UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 §CRF 230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 7.01. | Regulation FD Disclosure. |
We are furnishing this Current Report on Form 8-K in connection with the disclosure of information, in the form of the textual information from a PowerPoint presentation to be given at meetings with institutional investors or analysts. This information may be amended or updated at any time and from time to time through another Form 8-K, a later company filing, or other means. The PowerPoint presentation attached as Exhibit 99.1 to this Current Report on Form 8 K updates and replaces in its entirety all prior PowerPoint presentations filed by us, including the PowerPoint presentations filed as Exhibit 99.1 to the Current Report on Form 8-K dated November 14, 2019, which was filed with the Securities and Exchange Commission on November 14, 2019, and to the Current Report on Form 8-K dated January 17, 2017, which was filed with the Securities and Exchange Commission on January 17, 2017.
The information in this Current Report on Form 8-K (including the exhibit) is furnished pursuant to Item 7.01 and shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section. This Current Report on Form 8-K will not be deemed an admission as to the materiality of any information in the Report that is required to be disclosed solely by Regulation FD.
We do not have, and expressly disclaim, any obligation to release publicly any updates or any changes in our expectations or any change in events, conditions, or circumstances on which any forward-looking statement is based.
The text included with this Report on Form 8-K is available on our website located at www.aob.com, although we reserve the right to discontinue that availability at any time.
| Item 9.01. | Financial Statements and Exhibits. |
| (d) | Exhibits. |
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| 99.1 |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| AMERICAN OUTDOOR BRANDS CORPORATION | ||||||
| Date: March 10, 2020 |
By: |
/s/ Jeffrey D. Buchanan | ||||
| Jeffrey D. Buchanan | ||||||
| Executive Vice President, Chief Financial Officer, Chief Administrative Officer, and Treasurer | ||||||
Exhibit 99.1 INVESTOR PRESENTATION MARCH 2020 © 2020 AMERICAN OUTDOOR BRANDS CORP. ALL RIGHTS RESERVED.Exhibit 99.1 INVESTOR PRESENTATION MARCH 2020 © 2020 AMERICAN OUTDOOR BRANDS CORP. ALL RIGHTS RESERVED.
LEGAL SAFE HARBOR Certain statements contained in this presentation may be deemed to be forward- the prioritization of investments and capital allocation focused on both organic and looking statements under federal securities laws, and we intend that such forward- inorganic growth; the outdoor products & accessories strategic priorities for looking statements be subject to the safe-harbor created thereby. Such forward- growth, including introducing new and differentiated products, expanding our looking statements include, among others, anticipated revenue, GAAP earnings per addressable market, cultivating direct-to-consumer relationships, expanding and share, non-GAAP earnings per share, tax rate, and share count for future periods; enhancing our supply chain, and pursuing acquisitions that complement our current anticipated revenue for the Firearms segment and the Outdoor Products & business; expected new products and patents for outdoor products & accessories in Accessories segment for future periods; the methodology, tax-free nature, effects, 2020; the anticipated financial profile of Smith & Wesson Brands, Inc., which is and timing of the proposed spin-off of the outdoor products & accessories expected to yield strong cash flows, a granular focus on organic growth, and business; our belief that the spin-off will allow both companies and their dedicated profitability with a plan to eventually return capital to stockholders in the form of management teams to focus on their respective business models and growth dividends; the firearms strategic priorities for growth, including growing organically, opportunities, while providing access to capital, financial resources, and investors leveraging our iconic brands, focusing on new product introductions, simplifying that are better aligned with its unique business; our belief that the separation our business, and returning value to stockholders; and expected next steps for the enhances prospects for long-term value creation; our belief that each company will spin-off. We caution that these statements are qualified by important risks, benefit from a distinct strategic and management focus on its specific operational uncertainties, and other factors that could cause actual results to differ materially and growth priorities, with Smith & Wesson Brands, Inc. focusing on organic from those reflected by such forward-looking statements. Such factors include, growth by developing new products that meet the needs and wants of consumer among others, economic, social, political, legislative, and regulatory factors; the customers, and with American Outdoor Brands, Inc. focusing on market potential for increased regulation of firearms and firearm-related products; actions opportunities in rugged outdoor products, both organically through robust of social activists that could have an adverse effect on our business; the impact of innovation and inorganically by acquiring new brands; our expectation that each lawsuits; the demand for our products; the state of the U.S. economy in general and company will offer a unique and compelling investment opportunity, allowing it to the firearm industry in particular; general economic conditions and consumer attract investors more closely aligned with its business type and its operational and spending patterns; impacts from the Coronavirus; our competitive environment; the financial model, with Smith & Wesson Brands, Inc. focusing on firearms, strong supply, availability, and costs of raw materials and components; the impact of cash generation, and returning capital to stockholders via dividends, and with protectionist tariffs and trade wars; speculation surrounding fears of terrorism and American Outdoor Brands, Inc. focusing on OP&A and delivering high growth via crime; our anticipated growth and growth opportunities; our ability to increase re-investment in the business and M&A; our expectation that each company will demand for our products in various markets, including consumer, law enforcement, operate with its own capital allocation priorities and access to financial resources, and military channels, domestically and internationally; our penetration rates in new such as markets, credit, and insurance, that are better aligned with its business type and existing markets; our strategies; the completion of our proposed spin-off and and its long-term strategy; and our belief that each company will benefit from the the operations and performance of the two separate companies thereafter; our investment community’s ability to value the businesses independently and drive ability to maintain and enhance brand recognition and reputation; risks associated incremental stockholder value through an improved stock price; estimated revenue, with the establishment of our new 630,000 square foot Logistics & Customer adjusted EBITDAS, and market size for each of the separate companies for the first Services facility in Missouri; our ability to introduce new products; the success of 12 months as independent companies; our expectation that American Outdoor new products; our ability to expand our markets; our ability to integrate acquired Brands, Inc. will exclusively license certain brands from Smith & Wesson Brands, businesses in a successful manner; the general growth of our outdoor products and Inc. after the spin-off; the anticipated financial profile of American Outdoor accessories business; the potential for cancellation of orders from our backlog; and Brands, Inc., which is expected to yield growth and profitability that will facilitate other risks detailed from time to time in our reports filed with the SEC, including our Annual Report on Form 10-K for the fiscal year ended April 30, 2019. © 2020 AMERICAN OUTDOOR BRANDS CORP. © 2020 AMERICAN OUTDOOR ALL RIGHTS RESERVED. BRANDS 2 CORP. ALL RIGHTS RESERVED.LEGAL SAFE HARBOR Certain statements contained in this presentation may be deemed to be forward- the prioritization of investments and capital allocation focused on both organic and looking statements under federal securities laws, and we intend that such forward- inorganic growth; the outdoor products & accessories strategic priorities for looking statements be subject to the safe-harbor created thereby. Such forward- growth, including introducing new and differentiated products, expanding our looking statements include, among others, anticipated revenue, GAAP earnings per addressable market, cultivating direct-to-consumer relationships, expanding and share, non-GAAP earnings per share, tax rate, and share count for future periods; enhancing our supply chain, and pursuing acquisitions that complement our current anticipated revenue for the Firearms segment and the Outdoor Products & business; expected new products and patents for outdoor products & accessories in Accessories segment for future periods; the methodology, tax-free nature, effects, 2020; the anticipated financial profile of Smith & Wesson Brands, Inc., which is and timing of the proposed spin-off of the outdoor products & accessories expected to yield strong cash flows, a granular focus on organic growth, and business; our belief that the spin-off will allow both companies and their dedicated profitability with a plan to eventually return capital to stockholders in the form of management teams to focus on their respective business models and growth dividends; the firearms strategic priorities for growth, including growing organically, opportunities, while providing access to capital, financial resources, and investors leveraging our iconic brands, focusing on new product introductions, simplifying that are better aligned with its unique business; our belief that the separation our business, and returning value to stockholders; and expected next steps for the enhances prospects for long-term value creation; our belief that each company will spin-off. We caution that these statements are qualified by important risks, benefit from a distinct strategic and management focus on its specific operational uncertainties, and other factors that could cause actual results to differ materially and growth priorities, with Smith & Wesson Brands, Inc. focusing on organic from those reflected by such forward-looking statements. Such factors include, growth by developing new products that meet the needs and wants of consumer among others, economic, social, political, legislative, and regulatory factors; the customers, and with American Outdoor Brands, Inc. focusing on market potential for increased regulation of firearms and firearm-related products; actions opportunities in rugged outdoor products, both organically through robust of social activists that could have an adverse effect on our business; the impact of innovation and inorganically by acquiring new brands; our expectation that each lawsuits; the demand for our products; the state of the U.S. economy in general and company will offer a unique and compelling investment opportunity, allowing it to the firearm industry in particular; general economic conditions and consumer attract investors more closely aligned with its business type and its operational and spending patterns; impacts from the Coronavirus; our competitive environment; the financial model, with Smith & Wesson Brands, Inc. focusing on firearms, strong supply, availability, and costs of raw materials and components; the impact of cash generation, and returning capital to stockholders via dividends, and with protectionist tariffs and trade wars; speculation surrounding fears of terrorism and American Outdoor Brands, Inc. focusing on OP&A and delivering high growth via crime; our anticipated growth and growth opportunities; our ability to increase re-investment in the business and M&A; our expectation that each company will demand for our products in various markets, including consumer, law enforcement, operate with its own capital allocation priorities and access to financial resources, and military channels, domestically and internationally; our penetration rates in new such as markets, credit, and insurance, that are better aligned with its business type and existing markets; our strategies; the completion of our proposed spin-off and and its long-term strategy; and our belief that each company will benefit from the the operations and performance of the two separate companies thereafter; our investment community’s ability to value the businesses independently and drive ability to maintain and enhance brand recognition and reputation; risks associated incremental stockholder value through an improved stock price; estimated revenue, with the establishment of our new 630,000 square foot Logistics & Customer adjusted EBITDAS, and market size for each of the separate companies for the first Services facility in Missouri; our ability to introduce new products; the success of 12 months as independent companies; our expectation that American Outdoor new products; our ability to expand our markets; our ability to integrate acquired Brands, Inc. will exclusively license certain brands from Smith & Wesson Brands, businesses in a successful manner; the general growth of our outdoor products and Inc. after the spin-off; the anticipated financial profile of American Outdoor accessories business; the potential for cancellation of orders from our backlog; and Brands, Inc., which is expected to yield growth and profitability that will facilitate other risks detailed from time to time in our reports filed with the SEC, including our Annual Report on Form 10-K for the fiscal year ended April 30, 2019. © 2020 AMERICAN OUTDOOR BRANDS CORP. © 2020 AMERICAN OUTDOOR ALL RIGHTS RESERVED. BRANDS 2 CORP. ALL RIGHTS RESERVED.
