American Outdoor Brands Corporation Reports Third Quarter Fiscal 2017 Financial Results
Third Quarter Fiscal 2017 Financial Highlights
- Quarterly net sales were
$233.5 million compared with$210.8 million for the third quarter last year, an increase of 10.8%.
- Gross margin for the quarter was 42.5% compared with 41.1% for the third quarter last year.
- Quarterly GAAP net income was
$32.5 million , or$0.57 per diluted share, compared with$31.4 million , or$0.56 per diluted share, for the comparable quarter last year.
- Quarterly non-GAAP net income was
$37.6 million , or$0.66 per diluted share, compared with$33.2 million , or$0.59 per diluted share, for the comparable quarter last year. GAAP to non-GAAP adjustments in net income exclude a number of acquisition-related costs, including amortization, one-time transaction costs, inventory valuation adjustments, and a one-time holding company rebranding expense. For a detailed reconciliation, see the schedules that follow in this release.
- Quarterly non-GAAP Adjusted EBITDAS was
$67.6 million , or 28.9% of net sales, compared with$61.5 million , or 29.2% of net sales, for the comparable quarter last year.
- The company completed the acquisition of substantially all of the assets of
Ultimate Survival Technologies, Inc. ("UST"), a provider of high-quality survival and camping products, for$33.0 million in cash and up to$2.0 million , due over two years, contingent upon the financial performance of the acquired business. UST is included in the company's Outdoor Products & Accessories segment.
"Lastly, during the quarter, we successfully rebranded our holding company as
"Operating cash flow during the quarter was $48.2 million and we invested
Financial Outlook
AMERICAN OUTDOOR BRANDS CORPORATION |
|||||||
NET SALES AND EARNINGS PER SHARE GUIDANCE, INCLUDING GAAP TO NON-GAAP RECONCILIATION |
|||||||
Range for the Three Months Ending April 30, 2017 |
Range for the Year Ending April 30, 2017 |
||||||
Net sales (in thousands) |
$ 200,000 |
$ 220,000 |
$ 874,000 |
$ 894,000 |
|||
GAAP income per share - diluted |
$ 0.26 |
$ 0.36 |
$ 2.01 |
$ 2.11 |
|||
Acquisition-related costs |
— |
— |
0.07 |
0.07 |
|||
Amortization of acquired intangible assets |
0.09 |
0.09 |
0.31 |
0.31 |
|||
Corporate rebranding expense |
— |
— |
0.01 |
0.01 |
|||
Fair value inventory step-up and backlog expense |
— |
— |
0.08 |
0.08 |
|||
Transition costs |
0.01 |
0.01 |
0.01 |
0.01 |
|||
Tax effect of non-GAAP adjustments |
(0.04) |
(0.04) |
(0.16) |
(0.16) |
|||
Non-GAAP income per share - diluted |
$ 0.32 |
$ 0.42 |
$ 2.33 |
$ 2.43 |
Conference Call and Webcast
The company will host a conference call and webcast today,
Reconciliation of U.S. GAAP to Non-GAAP Financial Measures
In this press release, certain non-GAAP financial measures, including "non-GAAP net income," "Adjusted EBITDAS," and "free cash flow" are presented. From time-to-time, the company considers and uses these supplemental measures of operating performance in order to provide the reader with an improved understanding of underlying performance trends. The company believes it is useful for itself and the reader to review, as applicable, both (1) GAAP measures that include (i) amortization of acquired intangible assets, (ii) accessories transition costs, (iii) discontinued operations, (iv) DOJ and
About
