our belief that total revenue for the quarter faced a challenging comparison to last year's heightened levels of firearms demand which we believe was driven by concerns for personal safety and the potential for increased firearm legislation; our belief that operating results in the quarter  were impacted by successful promotions in the fourth fiscal quarter of 2017 on our M&P Shield pistols, which we believe pulled forward shipments into the fourth quarter as wholesalers and retailers stocked up in preparation for strong consumer demand over the ensuing 90 days; our belief that heightened channel inventory from multiple manufacturers at retail locations contributed to lower orders in the quarter; our belief that we are focused on executing our long-term strategic initiatives, which support our vision of being the leading provider of quality products for the shooting, hunting and rugged outdoor enthusiast; our expectation that the current fiscal year will deliver positive operating cash flow of $70 million to $90 million; our belief that we do not expect our Net-Debt-to-Adjusted EBITDAS trailing twelve month ratio to rise above 1.6 and that the ratio will be below 1.2 by the end of our current fiscal year; and our expectations for net sales, GAAP income per diluted share, amortization of acquired intangible assets, acquisition-related costs, transition costs, change in contingent consideration, tax effect of non-GAAP adjustments, and non-GAAP income per diluted share for the second quarter of fiscal 2018 and for fiscal 2018.  We caution that these statements are qualified by important risks, uncertainties and other factors that could cause actual results to differ materially from those reflected by such forward-looking statements.  Such factors include, among others, the demand for our products; the state of the U.S. economy in general and the firearm industry in particular; general economic conditions and consumer spending patterns; our competitive environment; the supply, availability and costs of raw materials and components; the potential for increased regulation of firearms and firearm-related products; speculation surrounding fears of terrorism and crime; our anticipated growth and growth opportunities; our ability to increase demand for our products in various markets, including consumer, law enforcement, and military channels, domestically and internationally; our penetration rates in new and existing markets; our strategies; our ability to maintain and enhance brand recognition and reputation; risks associated with the establishment of our new 500,000 square foot national distribution center; our ability to introduce new products; the success of new products; our ability to expand our markets; our ability to integrate acquired businesses in a successful manner; the general growth of our outdoor products and accessories business; the potential for cancellation of orders from our backlog; and other risks detailed from time to time in our reports filed with the SEC, including our Annual Report on Form 10-K for the fiscal year ended April 30, 2017.

Contact: Liz Sharp, VP Investor Relations
American Outdoor Brands Corporation
(413) 747-6284
lsharp@aob.com

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