American Outdoor Brands Corporation PRESENTERS BRIAN D. MURPHY CO-PRESIDENT & CO-CHIEF EXECUTIVE OFFICER MARK P. SMITH CO-PRESIDENT & CO-CHIEF EXECUTIVE OFFICER JEFFREY D. BUCHANAN EXECUTIVE VICE PRESIDENT, CHIEF FINANCIAL OFFICER, CHIEF ADMINISTRATIVE OFFICER & TREASURER © 2020 AMERICAN OUTDOOR BRANDS CORP. ALL RIGHTS RESERVED. 3American Outdoor Brands Corporation PRESENTERS BRIAN D. MURPHY CO-PRESIDENT & CO-CHIEF EXECUTIVE OFFICER MARK P. SMITH CO-PRESIDENT & CO-CHIEF EXECUTIVE OFFICER JEFFREY D. BUCHANAN EXECUTIVE VICE PRESIDENT, CHIEF FINANCIAL OFFICER, CHIEF ADMINISTRATIVE OFFICER & TREASURER © 2020 AMERICAN OUTDOOR BRANDS CORP. ALL RIGHTS RESERVED. 3
TODAY’S 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 Firearms Outdoor Products & Accessories in the global consumer and professional markets • AOBC reports two segments: – Firearms (handguns, long guns, and suppressor products, as well as forging, machining, and precision plastic injection molding services) – Outdoor Products & Accessories (accessories for shooting, hunting, cutlery, and outdoors) • Serves customers through manufacturing facilities in Springfield, MA, Houlton, ME, Deep River, CT, and Portland, OR, as well as a distribution facility located in Columbia, MO • Revenue and adjusted EBITDAS for the last twelve months were ~$620M and ~$93M, respectively © 2020 AMERICAN OUTDOOR BRANDS CORP. ALL RIGHTS RESERVED. 4TODAY’S 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 Firearms Outdoor Products & Accessories in the global consumer and professional markets • AOBC reports two segments: – Firearms (handguns, long guns, and suppressor products, as well as forging, machining, and precision plastic injection molding services) – Outdoor Products & Accessories (accessories for shooting, hunting, cutlery, and outdoors) • Serves customers through manufacturing facilities in Springfield, MA, Houlton, ME, Deep River, CT, and Portland, OR, as well as a distribution facility located in Columbia, MO • Revenue and adjusted EBITDAS for the last twelve months were ~$620M and ~$93M, respectively © 2020 AMERICAN OUTDOOR BRANDS CORP. ALL RIGHTS RESERVED. 4
Financial Review OVERVIEW QUARTERLY HIGHLIGHTS – FY20Q3 YEARLY HIGHLIGHTS FY19A FY20 Q3 (1/31/20) Segment Sales Sales $638.3M Gross Profit 35.4% Net Income $18.4M Outdoor Firearms Adj. EBITDAS $111.3M Products & Adj. EBITDAS Margin 17.4% Accessories 75% GAAP Income Per Share $0.33 25% $0.83 Non-GAAP Income Per Share American Outdoor Brands Corporation (NASDAQ Global Select: AOBC) § Revenue $166.7M (+2.9% Y/Y) is a provider of quality products for shooting, hunting, and rugged outdoor § One-fourth of revenue came from OP&A segment enthusiasts in the global consumer and professional markets. The company § Gross margin 33.1% (vs. 33.4% Q3FY19) reports two segments: Outdoor Products & Accessories (shooting, hunting, § Firearms segment sales increased 3.1% Y/Y cutlery, and outdoor accessories) and Firearms (handguns, long guns, and suppressor products). The company also provides forging, machining, and § OP&A segment sales increased 3.2% Y/Y precision plastic injection molding services. § Strong balance sheet maintained © 2020 AMERICAN OUTDOOR BRANDS CORP. ALL RIGHTS RESERVED. 5Financial Review OVERVIEW QUARTERLY HIGHLIGHTS – FY20Q3 YEARLY HIGHLIGHTS FY19A FY20 Q3 (1/31/20) Segment Sales Sales $638.3M Gross Profit 35.4% Net Income $18.4M Outdoor Firearms Adj. EBITDAS $111.3M Products & Adj. EBITDAS Margin 17.4% Accessories 75% GAAP Income Per Share $0.33 25% $0.83 Non-GAAP Income Per Share American Outdoor Brands Corporation (NASDAQ Global Select: AOBC) § Revenue $166.7M (+2.9% Y/Y) is a provider of quality products for shooting, hunting, and rugged outdoor § One-fourth of revenue came from OP&A segment enthusiasts in the global consumer and professional markets. The company § Gross margin 33.1% (vs. 33.4% Q3FY19) reports two segments: Outdoor Products & Accessories (shooting, hunting, § Firearms segment sales increased 3.1% Y/Y cutlery, and outdoor accessories) and Firearms (handguns, long guns, and suppressor products). The company also provides forging, machining, and § OP&A segment sales increased 3.2% Y/Y precision plastic injection molding services. § Strong balance sheet maintained © 2020 AMERICAN OUTDOOR BRANDS CORP. ALL RIGHTS RESERVED. 5
Financial Review FINANCIALGUIDANCE (Fiscal Year Ending April 30) Fiscal Fourth Quarter Estimate Revenue $205M to $215M Note: Guidance for revenue, GAAP GAAP Earnings Per Share $0.17 to $0.21 earnings per share, non-GAAP Non-GAAP Earnings Per Share* $0.33 to $0.37 earnings per share, tax rate, and share count reflects information as of March 5, 2020. The Fiscal Year 2020 Estimate Company is not updating any of this guidance to the present date Revenue $650M to $660M nor does its inclusion constitute a GAAP Earnings Per Share $0.25 to $0.29 reiteration or modification of this information. Non-GAAP Earnings Per Share* $0.58 to $0.62 See Appendices for GAAP to non-GAAP reconciliations. Tax Rate 30% Share Count 55.0M The company is also providing full year revenue guidance for each of its business segments. Accordingly, the company expects full year revenue for its Firearms segment to be between $502.0 million and $507.0 million and full year revenue for its Outdoor Products & Accessories segment to be between $170.0 million and $175.0 million. The full year revenue estimate for the Firearms segment includes additional revenue of $34.0 million to $36.0 million as a result of the change in timing of the federal excise tax and further discussed in the company’s Form 10-Q. Intercompany eliminations are expected to be approximately $22.0 million. This guidance takes into account several factors, including expected impacts from the Coronavirus, all of which are outlined in the company’s Form 10-Q. © 2020 AMERICAN OUTDOOR BRANDS CORP. ALL RIGHTS© RESER 2019 VAM ED.ERICAN OUTDOOR BRANDS CORP. ALL RIGHTSRESERVED. © 2020 AMERICAN OUTDOOR BRANDS CORP. ALL RIGHTS RESERVED. 6Financial Review FINANCIALGUIDANCE (Fiscal Year Ending April 30) Fiscal Fourth Quarter Estimate Revenue $205M to $215M Note: Guidance for revenue, GAAP GAAP Earnings Per Share $0.17 to $0.21 earnings per share, non-GAAP Non-GAAP Earnings Per Share* $0.33 to $0.37 earnings per share, tax rate, and share count reflects information as of March 5, 2020. The Fiscal Year 2020 Estimate Company is not updating any of this guidance to the present date Revenue $650M to $660M nor does its inclusion constitute a GAAP Earnings Per Share $0.25 to $0.29 reiteration or modification of this information. Non-GAAP Earnings Per Share* $0.58 to $0.62 See Appendices for GAAP to non-GAAP reconciliations. Tax Rate 30% Share Count 55.0M The company is also providing full year revenue guidance for each of its business segments. Accordingly, the company expects full year revenue for its Firearms segment to be between $502.0 million and $507.0 million and full year revenue for its Outdoor Products & Accessories segment to be between $170.0 million and $175.0 million. The full year revenue estimate for the Firearms segment includes additional revenue of $34.0 million to $36.0 million as a result of the change in timing of the federal excise tax and further discussed in the company’s Form 10-Q. Intercompany eliminations are expected to be approximately $22.0 million. This guidance takes into account several factors, including expected impacts from the Coronavirus, all of which are outlined in the company’s Form 10-Q. © 2020 AMERICAN OUTDOOR BRANDS CORP. ALL RIGHTS© RESER 2019 VAM ED.ERICAN OUTDOOR BRANDS CORP. ALL RIGHTSRESERVED. © 2020 AMERICAN OUTDOOR BRANDS CORP. ALL RIGHTS RESERVED. 6
Executive Summary SPIN-OFF OF OUTDOOR PRODUCTS & ACCESSORIES • AOBC has announced a plan to pursue the spin-off of its Outdoor Products & Accessories business via a tax-free distribution to AOBC stockholders • Transaction is expected to result in two separate public companies: – Smith & Wesson Brands, Inc. (Firearms) – American Outdoor Brands, Inc. (Outdoor Products & Accessories) • The company’s bank syndicate supports the proposed transaction • Transaction is expected to be completed in the second half of calendar 2020 • Spin-off will allow both companies and their dedicated management teams to focus on their respective business models and growth opportunities, while providing access to capital, financial resources, and investors that are better aligned with its unique business © © 2020 AMERICAN OUTDOOR 2020 AMERICAN OUTDOOR BRANDS BRANDS CORP. CORP. ALL RIGHTS ALL RIGHTS RESERVED. RESERVED. 7 7Executive Summary SPIN-OFF OF OUTDOOR PRODUCTS & ACCESSORIES • AOBC has announced a plan to pursue the spin-off of its Outdoor Products & Accessories business via a tax-free distribution to AOBC stockholders • Transaction is expected to result in two separate public companies: – Smith & Wesson Brands, Inc. (Firearms) – American Outdoor Brands, Inc. (Outdoor Products & Accessories) • The company’s bank syndicate supports the proposed transaction • Transaction is expected to be completed in the second half of calendar 2020 • Spin-off will allow both companies and their dedicated management teams to focus on their respective business models and growth opportunities, while providing access to capital, financial resources, and investors that are better aligned with its unique business © © 2020 AMERICAN OUTDOOR 2020 AMERICAN OUTDOOR BRANDS BRANDS CORP. CORP. ALL RIGHTS ALL RIGHTS RESERVED. RESERVED. 7 7