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 our belief that toward the end of the year, consumer firearm purchasing began to cool; our belief that such trend underscores the importance of remaining focused on our strategy to continue growing and balancing our business across the shooting, hunting, and rugged outdoor enthusiast market; our belief that the launch of our next generation, full size M&P M2.0 pistol significantly strengthens our growing family of innovative polymer pistols; our belief that higher year-over-year revenue in the Outdoor Products & Accessories segment was driven largely by our acquisitions of
Contact:
(413) 747-6284
lsharp@aob.com
AMERICAN OUTDOOR BRANDS CORPORATION AND SUBSIDIARIES |
|||||||
CONDENSED CONSOLIDATED STATEMENTS OF INCOME |
|||||||
(Unaudited) |
|||||||
For the Three Months Ended |
For the Nine Months Ended |
||||||
January 31, 2017 |
January 31, 2016 |
January 31, 2017 |
January 31, 2016 |
||||
(In thousands, except per share data) |
|||||||
Net sales |
$ 233,523 |
$ 210,786 |
$ 674,002 |
$ 501,791 |
|||
Cost of sales |
134,212 |
124,128 |
389,517 |
300,048 |
|||
Gross profit |
99,311 |
86,658 |
284,485 |
201,743 |
|||
Operating expenses: |
|||||||
Research and development |
2,764 |
2,521 |
7,614 |
7,612 |
|||
Selling and marketing |
15,052 |
11,505 |
36,773 |
33,260 |
|||
General and administrative |
31,286 |
22,484 |
85,210 |
59,124 |
|||
Total operating expenses |
49,102 |
36,510 |
129,597 |
99,996 |
|||
Operating income |
50,209 |
50,148 |
154,888 |
101,747 |
|||
Other expense, net: |
|||||||
Other expense, net |
(8) |
(5) |
(37) |
(17) |
|||
Interest expense, net |
(1,939) |
(2,079) |
(6,128) |
(11,575) |
|||
Total other expense, net |
(1,947) |
(2,084) |
(6,165) |
(11,592) |
|||
Income from operations before income taxes |
48,262 |
48,064 |
148,723 |
90,155 |
|||
Income tax expense |
15,809 |
16,630 |
48,562 |
31,844 |
|||
Net income |
32,453 |
31,434 |
100,161 |
58,311 |
|||
Net income per share: |
|||||||
Basic |
$ 0.58 |
$ 0.57 |
$ 1.78 |
$ 1.07 |
|||
Diluted |
$ 0.57 |
$ 0.56 |
$ 1.75 |
$ 1.05 |
|||
Weighted average number of common shares outstanding: |
|||||||
Basic |
56,342 |
54,857 |
56,208 |
54,508 |
|||
Diluted |
57,127 |
55,981 |
57,166 |
55,784 |
AMERICAN OUTDOOR BRANDS CORPORATION AND SUBSIDIARIES |
|||
CONDENSED CONSOLIDATED BALANCE SHEETS |
|||
(Unaudited) |
|||
As of |
|||
January 31, 2017 |
April 30, 2016 |
||
(In thousands, except par value and share data) |
|||
ASSETS |
|||
Current assets: |
|||
Cash and cash equivalents |
$ 54,253 |
$ 191,279 |
|
Accounts receivable, net of allowance for doubtful accounts of $564 on January 31, 2017 and $680 on April 30, 2016 |
72,919 |
57,792 |
|
Inventories |
128,096 |
77,789 |
|
Prepaid expenses and other current assets |
6,735 |
4,307 |
|
Income tax receivable |
575 |
2,064 |
|
Total current assets |
262,578 |
333,231 |
|
Property, plant, and equipment, net |
151,645 |
135,405 |
|
Intangibles, net |
147,045 |
62,924 |
|
Goodwill |
168,829 |
76,357 |
|
Other assets |
9,623 |
11,586 |
|
$ 739,720 |
$ 619,503 |
||
LIABILITIES AND STOCKHOLDERS' EQUITY |
|||
Current liabilities: |
|||
Accounts payable |
$ 55,578 |
$ 45,513 |
|
Accrued expenses |
35,412 |
28,447 |
|
Accrued payroll and incentives |
19,066 |
18,784 |
|
Accrued income taxes |
2,349 |
5,960 |
|
Accrued profit sharing |
9,865 |
11,459 |
|
Accrued warranty |
5,968 |
6,129 |
|
Current portion of notes payable |
6,300 |
6,300 |
|
Total current liabilities |
134,538 |
122,592 |
|
Deferred income taxes |
21,212 |
12,161 |
|
Notes payable, net of current portion |
161,990 |
166,564 |
|
Other non-current liabilities |
9,685 |
10,370 |
|
Total liabilities |
327,425 |
311,687 |
|
Commitments and contingencies |
|||
Stockholders' equity: |
|||
Preferred stock, $.001 par value, 20,000,000 shares authorized, no shares issued or outstanding |
— |
— |
|