Executive Summary SEPARATION ENHANCES PROSPECTS FOR LONG-TERM VALUE CREATION • Each company will benefit from a distinct strategic and management focus on its specific operational and growth priorities – Smith & Wesson Brands, Inc. – focus on organic growth by developing new products that meet the needs and wants of consumer customers Distinct Focus – American Outdoor Brands, Inc. – focus on market opportunities in rugged outdoor products, both organically through robust innovation, and inorganically by acquiring new brands • Each company will offer a unique and compelling investment opportunity, allowing it to attract investors more closely aligned with its business type and its operational and financial model Differentiated – Smith & Wesson Brands, Inc. – focus on firearms, strong cash generation, returning capital to stockholders via dividends Investment Theses – American Outdoor Brands, Inc. – focus on OP&A, delivering high growth via re-investment in the business and M&A Optimized Balance • Each company will operate with its own capital allocation priorities and access to financial resources, such as markets, Sheet and Capital credit, and insurance, that are better aligned with its business type and its long term strategy Allocation Priorities • Each company will benefit from the investment community’s ability to value the businesses independently and drive Incremental incremental stockholder value through an improved stock price Stockholder Value © 2020 AMERICAN OUTDOOR BRANDS CORP. ALL RIGHTS RESERVED. 8Executive Summary SEPARATION ENHANCES PROSPECTS FOR LONG-TERM VALUE CREATION • Each company will benefit from a distinct strategic and management focus on its specific operational and growth priorities – Smith & Wesson Brands, Inc. – focus on organic growth by developing new products that meet the needs and wants of consumer customers Distinct Focus – American Outdoor Brands, Inc. – focus on market opportunities in rugged outdoor products, both organically through robust innovation, and inorganically by acquiring new brands • Each company will offer a unique and compelling investment opportunity, allowing it to attract investors more closely aligned with its business type and its operational and financial model Differentiated – Smith & Wesson Brands, Inc. – focus on firearms, strong cash generation, returning capital to stockholders via dividends Investment Theses – American Outdoor Brands, Inc. – focus on OP&A, delivering high growth via re-investment in the business and M&A Optimized Balance • Each company will operate with its own capital allocation priorities and access to financial resources, such as markets, Sheet and Capital credit, and insurance, that are better aligned with its business type and its long term strategy Allocation Priorities • Each company will benefit from the investment community’s ability to value the businesses independently and drive Incremental incremental stockholder value through an improved stock price Stockholder Value © 2020 AMERICAN OUTDOOR BRANDS CORP. ALL RIGHTS RESERVED. 8
Executive Summary TWO COMPANIES WITH ENHANCED PROSPECTS FOR VALUE CREATION Estimated $500M – $550M $200M - $210M (a) Revenue Pro Forma Adjusted $90M - $105M $25M - $30M (a) EBITDAS Industry-Leading (b) Brands Estimated Handguns & Long Guns: ~$4.2B Rugged Outdoor Recreation: ~$30-35B (c) Market Size (a) Estimated revenue and pro forma adjusted EBITDAS for the first 12 months as an independent company. (b) American Outdoor Brands, Inc. will license the brands Smith & Wesson® Accessories; M&P® Accessories; Thompson/Center Arms™ Accessories; and Performance Center® © 2020 AMERICAN OUTDOOR BRANDS CORP. ALL RIGHTS RESERVED. 9 Accessories, all of which will be owned by Smith & Wesson Brands, Inc. and will be exclusively licensed to American Outdoor Brands, Inc., after the spin-off. (c) Estimated market size per Management estimates.Executive Summary TWO COMPANIES WITH ENHANCED PROSPECTS FOR VALUE CREATION Estimated $500M – $550M $200M - $210M (a) Revenue Pro Forma Adjusted $90M - $105M $25M - $30M (a) EBITDAS Industry-Leading (b) Brands Estimated Handguns & Long Guns: ~$4.2B Rugged Outdoor Recreation: ~$30-35B (c) Market Size (a) Estimated revenue and pro forma adjusted EBITDAS for the first 12 months as an independent company. (b) American Outdoor Brands, Inc. will license the brands Smith & Wesson® Accessories; M&P® Accessories; Thompson/Center Arms™ Accessories; and Performance Center® © 2020 AMERICAN OUTDOOR BRANDS CORP. ALL RIGHTS RESERVED. 9 Accessories, all of which will be owned by Smith & Wesson Brands, Inc. and will be exclusively licensed to American Outdoor Brands, Inc., after the spin-off. (c) Estimated market size per Management estimates.
Executive Summary COMPARABLE COMPANY ANALYSIS Commentary Firearms & Outdoor Products — Enterprise Value / EBITDA Multiples 20.0x • AOBC currently trades at a meaningful discount to EV/LTM EBITDA EV/CY2020E EBITDA 15.2x comparable firearms and outdoor products peer groups 15.0 12.5x • Only publicly traded pure-play firearms comparable is 8.9x 10.0 Ruger, which currently trades at ~9x EV/LTM EBITDA 6.5x 5.2x • Comparable outdoor products peer group trades at a 5.0 NA median EV/LTM EBITDA of 15.2x and EV/CY2020E 0.0 EBITDA of 12.5x AOBC Today Pure-Play Firearms Outdoor Products Median Commentary Outdoor Products — Enterprise Value / EBITDA Multiples • Clarus, a provider of outdoor equipment, bullets and EV/LTM EBITDA EV/CY2020E EBITDA 25.0x 20.8x ammunition, currently trades at ~13-17x EV/EBITDA 18.4x 20.0 16.8x 15.7x 15.2x • Vista Outdoor, a provider of outdoor products and 14.1x 13.3x 12.5x 15.0 (b) ammunition, currently trades at ~8x EV/EBITDA 9.2x (a) (a) 8.8x 8.2x 10.0 7.3x 6.6x 6.5x • YETI, a provider of a variety of branded outdoor 5.0 products, coolers, and drinkware, currently trades at ~13-15x EV/EBITDA 0.0 Outdoor Products Source: Public company filings and Capital IQ as of March 6, 2020. (a) Enterprise value includes ~$138 million of cash and ~$41 million of lease obligations. Equity Value to EBITDA multiples are 7.8x and 7.7x for LTM and CY2020E, respectively. © 2020 AMERICAN OUTDOOR BRANDS CORP. ALL RIGHTS RESERVED. 10 (b) Values are pro forma for the sale of Savage Arms in July 2019. Executive Summary COMPARABLE COMPANY ANALYSIS Commentary Firearms & Outdoor Products — Enterprise Value / EBITDA Multiples 20.0x • AOBC currently trades at a meaningful discount to EV/LTM EBITDA EV/CY2020E EBITDA 15.2x comparable firearms and outdoor products peer groups 15.0 12.5x • Only publicly traded pure-play firearms comparable is 8.9x 10.0 Ruger, which currently trades at ~9x EV/LTM EBITDA 6.5x 5.2x • Comparable outdoor products peer group trades at a 5.0 NA median EV/LTM EBITDA of 15.2x and EV/CY2020E 0.0 EBITDA of 12.5x AOBC Today Pure-Play Firearms Outdoor Products Median Commentary Outdoor Products — Enterprise Value / EBITDA Multiples • Clarus, a provider of outdoor equipment, bullets and EV/LTM EBITDA EV/CY2020E EBITDA 25.0x 20.8x ammunition, currently trades at ~13-17x EV/EBITDA 18.4x 20.0 16.8x 15.7x 15.2x • Vista Outdoor, a provider of outdoor products and 14.1x 13.3x 12.5x 15.0 (b) ammunition, currently trades at ~8x EV/EBITDA 9.2x (a) (a) 8.8x 8.2x 10.0 7.3x 6.6x 6.5x • YETI, a provider of a variety of branded outdoor 5.0 products, coolers, and drinkware, currently trades at ~13-15x EV/EBITDA 0.0 Outdoor Products Source: Public company filings and Capital IQ as of March 6, 2020. (a) Enterprise value includes ~$138 million of cash and ~$41 million of lease obligations. Equity Value to EBITDA multiples are 7.8x and 7.7x for LTM and CY2020E, respectively. © 2020 AMERICAN OUTDOOR BRANDS CORP. ALL RIGHTS RESERVED. 10 (b) Values are pro forma for the sale of Savage Arms in July 2019.
OUTDOOR PRODUCTS & ACCESSORI ESOUTDOOR PRODUCTS & ACCESSORI ES
Outdoor Products & Accessories EXPERIENCED LEADERSHIP BRIAN D. MURPHY H. ANDREW FULMER, CPA PRESIDENT & CHIEF FINANCIAL OFFICER CHIEF EXECUTIVE OFFICER • Joined the Company in 2016 as President of the Outdoor Recreation Division, • Joined the Company in 2010 with his most recent role being Vice the activities of which have been collapsed into Outdoor Product & Accessories President, Financial Planning & Analysis • Currently serves as Co-President and Co-Chief Executive Officer and previously • His extensive financial experience with the company is coupled with his served as President of the Outdoor Products & Accessories Division key role in developing and executing the company’s long-term acquisition strategy, particularly for the outdoor products and accessories business • Previously a Vice President, Corporate Development of Vista Outdoor, a publicly traded outdoor products company, and Director of Mergers & Acquisitions and • In addition to leading the company’s strategic planning process, he Director of Financial Planning & Analysis for Alliant Techsystems (ATK), developed the company’s procedures for acquisition-related financial formerly a publicly traded aerospace, defense, and retail sporting company modeling, due diligence, internal controls, and integration • Key role in executing AOBC’s diversification strategy to expand presence in the rugged outdoor recreation markets, in areas such as camping, hiking, and fishing • Experienced leader with ability to create and lead teams, build and run business operations, and apply transactional and industry experience © 2020 AMERICAN OUTDOOR BRANDS CORP. ALL RIGHTS RESERVED. 12Outdoor Products & Accessories EXPERIENCED LEADERSHIP BRIAN D. MURPHY H. ANDREW FULMER, CPA PRESIDENT & CHIEF FINANCIAL OFFICER CHIEF EXECUTIVE OFFICER • Joined the Company in 2016 as President of the Outdoor Recreation Division, • Joined the Company in 2010 with his most recent role being Vice the activities of which have been collapsed into Outdoor Product & Accessories President, Financial Planning & Analysis • Currently serves as Co-President and Co-Chief Executive Officer and previously • His extensive financial experience with the company is coupled with his served as President of the Outdoor Products & Accessories Division key role in developing and executing the company’s long-term acquisition strategy, particularly for the outdoor products and accessories business • Previously a Vice President, Corporate Development of Vista Outdoor, a publicly traded outdoor products company, and Director of Mergers & Acquisitions and • In addition to leading the company’s strategic planning process, he Director of Financial Planning & Analysis for Alliant Techsystems (ATK), developed the company’s procedures for acquisition-related financial formerly a publicly traded aerospace, defense, and retail sporting company modeling, due diligence, internal controls, and integration • Key role in executing AOBC’s diversification strategy to expand presence in the rugged outdoor recreation markets, in areas such as camping, hiking, and fishing • Experienced leader with ability to create and lead teams, build and run business operations, and apply transactional and industry experience © 2020 AMERICAN OUTDOOR BRANDS CORP. ALL RIGHTS RESERVED. 12
Outdoor Products & Accessories A Diverse Outdoor Products & Accessories Company: American Outdoor Brands, Inc. • American Outdoor Brands, Inc. will be a growth-oriented provider of outdoor products • Financial profile is expected to yield growth and profitability and accessories, including hunting, fishing, camping, shooting, and personal security and that will facilitate the prioritization of investments and capital defense products, for rugged outdoor enthusiasts allocation focused on both organic and inorganic growth • Our 21 brands are organized into four “Brand Lanes”: Marksman, Harvester, Defender, • Expected to generate revenue between $200M and $210M and Adventurer. These brand lanes are constructed around defined consumer and adjusted EBITDAS between $25M and $30M in its first archetypes, and comprised of agile marketing, creative, and product teams that enable us 12 months as an independent company to achieve a full spectrum of targeted growth initiatives by brand. (b) • Rugged Outdoor Recreation Market Size: ~$30-35B • HQ: Boone County, MO (a) Industry-leading Brands Organized into Four Brand Lanes Competitive Strengths Portfolio of Leading Outdoor Brands Four Brand Lanes with Significant Runway for Growth Repeatable Process for Rejuvenating Mature Product Categories Leverageable Platform for Acquisitions (via Brand Lanes) Experienced, Entrepreneurial Management Team (a) American Outdoor Brands, Inc. will license the brands Smith & Wesson® Accessories; M&P® Accessories; Thompson/Center Arms™ Accessories; and Performance Center® Accessories, all of which will be owned by Smith & © 2020 AMERICAN OUTDOOR BRANDS CORP. ALL RIGHTS RESERVED. 13 Wesson Brands, Inc. and will be exclusively licensed to American Outdoor Brands, Inc., after the spin-off. (b) Estimated market size per Management estimates.Outdoor Products & Accessories A Diverse Outdoor Products & Accessories Company: American Outdoor Brands, Inc. • American Outdoor Brands, Inc. will be a growth-oriented provider of outdoor products • Financial profile is expected to yield growth and profitability and accessories, including hunting, fishing, camping, shooting, and personal security and that will facilitate the prioritization of investments and capital defense products, for rugged outdoor enthusiasts allocation focused on both organic and inorganic growth • Our 21 brands are organized into four “Brand Lanes”: Marksman, Harvester, Defender, • Expected to generate revenue between $200M and $210M and Adventurer. These brand lanes are constructed around defined consumer and adjusted EBITDAS between $25M and $30M in its first archetypes, and comprised of agile marketing, creative, and product teams that enable us 12 months as an independent company to achieve a full spectrum of targeted growth initiatives by brand. (b) • Rugged Outdoor Recreation Market Size: ~$30-35B • HQ: Boone County, MO (a) Industry-leading Brands Organized into Four Brand Lanes Competitive Strengths Portfolio of Leading Outdoor Brands Four Brand Lanes with Significant Runway for Growth Repeatable Process for Rejuvenating Mature Product Categories Leverageable Platform for Acquisitions (via Brand Lanes) Experienced, Entrepreneurial Management Team (a) American Outdoor Brands, Inc. will license the brands Smith & Wesson® Accessories; M&P® Accessories; Thompson/Center Arms™ Accessories; and Performance Center® Accessories, all of which will be owned by Smith & © 2020 AMERICAN OUTDOOR BRANDS CORP. ALL RIGHTS RESERVED. 13 Wesson Brands, Inc. and will be exclusively licensed to American Outdoor Brands, Inc., after the spin-off. (b) Estimated market size per Management estimates.
Outdoor Products & Accessories STRATEGIC PRIORITIES FOR GROWTH United States Japan Taiwan South Korea China Philippines Thailand 5 India Mexico 4 3 Pursue Acquisitions that 2 Complement our Expand and Enhance 1 Current Business Cultivate Direct-to- our Supply Chain Expand Our Consumer Relationships Introduce New and Addressable Market Differentiated Products We plan to continue leveraging our We plan to leverage our brands’ We have made significant investments We will continue to expand and Where our existing brands do not have agile brand and product development “permission to play” to enter new in both our creative teams and a new enhance our supply chain by identifying, “permission to play,” we will seek teams to satisfy consumer needs in product categories that appeal to a eCommerce platform, positioning us to qualifying, attracting, and maintaining tuck-in acquisitions into our brand existing product categories. We will wider audience, which could naturally create and distribute high volumes of qualified contract manufacturers. lane structure that augment organic continue to focus on disruptive pull some of our brands beyond the engaging content directly to consumers. Qualifying additional suppliers will growth where we have: 1) product technology, successful product launches, “rugged outdoor” market, such as DIY This engagement, in turn, is expected reduce our dependence on any one or expertise; 2) familiarity with the and create competitive moats through Security (via Lockdown brand), thereby to help drive pull-through at retail and small group of suppliers and help protect consumer; and where 3) the brand is intellectual property, where possible. increasing the size of our addressable enable consumers to purchase directly us against operational, performance, or complementary to our existing portfolio opportunity. from our platform if they choose to. capacity issues. and sales channels. © 2020 AMERICAN OUTDOOR BRANDS CORP. ALL RIGHTS RESERVED. 14Outdoor Products & Accessories STRATEGIC PRIORITIES FOR GROWTH United States Japan Taiwan South Korea China Philippines Thailand 5 India Mexico 4 3 Pursue Acquisitions that 2 Complement our Expand and Enhance 1 Current Business Cultivate Direct-to- our Supply Chain Expand Our Consumer Relationships Introduce New and Addressable Market Differentiated Products We plan to continue leveraging our We plan to leverage our brands’ We have made significant investments We will continue to expand and Where our existing brands do not have agile brand and product development “permission to play” to enter new in both our creative teams and a new enhance our supply chain by identifying, “permission to play,” we will seek teams to satisfy consumer needs in product categories that appeal to a eCommerce platform, positioning us to qualifying, attracting, and maintaining tuck-in acquisitions into our brand existing product categories. We will wider audience, which could naturally create and distribute high volumes of qualified contract manufacturers. lane structure that augment organic continue to focus on disruptive pull some of our brands beyond the engaging content directly to consumers. Qualifying additional suppliers will growth where we have: 1) product technology, successful product launches, “rugged outdoor” market, such as DIY This engagement, in turn, is expected reduce our dependence on any one or expertise; 2) familiarity with the and create competitive moats through Security (via Lockdown brand), thereby to help drive pull-through at retail and small group of suppliers and help protect consumer; and where 3) the brand is intellectual property, where possible. increasing the size of our addressable enable consumers to purchase directly us against operational, performance, or complementary to our existing portfolio opportunity. from our platform if they choose to. capacity issues. and sales channels. © 2020 AMERICAN OUTDOOR BRANDS CORP. ALL RIGHTS RESERVED. 14
Outdoor Products & Accessories BRAND LANES: TARGETED CONSUMER SEGMENTS Who is the Marksman? Who is the Harvester? Who is the Defender? Who is the Adventurer? Marksmen are shooters, from the beginner To the Harvester, it’s not a job. It’s not For the Defender, security is above all The Adventurer is at home when they are to the skilled competitor. Whether at the about mounting a trophy. It’s a passion else. It starts with the peace of mind that away. Whether it is conquering a workbench, in the workshop, in the field that lives within to create, to grow, to comes with confidently knowing your mountain, navigating the open ocean, or on the range; and no matter the choice conserve and to ensure that the hunger to belongings are safe, and becomes trekking through a valley or taking on any of handgun, rifle, shotgun or archery: a hunt and experience the most inaccessible complete with determination to train and other outdoor escapade, the Adventurer’s Marksman’s success is measured in hours terrain is passed down for future prepare yourself for life’s biggest thrill is their comfort zone. It is more than of trigger time, the smell of burnt powder, generations. Being a Harvester is not adversaries. The Defender protects – it a connection with the outdoors, it is about and bullseyes. about taking, it’s about giving back. makes up the fabric of their DNA. being a part of it. © 2020 AMERICAN OUTDOOR BRANDS CORP. ALL RIGHTS RESERVED. 15Outdoor Products & Accessories BRAND LANES: TARGETED CONSUMER SEGMENTS Who is the Marksman? Who is the Harvester? Who is the Defender? Who is the Adventurer? Marksmen are shooters, from the beginner To the Harvester, it’s not a job. It’s not For the Defender, security is above all The Adventurer is at home when they are to the skilled competitor. Whether at the about mounting a trophy. It’s a passion else. It starts with the peace of mind that away. Whether it is conquering a workbench, in the workshop, in the field that lives within to create, to grow, to comes with confidently knowing your mountain, navigating the open ocean, or on the range; and no matter the choice conserve and to ensure that the hunger to belongings are safe, and becomes trekking through a valley or taking on any of handgun, rifle, shotgun or archery: a hunt and experience the most inaccessible complete with determination to train and other outdoor escapade, the Adventurer’s Marksman’s success is measured in hours terrain is passed down for future prepare yourself for life’s biggest thrill is their comfort zone. It is more than of trigger time, the smell of burnt powder, generations. Being a Harvester is not adversaries. The Defender protects – it a connection with the outdoors, it is about and bullseyes. about taking, it’s about giving back. makes up the fabric of their DNA. being a part of it. © 2020 AMERICAN OUTDOOR BRANDS CORP. ALL RIGHTS RESERVED. 15
Outdoor Products & Accessories CREATING LOYAL CONSUMER RELATIONSHIPS BY CONNECTING THE CONSUMER TO A BRAND’S CORE CHARACTERISTICS © 2020 AMERICAN OUTDOOR BRANDS CORP. ALL RIGHTS RESERVED. 16Outdoor Products & Accessories CREATING LOYAL CONSUMER RELATIONSHIPS BY CONNECTING THE CONSUMER TO A BRAND’S CORE CHARACTERISTICS © 2020 AMERICAN OUTDOOR BRANDS CORP. ALL RIGHTS RESERVED. 16
Outdoor Products & Accessories NEW PRODUCTS FOR 2020 MARKSMAN HARVESTER 300+ NEW NEW 65 112 PRODUCTS PRODUCTS NEW PRODUCTS 29+ DEFENDER ADVENTURER NEW PATENTS NEW NEW 88 38 PRODUCTS PRODUCTS EXPECTED © 2020 AMERICAN OUTDOOR BRANDS CORP. ALL RIGHTS RESERVED. 17Outdoor Products & Accessories NEW PRODUCTS FOR 2020 MARKSMAN HARVESTER 300+ NEW NEW 65 112 PRODUCTS PRODUCTS NEW PRODUCTS 29+ DEFENDER ADVENTURER NEW PATENTS NEW NEW 88 38 PRODUCTS PRODUCTS EXPECTED © 2020 AMERICAN OUTDOOR BRANDS CORP. ALL RIGHTS RESERVED. 17
Outdoor Products & Accessories FEATURED NEW PRODUCTS FOR 2020 CSA-1309 Rifle Scope E-Max Shadows Electronic Ear Buds LS870 Shotgun Laser Saddle AR500 Target Puck E-Max Pro Pile Driver Lineup Electronic Ear Muffs Bullet Puller Monitoring/Security System © 2020 AMERICAN OUTDOOR BRANDS CORP. ALL RIGHTS RESERVED. 18Outdoor Products & Accessories FEATURED NEW PRODUCTS FOR 2020 CSA-1309 Rifle Scope E-Max Shadows Electronic Ear Buds LS870 Shotgun Laser Saddle AR500 Target Puck E-Max Pro Pile Driver Lineup Electronic Ear Muffs Bullet Puller Monitoring/Security System © 2020 AMERICAN OUTDOOR BRANDS CORP. ALL RIGHTS RESERVED. 18
Outdoor Products & Accessories FEATURED NEW PRODUCTS FOR 2020 DeathGrip UltraLite Grave Digger Hunting Blind Multi-Flex Interchangeable Knife System No Slip H-Grip Blood Moon 22MP Land Management Tools Homeland Premium Game Camera Made-In-USA Knife © 2020 AMERICAN OUTDOOR BRANDS CORP. ALL RIGHTS RESERVED. 19Outdoor Products & Accessories FEATURED NEW PRODUCTS FOR 2020 DeathGrip UltraLite Grave Digger Hunting Blind Multi-Flex Interchangeable Knife System No Slip H-Grip Blood Moon 22MP Land Management Tools Homeland Premium Game Camera Made-In-USA Knife © 2020 AMERICAN OUTDOOR BRANDS CORP. ALL RIGHTS RESERVED. 19
STRATEGIC CONCEPTION 1. Understand Journey of the Harvester 2. Assess Organic Capabilities 3. Create Pre-Hunt Hunt Post-Hunt (no desirable acquisition Product target) Consumer Acquire or Development (leverage brand lane Familiarity Create? Capability structure to create new brand) Land management and Products used for the hunt, Post-hunt meat preparation, preparation (e.g., food itself (e.g., shooting rests, trail processing, preservation, and plots, feed stations, clear cameras, binoculars, hunting consumption shooting lanes) knives) Rugged Outdoor Product Category MEAT! Website MEAT! Instagram MEAT! Launch Party © 2020 AMERICAN OUTDOOR BRANDS CORP. ALL RIGHTS RESERVED.STRATEGIC CONCEPTION 1. Understand Journey of the Harvester 2. Assess Organic Capabilities 3. Create Pre-Hunt Hunt Post-Hunt (no desirable acquisition Product target) Consumer Acquire or Development (leverage brand lane Familiarity Create? Capability structure to create new brand) Land management and Products used for the hunt, Post-hunt meat preparation, preparation (e.g., food itself (e.g., shooting rests, trail processing, preservation, and plots, feed stations, clear cameras, binoculars, hunting consumption shooting lanes) knives) Rugged Outdoor Product Category MEAT! Website MEAT! Instagram MEAT! Launch Party © 2020 AMERICAN OUTDOOR BRANDS CORP. ALL RIGHTS RESERVED.
NOW TRENDING U.S. CONSUMER MEAT PROCESSING EQUIPMENT PROJECTED GROWTH 2016 $ 10+ Billion 5.9% Annual Growth We are the makers of MEAT processing equipment. Yes, *Grand View Research we love meat so much we named our brand after it. And 2017 Report we’re here to help you up your wild game … game. With grinders, stuffers, slicers and sealers that are built to exceed your stubbornly high standards. We keep the middleman out of your meat, only selling direct, so you can experience some of the finest machinery available, for TOP MEAT! PRODUCTS less than you’d expect. 1.5LB Jerky Gun Kit 500 Watt Grinder (#12) 15LB Vertical Stuffer © 2020 AMERICAN OUTDOOR BRANDS CORP. ALL RIGHTS RESERVED.NOW TRENDING U.S. CONSUMER MEAT PROCESSING EQUIPMENT PROJECTED GROWTH 2016 $ 10+ Billion 5.9% Annual Growth We are the makers of MEAT processing equipment. Yes, *Grand View Research we love meat so much we named our brand after it. And 2017 Report we’re here to help you up your wild game … game. With grinders, stuffers, slicers and sealers that are built to exceed your stubbornly high standards. We keep the middleman out of your meat, only selling direct, so you can experience some of the finest machinery available, for TOP MEAT! PRODUCTS less than you’d expect. 1.5LB Jerky Gun Kit 500 Watt Grinder (#12) 15LB Vertical Stuffer © 2020 AMERICAN OUTDOOR BRANDS CORP. ALL RIGHTS RESERVED.
Outdoor Products & Accessories PURSUE COMPLEMENTARY ACQUISITIONS Pursue appropriate acquisitions for Outdoor Products & Accessories, with a focus on the large and growing markets in which our core consumers participate. This disciplined approach to acquisitions has led to our complementary brand portfolio. ACQUISITION PREFERENCES SIGNIFICANT MARKET OPPORTUNITY • Complementary Brands — Enables us to address new Shooting/Hunting areas of the market and focus our resources efficiently Market: Hunting $16 Billion • Overlapping Core Consumers — Ability to leverage Shooting Fishing existing marketing efforts U.S. Outdoor • Product Familiarity — Enables “point of view” on how Recreation to create value and accelerates product development impact Market: ~$90-100 Billion Archery Camping • Runway for Growth — Ensures upside potential Rugged Outdoor Paddling Hiking Recreation Market: (a) ~$30-35 Billion (a) Estimated market size per Management estimates. © 2020 AMERICAN OUTDOOR BRANDS CORP. ALL RIGHTS RESERVED. 22Outdoor Products & Accessories PURSUE COMPLEMENTARY ACQUISITIONS Pursue appropriate acquisitions for Outdoor Products & Accessories, with a focus on the large and growing markets in which our core consumers participate. This disciplined approach to acquisitions has led to our complementary brand portfolio. ACQUISITION PREFERENCES SIGNIFICANT MARKET OPPORTUNITY • Complementary Brands — Enables us to address new Shooting/Hunting areas of the market and focus our resources efficiently Market: Hunting $16 Billion • Overlapping Core Consumers — Ability to leverage Shooting Fishing existing marketing efforts U.S. Outdoor • Product Familiarity — Enables “point of view” on how Recreation to create value and accelerates product development impact Market: ~$90-100 Billion Archery Camping • Runway for Growth — Ensures upside potential Rugged Outdoor Paddling Hiking Recreation Market: (a) ~$30-35 Billion (a) Estimated market size per Management estimates. © 2020 AMERICAN OUTDOOR BRANDS CORP. ALL RIGHTS RESERVED. 22
FIREARMSFIREARMS
Firearms EXPERIENCED LEADERSHIP MARK P. SMITH DEANA L. MCPHERSON, CPA, CGMA PRESIDENT & CHIEF EXECUTIVE OFFICER CHIEF FINANCIAL OFFICER • Joined the Company in 2010 as Vice President of Supply Chain • Joined the Company in 2007 as Corporate Controller, was later promoted to Vice President of Finance and Corporate Controller, and • Currently serves as Co-President and Co-Chief Executive Officer and became Chief Accounting Officer in 2017 previously served as President of the Manufacturing Services division and supports all the company’s businesses • Her extensive finance and treasury experience with the company includes responsibility for financial reporting and oversight of the • During his tenure, the company achieved significant growth while company’s audit, tax, and banking matters optimizing its manufacturing footprint and achieving record level gross margins • She has played a key role in the company’s longstanding relationship with its lenders, and her work has been instrumental in managing the • In addition to his ten years of operations and leadership experience in company’s syndicated bank credit facility the firearms industry, he has over 20 years of operations and supply chain management experience in leadership roles across multiple industries, from Fortune 500 to diversified international corporations © 2020 AMERICAN OUTDOOR BRANDS CORP. ALL RIGHTS RESERVED. 24Firearms EXPERIENCED LEADERSHIP MARK P. SMITH DEANA L. MCPHERSON, CPA, CGMA PRESIDENT & CHIEF EXECUTIVE OFFICER CHIEF FINANCIAL OFFICER • Joined the Company in 2010 as Vice President of Supply Chain • Joined the Company in 2007 as Corporate Controller, was later promoted to Vice President of Finance and Corporate Controller, and • Currently serves as Co-President and Co-Chief Executive Officer and became Chief Accounting Officer in 2017 previously served as President of the Manufacturing Services division and supports all the company’s businesses • Her extensive finance and treasury experience with the company includes responsibility for financial reporting and oversight of the • During his tenure, the company achieved significant growth while company’s audit, tax, and banking matters optimizing its manufacturing footprint and achieving record level gross margins • She has played a key role in the company’s longstanding relationship with its lenders, and her work has been instrumental in managing the • In addition to his ten years of operations and leadership experience in company’s syndicated bank credit facility the firearms industry, he has over 20 years of operations and supply chain management experience in leadership roles across multiple industries, from Fortune 500 to diversified international corporations © 2020 AMERICAN OUTDOOR BRANDS CORP. ALL RIGHTS RESERVED. 24
Firearms AN ICONIC FIREARMS COMPANY: SMITH & WESSON BRANDS, INC. • Smith & Wesson Brands, Inc. is an iconic firearm business with a 167-year history • Financial profile is expected to yield strong cash flows, a granular of delivering market leading, personal protection and sport-related firearms for focus on organic growth, and profitability with a plan to eventually consumers and professionals return capital to stockholders in the form of dividends • Industry-leading handgun, long gun, and suppressor products are marketed under • Expected to generate revenue between $500M and $550M and the brands Smith & Wesson®, M&P®, Performance Center, Thompson/Center adjusted EBITDAS between $90M and $105M in its first 12 Arms™, and Gemtech® brands months as an independent company (a) • HQ: Springfield, MA • Handguns & Long Guns Market Size: ~$4.2B Handguns Suppressors Investment Considerations Iconic brand portfolio with loyal consumer base Market leader in $4.2 billion addressable market (handgun & long gun) Strategic focus on driving stable organic growth while Long Guns Manufacturing Services expanding margins through business simplification Capital allocation strategy of returning shareholder value Highly experienced management team of industry veterans (a) Estimated market size per Management estimates. © 2020 AMERICAN OUTDOOR BRANDS CORP. ALL RIGHTS RESERVED. 25Firearms AN ICONIC FIREARMS COMPANY: SMITH & WESSON BRANDS, INC. • Smith & Wesson Brands, Inc. is an iconic firearm business with a 167-year history • Financial profile is expected to yield strong cash flows, a granular of delivering market leading, personal protection and sport-related firearms for focus on organic growth, and profitability with a plan to eventually consumers and professionals return capital to stockholders in the form of dividends • Industry-leading handgun, long gun, and suppressor products are marketed under • Expected to generate revenue between $500M and $550M and the brands Smith & Wesson®, M&P®, Performance Center, Thompson/Center adjusted EBITDAS between $90M and $105M in its first 12 Arms™, and Gemtech® brands months as an independent company (a) • HQ: Springfield, MA • Handguns & Long Guns Market Size: ~$4.2B Handguns Suppressors Investment Considerations Iconic brand portfolio with loyal consumer base Market leader in $4.2 billion addressable market (handgun & long gun) Strategic focus on driving stable organic growth while Long Guns Manufacturing Services expanding margins through business simplification Capital allocation strategy of returning shareholder value Highly experienced management team of industry veterans (a) Estimated market size per Management estimates. © 2020 AMERICAN OUTDOOR BRANDS CORP. ALL RIGHTS RESERVED. 25
Firearms STRATEGIC PRIORITIES FOR GROWTH 5 4 Return Value 3 To Stockholders Simplify Our Business Capital allocation methodology 2 A culture of simplicity to focus on designed to return stockholder Focus on New value and enhance efficiency profitability and improve the ease Leverage Our Iconic Product Introductions of doing business 1 Brands Speed to market and healthy NPD Clear, concise brand pipeline to support brand plans. Grow Organically identities/plans supported by Pure play in a mature market, collateral and NPD pipelines focused on gaining market share. The company will operate solely in the The Smith & Wesson brand portfolio A major component of our brand plans As a pure play firearms company in a Return value to our stockholders via a firearms industry, focused on leveraging holds arguably the strongest position in is healthy new product pipelines to drive mature market, we will simplify our capital allocation strategy focused on our exceptional brands to grow the firearms industry. A major driver continued consumer excitement and corporate operating model, lowering lowering debt and paying dividends, organically by taking market share. in ongoing market share gains will be brand loyalty. Speed to market, costs, and driving a culture that while making capital investments executing on our clear and concise strategic pipeline, and launch planning rewards simple, effective solutions, and supporting our strategy (e.g. NPD, brand plans. & execution remains crucial. smooth customer and vendor reducing cost, etc.). interactions. © 2020 AMERICAN OUTDOOR BRANDS CORP. ALL RIGHTS RESERVED. 26Firearms STRATEGIC PRIORITIES FOR GROWTH 5 4 Return Value 3 To Stockholders Simplify Our Business Capital allocation methodology 2 A culture of simplicity to focus on designed to return stockholder Focus on New value and enhance efficiency profitability and improve the ease Leverage Our Iconic Product Introductions of doing business 1 Brands Speed to market and healthy NPD Clear, concise brand pipeline to support brand plans. Grow Organically identities/plans supported by Pure play in a mature market, collateral and NPD pipelines focused on gaining market share. The company will operate solely in the The Smith & Wesson brand portfolio A major component of our brand plans As a pure play firearms company in a Return value to our stockholders via a firearms industry, focused on leveraging holds arguably the strongest position in is healthy new product pipelines to drive mature market, we will simplify our capital allocation strategy focused on our exceptional brands to grow the firearms industry. A major driver continued consumer excitement and corporate operating model, lowering lowering debt and paying dividends, organically by taking market share. in ongoing market share gains will be brand loyalty. Speed to market, costs, and driving a culture that while making capital investments executing on our clear and concise strategic pipeline, and launch planning rewards simple, effective solutions, and supporting our strategy (e.g. NPD, brand plans. & execution remains crucial. smooth customer and vendor reducing cost, etc.). interactions. © 2020 AMERICAN OUTDOOR BRANDS CORP. ALL RIGHTS RESERVED. 26
Firearms BRAND STRATEGY: EXPAND BRANDS WITH PRODUCTS THAT MEET NEEDS / WANTS OF EACH TARGET CONSUMER Iconic revolvers, pistols, shooting gear, accessories: The Smith & Wesson brand product portfolio includes everything that made Smith & Wesson a household name. World class quality classic revolvers and metal frame pistols meet the needs of our discerning consumers for everything from competition target shooting to personal protection and professional use by law enforcement. S&W 629 Classic Pistols, rifles, revolvers, shooting gear, accessories designed for personal protection, concealed carry, and professional use: The M&P brand is focused on reaching those consumers who are seeking modern tactical pistols and rifles with highest performance and reliability standards available in the marketplace. These products are primarily used for sport & competition shooting and self defense. M&P M2.0 Bolt-action rifles, semi-automatic rifles, muzzleloaders, interchangeable platforms, hunting accessories: Thompson/Center enthusiasts are looking for the latest in today’s hunting and shooting technology staked in craftsmanship and tradition. Thompson/Center firearms are modern tools for the T/C Compass II classically-trained hunter and shooter. Feature-rich, high-performance revolvers, pistols, rifles: The Performance Center is an aspirational brand that attracts sophisticated shooters who prefer uniquely designed firearms with special customized Performance Center upgrades and features. T/CR22 Carbon Fiber Suppressors: Gemtech suppressors are high-value suppressors that strike the balance between size, weight, and sound reduction. Gemtech suppressors are used around the globe by firearm enthusiasts, law enforcement, and Gemtech Lunar 9 military agencies. © 2020 AMERICAN OUTDOOR BRANDS CORP. ALL RIGHTS RESERVED. 27Firearms BRAND STRATEGY: EXPAND BRANDS WITH PRODUCTS THAT MEET NEEDS / WANTS OF EACH TARGET CONSUMER Iconic revolvers, pistols, shooting gear, accessories: The Smith & Wesson brand product portfolio includes everything that made Smith & Wesson a household name. World class quality classic revolvers and metal frame pistols meet the needs of our discerning consumers for everything from competition target shooting to personal protection and professional use by law enforcement. S&W 629 Classic Pistols, rifles, revolvers, shooting gear, accessories designed for personal protection, concealed carry, and professional use: The M&P brand is focused on reaching those consumers who are seeking modern tactical pistols and rifles with highest performance and reliability standards available in the marketplace. These products are primarily used for sport & competition shooting and self defense. M&P M2.0 Bolt-action rifles, semi-automatic rifles, muzzleloaders, interchangeable platforms, hunting accessories: Thompson/Center enthusiasts are looking for the latest in today’s hunting and shooting technology staked in craftsmanship and tradition. Thompson/Center firearms are modern tools for the T/C Compass II classically-trained hunter and shooter. Feature-rich, high-performance revolvers, pistols, rifles: The Performance Center is an aspirational brand that attracts sophisticated shooters who prefer uniquely designed firearms with special customized Performance Center upgrades and features. T/CR22 Carbon Fiber Suppressors: Gemtech suppressors are high-value suppressors that strike the balance between size, weight, and sound reduction. Gemtech suppressors are used around the globe by firearm enthusiasts, law enforcement, and Gemtech Lunar 9 military agencies. © 2020 AMERICAN OUTDOOR BRANDS CORP. ALL RIGHTS RESERVED. 27
Firearms NEW PRODUCTS FOR 2020 Brand Product SKUs Primary Consumer Segments M&P®9 SHIELD™ EZ 4 • All Handguns segments Performance Center® M&P® 12 • Hard Core, Young Gun, Target Masters M2.0™ Full Size • Young Novices, Shooters, Field & Stream, 4 Performance Center® T/CR22® Avid Owners Carbon Fiber 32 • Young Novices, Shooters, Field & Stream T/C® Compass® II, T/C® Compass® Utility • Young Novices, Shooters, Field & Stream, 9 Avid Owners T/C® Venture™ II 1 • Hard Core, Young Gun Gemtech® Lunar® 9 © 2020 AMERICAN OUTDOOR BRANDS CORP. ALL RIGHTS RESERVED. 28 Supp. Long Guns HandgunsFirearms NEW PRODUCTS FOR 2020 Brand Product SKUs Primary Consumer Segments M&P®9 SHIELD™ EZ 4 • All Handguns segments Performance Center® M&P® 12 • Hard Core, Young Gun, Target Masters M2.0™ Full Size • Young Novices, Shooters, Field & Stream, 4 Performance Center® T/CR22® Avid Owners Carbon Fiber 32 • Young Novices, Shooters, Field & Stream T/C® Compass® II, T/C® Compass® Utility • Young Novices, Shooters, Field & Stream, 9 Avid Owners T/C® Venture™ II 1 • Hard Core, Young Gun Gemtech® Lunar® 9 © 2020 AMERICAN OUTDOOR BRANDS CORP. ALL RIGHTS RESERVED. 28 Supp. Long Guns Handguns
Firearms PRODUCT HIGHLIGHT: M&P9 SHIELD EZ AWARD WINNING M&P SHIELD EZ Pistol Series now in popular, powerful 9MM caliber Built for personal protection and every day carry, the M&P9 Shield EZ further expands the M&P Shield EZ pistol platform, which was released in 2018 and features an easy-to-rack slide, easy-to-load magazine, and easy-to-clean design. With over three million M&P Shield pistols adopted by consumers, we believe the ‘M&P Shield’ name has become synonymous with personal protection. This much anticipated release is the next evolution of the personal protection pistol. EASY TO RACK EASY TO LOAD EASY TO PACK EASY TO SHOOT EASY TO CLEAN © 2020 AMERICAN OUTDOOR BRANDS CORP. ALL RIGHTS RESERVED. 29Firearms PRODUCT HIGHLIGHT: M&P9 SHIELD EZ AWARD WINNING M&P SHIELD EZ Pistol Series now in popular, powerful 9MM caliber Built for personal protection and every day carry, the M&P9 Shield EZ further expands the M&P Shield EZ pistol platform, which was released in 2018 and features an easy-to-rack slide, easy-to-load magazine, and easy-to-clean design. With over three million M&P Shield pistols adopted by consumers, we believe the ‘M&P Shield’ name has become synonymous with personal protection. This much anticipated release is the next evolution of the personal protection pistol. EASY TO RACK EASY TO LOAD EASY TO PACK EASY TO SHOOT EASY TO CLEAN © 2020 AMERICAN OUTDOOR BRANDS CORP. ALL RIGHTS RESERVED. 29
American Outdoor Brands Corporation NEXT STEPS TOWARD SPIN-OFFAmerican Outdoor Brands Corporation NEXT STEPS TOWARD SPIN-OFF
NEXT STEPS 1H CALENDAR 2020 2H CALENDAR 2020 • Finalize American Outdoor Brands, Inc. management • Finalize Form 10 and Board of Directors composition • Financing execution • Finalize American Outdoor Brands, Inc. capital structure • Establish effective spin-off date • File initial Form 10 • Smith & Wesson Brands, Inc. and American Outdoor • Smith & Wesson Brands, Inc. and American Outdoor Brands, Inc. investor days Brands, Inc. investor roadshows © © 2020 AMERICAN OUTDOOR 2020 AMERICAN OUTDOOR BRANDS BRANDS CORP. CORP. ALL RIGHTS ALL RIGHTS RESERVED. RESERVED. 31NEXT STEPS 1H CALENDAR 2020 2H CALENDAR 2020 • Finalize American Outdoor Brands, Inc. management • Finalize Form 10 and Board of Directors composition • Financing execution • Finalize American Outdoor Brands, Inc. capital structure • Establish effective spin-off date • File initial Form 10 • Smith & Wesson Brands, Inc. and American Outdoor • Smith & Wesson Brands, Inc. and American Outdoor Brands, Inc. investor days Brands, Inc. investor roadshows © © 2020 AMERICAN OUTDOOR 2020 AMERICAN OUTDOOR BRANDS BRANDS CORP. CORP. ALL RIGHTS ALL RIGHTS RESERVED. RESERVED. 31
APPENDIX SLIDES © 2020 AMERICAN OUTDOOR BRANDS CORP. ALL RIGHTS RESERVED.APPENDIX SLIDES © 2020 AMERICAN OUTDOOR BRANDS CORP. ALL RIGHTS RESERVED.
RECONCILIATION OF U.S. GAAP TO NON-GAAP FINANCIAL MEASURES In this investor presentation, certain non-GAAP financial measures, stock-based compensation expenses; and (2) the non-GAAP including “non-GAAP net income,” and “Adjusted EBITDA” are measures that exclude such information. The company presents presented. From time-to-time, the company considers and uses these non-GAAP measures because it considers them an important these supplemental measures of operating performance in order to supplemental measure of its performance. The company’s definition provide the reader with an improved understanding of underlying of these adjusted financial measures may differ from similarly performance trends. The company believes it is useful for itself and named measures used by others. The company believes these the reader to review, as applicable, both (1) GAAP measures that measures facilitate operating performance comparisons from period include (i) amortization of acquired intangible assets, (ii) transition to period by eliminating potential differences caused by the costs, (iii) fair value inventory step-up expense, (iv) recall related existence and timing of certain expense items that would not expenses, (v) change in contingent consideration; (vi) goodwill otherwise be apparent on a GAAP basis. These non-GAAP impairment, (vii) CEO separation, (viii) acquisition-related costs, (ix) measures have limitations as an analytical tool and should not be the tax effect of non-GAAP adjustments, (x) net cash (used considered in isolation or as a substitute for the company's GAAP in)/provided by operating activities, (xi) net cash used in investing measures. The principal limitations of these measures are that they activities, (xii) interest expense, (xiii) income tax expense, (xiv) do not reflect the company's actual expenses and may thus have the depreciation and amortization, and (xv) effect of inflating its financial measures on a GAAP basis. © © 2020 AMERICAN OUTDOOR 2020 AMERICAN OUTDOOR BRANDS BRANDS CORP. CORP. ALL RIGHTS ALL RIGHTS RESERVED. RESERVED. 33RECONCILIATION OF U.S. GAAP TO NON-GAAP FINANCIAL MEASURES In this investor presentation, certain non-GAAP financial measures, stock-based compensation expenses; and (2) the non-GAAP including “non-GAAP net income,” and “Adjusted EBITDA” are measures that exclude such information. The company presents presented. From time-to-time, the company considers and uses these non-GAAP measures because it considers them an important these supplemental measures of operating performance in order to supplemental measure of its performance. The company’s definition provide the reader with an improved understanding of underlying of these adjusted financial measures may differ from similarly performance trends. The company believes it is useful for itself and named measures used by others. The company believes these the reader to review, as applicable, both (1) GAAP measures that measures facilitate operating performance comparisons from period include (i) amortization of acquired intangible assets, (ii) transition to period by eliminating potential differences caused by the costs, (iii) fair value inventory step-up expense, (iv) recall related existence and timing of certain expense items that would not expenses, (v) change in contingent consideration; (vi) goodwill otherwise be apparent on a GAAP basis. These non-GAAP impairment, (vii) CEO separation, (viii) acquisition-related costs, (ix) measures have limitations as an analytical tool and should not be the tax effect of non-GAAP adjustments, (x) net cash (used considered in isolation or as a substitute for the company's GAAP in)/provided by operating activities, (xi) net cash used in investing measures. The principal limitations of these measures are that they activities, (xii) interest expense, (xiii) income tax expense, (xiv) do not reflect the company's actual expenses and may thus have the depreciation and amortization, and (xv) effect of inflating its financial measures on a GAAP basis. © © 2020 AMERICAN OUTDOOR 2020 AMERICAN OUTDOOR BRANDS BRANDS CORP. CORP. ALL RIGHTS ALL RIGHTS RESERVED. RESERVED. 33
American Outdoor Brands Corporation CONDENSED CONSOLIDATED STATEMENTS OF INCOME/(LOSS) (Unaudited) For the Three Months Ended For the Nine Months Ended January 31, 2020 January 31, 2019 January 31, 2020 January 31, 2019 (Unaudited) (In thousands, except per share data) Net sales $ 166,695 $ 162,008 $ 444,753 $ 462,544 111,492 107,949 291,390 299,677 Cost of sales Gross profit 55,203 54,059 153,363 162,867 Operating expenses: Research and development 3,192 3,297 9,410 9,358 Selling, marketing, and distribution 19,294 15,373 55,419 42,279 21,810 27,026 71,601 78,065 General and administrative — 10,396 10,396 Goodwill Impairment Total operating expenses 44,296 56,092 136,430 140,098 Operating income 10,907 (2,033) 16,933 22,769 Other (expense)/income, net: Other income, net (18) 47 73 38 (2,885) (2,548) (8,551) (6,822) Interest expense, net Total other (expense), net (2,903) (2,501) (8,478) (6,784) Income from operations before income taxes 8,004 (4,534) 8,455 15,985 Income tax expense 2,273 1,191 3,539 7,399 Net Income/(loss) $ 5,731 $ (5,725) $ 4,916 $ 8,586 Net Income/(loss) per share: $ 0.10 $ (0.10) $ 0.09 $ 0.16 Basic Diluted $ 0.10 $ (0.10) $ 0.09 $ 0.16 Weighted average number of common shares outstanding: Basic 55,064 54,544 54,919 54,444 Diluted 55,744 54,544 55,641 55,132 © 2020 AMERICAN OUTDOOR BRANDS CORP. ALL RIGHTS RESERVED. 34American Outdoor Brands Corporation CONDENSED CONSOLIDATED STATEMENTS OF INCOME/(LOSS) (Unaudited) For the Three Months Ended For the Nine Months Ended January 31, 2020 January 31, 2019 January 31, 2020 January 31, 2019 (Unaudited) (In thousands, except per share data) Net sales $ 166,695 $ 162,008 $ 444,753 $ 462,544 111,492 107,949 291,390 299,677 Cost of sales Gross profit 55,203 54,059 153,363 162,867 Operating expenses: Research and development 3,192 3,297 9,410 9,358 Selling, marketing, and distribution 19,294 15,373 55,419 42,279 21,810 27,026 71,601 78,065 General and administrative — 10,396 10,396 Goodwill Impairment Total operating expenses 44,296 56,092 136,430 140,098 Operating income 10,907 (2,033) 16,933 22,769 Other (expense)/income, net: Other income, net (18) 47 73 38 (2,885) (2,548) (8,551) (6,822) Interest expense, net Total other (expense), net (2,903) (2,501) (8,478) (6,784) Income from operations before income taxes 8,004 (4,534) 8,455 15,985 Income tax expense 2,273 1,191 3,539 7,399 Net Income/(loss) $ 5,731 $ (5,725) $ 4,916 $ 8,586 Net Income/(loss) per share: $ 0.10 $ (0.10) $ 0.09 $ 0.16 Basic Diluted $ 0.10 $ (0.10) $ 0.09 $ 0.16 Weighted average number of common shares outstanding: Basic 55,064 54,544 54,919 54,444 Diluted 55,744 54,544 55,641 55,132 © 2020 AMERICAN OUTDOOR BRANDS CORP. ALL RIGHTS RESERVED. 34
American Outdoor Brands Corporation GAAP TO NON-GAAP RECONCILIATION (Unaudited) (U.S. $ thousands, except per share data) For the Three Months Ended For the Nine Months Ended January 31, 2020 January 31, 2019 January 31, 2020 January 31, 2019 $ % of Sales $ % of Sales $ % of Sales $ % of Sales GAAP gross profit $ 55,203 33.1% $ 54,059 33.4% $ 1 53,363 34.5% $ 1 62,867 35.2% Diode recall ( 180) -0.1% — — ( 769) -0.2% — — Fair value inventory step-up — — 9 2 0.1% — — 3 62 0.1% Transition costs — — — — 8 72 0.2% — — Non-GAAP gross profit $ 55,023 33.0% $ 54,151 33.4% $ 153,466 34.5% $ 163,229 35.3% GAAP operating expenses $ 44,296 26.6% $ 56,092 34.6% $ 136,430 30.7% $ 1 40,098 30.3% Amortization of acquired intangible assets (4,697) -2.8% ( 5,445) -3.4% (14,242) -3.2% ( 16,335) -3.5% Goodwill impairment — — ( 10,396) -6.4% — — ( 10,396) -2.2% Transition costs ( 990) -0.6% ( 369) -0.2% ( 1,889) -0.4% ( 751) -0.2% CEO separation 3 ,844 2.3% — — 3 ,844 0.9% — — Acquisition-related costs — — (6 ) 0.0% — — (6 ) 0.0% Non-GAAP operating expenses $ 42,453 25.5% $ 39,876 24.6% $ 1 24,143 27.9% $ 1 12,610 24.3% GAAP operating income $ 10,907 6.5% $ (2,033) -1.3% $ 16,933 3.8% $ 22,769 4.9% Fair value inventory step-up — — 9 2 0.1% — — 3 62 0.1% Diode recall ( 180) -0.1% — — ( 769) -0.2% — — Amortization of acquired intangible assets 4 ,697 2.8% 5 ,445 3.4% 14,242 3.2% 1 6,335 3.5% Goodwill impairment — — 1 0,396 6.4% — — 1 0,396 2.2% Transition costs 9 90 0.6% 3 69 0.2% 2 ,761 0.6% 7 51 0.2% CEO separation ( 3,844) -2.3% — — ( 3,844) -0.9% — — Acquisition-related costs — — 6 0.0% — — 6 0.0% Non-GAAP operating income $ 12,570 7.5% $ 14,275 8.8% $ 29,323 6.6% $ 50,619 10.9% GAAP net income/(loss) $ 5,731 3.4% $ (5,725) -3.5% $ 4,916 1.1% $ 8,586 1.9% Fair value inventory step-up — — 9 2 0.1% — — 3 62 0.1% Amortization of acquired intangible assets 4 ,697 2.8% 5 ,445 3.4% 14,242 3.2% 1 6,335 3.5% Goodwill impairment — — 1 0,396 6.4% — — 1 0,396 2.2% Diode recall ( 180) -0.1% — — ( 769) -0.2% — — Transition costs 9 90 0.6% 3 69 0.2% 2 ,761 0.6% 7 51 0.2% CEO separation ( 3,844) -2.3% — — ( 3,844) -0.9% — — Acquisition-related costs — — 6 0.0% — — 6 0.0% Change in contingent consideration — — ( 60) 0.0% ( 100) 0.0% ( 60) 0.0% Tax effect of non-GAAP adjustments ( 449) -0.3% (1,580) -1.0% (3,318) -0.7% (4,696) -1.0% Non-GAAP net income $ 6,945 4.2% $ 8,943 5.5% $ 13,888 3.1% $ 31,680 6.8% GAAP net income/(loss) per share - diluted $ 0 .10 $ (0.10) $ 0 .09 $ 0 .16 Fair value inventory step-up — — — 0 .01 Amortization of acquired intangible assets 0.08 0 .10 0 .26 0 .30 Goodwill impairment — 0 .19 — 0 .19 Diode recall — — ( 0.01) — Transition costs 0 .02 0 .01 0 .05 0 .01 CEO separation ( 0.07) — ( 0.07) — Tax effect of non-GAAP adjustments ( 0.01) ( 0.03) ( 0.06) ( 0.09) Non-GAAP net income per share - diluted $ 0 .13 $ 0 .16 $ 0 .25 $ 0 .57 © 2020 AMERICAN OUTDOOR BRANDS CORP. ALL RIGHTS RESERVED. 35American Outdoor Brands Corporation GAAP TO NON-GAAP RECONCILIATION (Unaudited) (U.S. $ thousands, except per share data) For the Three Months Ended For the Nine Months Ended January 31, 2020 January 31, 2019 January 31, 2020 January 31, 2019 $ % of Sales $ % of Sales $ % of Sales $ % of Sales GAAP gross profit $ 55,203 33.1% $ 54,059 33.4% $ 1 53,363 34.5% $ 1 62,867 35.2% Diode recall ( 180) -0.1% — — ( 769) -0.2% — — Fair value inventory step-up — — 9 2 0.1% — — 3 62 0.1% Transition costs — — — — 8 72 0.2% — — Non-GAAP gross profit $ 55,023 33.0% $ 54,151 33.4% $ 153,466 34.5% $ 163,229 35.3% GAAP operating expenses $ 44,296 26.6% $ 56,092 34.6% $ 136,430 30.7% $ 1 40,098 30.3% Amortization of acquired intangible assets (4,697) -2.8% ( 5,445) -3.4% (14,242) -3.2% ( 16,335) -3.5% Goodwill impairment — — ( 10,396) -6.4% — — ( 10,396) -2.2% Transition costs ( 990) -0.6% ( 369) -0.2% ( 1,889) -0.4% ( 751) -0.2% CEO separation 3 ,844 2.3% — — 3 ,844 0.9% — — Acquisition-related costs — — (6 ) 0.0% — — (6 ) 0.0% Non-GAAP operating expenses $ 42,453 25.5% $ 39,876 24.6% $ 1 24,143 27.9% $ 1 12,610 24.3% GAAP operating income $ 10,907 6.5% $ (2,033) -1.3% $ 16,933 3.8% $ 22,769 4.9% Fair value inventory step-up — — 9 2 0.1% — — 3 62 0.1% Diode recall ( 180) -0.1% — — ( 769) -0.2% — — Amortization of acquired intangible assets 4 ,697 2.8% 5 ,445 3.4% 14,242 3.2% 1 6,335 3.5% Goodwill impairment — — 1 0,396 6.4% — — 1 0,396 2.2% Transition costs 9 90 0.6% 3 69 0.2% 2 ,761 0.6% 7 51 0.2% CEO separation ( 3,844) -2.3% — — ( 3,844) -0.9% — — Acquisition-related costs — — 6 0.0% — — 6 0.0% Non-GAAP operating income $ 12,570 7.5% $ 14,275 8.8% $ 29,323 6.6% $ 50,619 10.9% GAAP net income/(loss) $ 5,731 3.4% $ (5,725) -3.5% $ 4,916 1.1% $ 8,586 1.9% Fair value inventory step-up — — 9 2 0.1% — — 3 62 0.1% Amortization of acquired intangible assets 4 ,697 2.8% 5 ,445 3.4% 14,242 3.2% 1 6,335 3.5% Goodwill impairment — — 1 0,396 6.4% — — 1 0,396 2.2% Diode recall ( 180) -0.1% — — ( 769) -0.2% — — Transition costs 9 90 0.6% 3 69 0.2% 2 ,761 0.6% 7 51 0.2% CEO separation ( 3,844) -2.3% — — ( 3,844) -0.9% — — Acquisition-related costs — — 6 0.0% — — 6 0.0% Change in contingent consideration — — ( 60) 0.0% ( 100) 0.0% ( 60) 0.0% Tax effect of non-GAAP adjustments ( 449) -0.3% (1,580) -1.0% (3,318) -0.7% (4,696) -1.0% Non-GAAP net income $ 6,945 4.2% $ 8,943 5.5% $ 13,888 3.1% $ 31,680 6.8% GAAP net income/(loss) per share - diluted $ 0 .10 $ (0.10) $ 0 .09 $ 0 .16 Fair value inventory step-up — — — 0 .01 Amortization of acquired intangible assets 0.08 0 .10 0 .26 0 .30 Goodwill impairment — 0 .19 — 0 .19 Diode recall — — ( 0.01) — Transition costs 0 .02 0 .01 0 .05 0 .01 CEO separation ( 0.07) — ( 0.07) — Tax effect of non-GAAP adjustments ( 0.01) ( 0.03) ( 0.06) ( 0.09) Non-GAAP net income per share - diluted $ 0 .13 $ 0 .16 $ 0 .25 $ 0 .57 © 2020 AMERICAN OUTDOOR BRANDS CORP. ALL RIGHTS RESERVED. 35
Elizabeth Sharp Vice President — Investor Relations 2100 Roosevelt Avenue Springfield, MA 01104 Phone: 413 747 6284 Email: lsharp@aob.com www.aob.com © 2020 AMERICAN OUTDOOR BRANDS CORP. ALL RIGHTS RESERVED.Elizabeth Sharp Vice President — Investor Relations 2100 Roosevelt Avenue Springfield, MA 01104 Phone: 413 747 6284 Email: lsharp@aob.com www.aob.com © 2020 AMERICAN OUTDOOR BRANDS CORP. ALL RIGHTS RESERVED.