Common stock, $.001 par value, 100,000,000 shares authorized, 71,918,857 shares issued and 56,356,235 shares outstanding on January 31, 2017 and 71,558,633 shares issued and 55,996,011 shares outstanding on April 30, 2016 |
72 |
72 |
|
Additional paid-in capital |
242,586 |
239,505 |
|
Retained earnings |
341,471 |
241,310 |
|
Accumulated other comprehensive income/(loss) |
489 |
(748) |
|
Treasury stock, at cost (15,562,622 shares on January 31, 2017 and April 30, 2016) |
(172,323) |
(172,323) |
|
Total stockholders' equity |
412,295 |
307,816 |
|
$ 739,720 |
$ 619,503 |
AMERICAN OUTDOOR BRANDS CORPORATION AND SUBSIDIARIES |
|||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
|||
(Unaudited) |
|||
For the Nine Months Ended |
|||
January 31, 2017 |
January 31, 2016 |
||
(In thousands) |
|||
Cash flows from operating activities: |
|||
Net income |
$ 100,161 |
$ 58,311 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|||
Depreciation and amortization |
37,187 |
30,836 |
|
Loss on sale/disposition of assets |
98 |
138 |
|
Provision for losses on notes and accounts receivable |
179 |
2 |
|
Deferred income taxes |
(12,300) |
244 |
|
Stock-based compensation expense |
6,383 |
4,885 |
|
Changes in operating assets and liabilities (net effect of acquisitions): |
|||
Accounts receivable |
(3,754) |
(34,536) |
|
Inventories |
(18,451) |
1,244 |
|
Prepaid expenses and other current assets |
(2,178) |
325 |
|
Income taxes |
(2,095) |
(2,811) |
|
Accounts payable |
2,393 |
2,931 |
|
Accrued payroll and incentives |
(1,218) |
7,874 |
|
Accrued profit sharing |
(1,594) |
1,710 |
|
Accrued expenses |
5,004 |
4,044 |
|
Accrued warranty |
(262) |
(248) |
|
Other assets |
1,059 |
(119) |
|
Other non-current liabilities |
(1,088) |
(1,087) |
|
Net cash provided by operating activities |
109,524 |
73,743 |
|
Cash flows from investing activities: |
|||
Acquisition of businesses, net of cash acquired |
(211,069) |
— |
|
Refunds on machinery and equipment |
2,776 |
4,222 |
|
Receipts from note receivable |
58 |
56 |
|
Payments to acquire patents and software |
(515) |
(248) |
|
Proceeds from sale of property and equipment |
— |
61 |
|
Payments to acquire property and equipment |
(28,952) |
(22,933) |
|
Net cash used in investing activities |
(237,702) |
(18,842) |
|
Cash flows from financing activities: |
|||
Proceeds from loans and notes payable |
50,000 |
105,000 |
|
Cash paid for debt issuance costs |
(525) |
(1,024) |
|
Payments on capital lease obligation |
(397) |
(447) |
|
Payments on notes payable |
(54,725) |
(103,150) |
|
Proceeds from Economic Development Incentive Program |
101 |
— |
|
Proceeds from exercise of options to acquire common stock, including employee stock purchase plan |
1,141 |
6,668 |
|
Payment of employee withholding tax related to restricted stock units |
(4,443) |
(2,073) |
|
Excess tax benefit of stock-based compensation |
- |
3,123 |
|
Net cash (used in)/provided by financing activities |
(8,848) |
8,097 |
|
Net increase/(decrease) in cash and cash equivalents |
(137,026) |
62,998 |
|
Cash and cash equivalents, beginning of period |
191,279 |
42,222 |
|
Cash and cash equivalents, end of period |
$ 54,253 |
$ 105,220 |
|
Supplemental disclosure of cash flow information |
|||
Cash paid for: |
|||
Interest |
$ 6,683 |
$ 12,118 |
|
Income taxes |
63,195 |
31,484 |
RECONCILIATION OF GAAP FINANCIAL MEASURES TO NON-GAAP FINANCIAL MEASURES |
|||||||||||||||
For the Three Months Ended |
For the Nine Months Ended |
||||||||||||||
January 31, 2017 |
January 31, 2016 |
January 31, 2017 |
January 31, 2016 |
||||||||||||
$ |
% of Sales |
$ |
% of Sales |
$ |
% of Sales |
$ |
% of Sales |
||||||||
GAAP gross profit |
$ 99,311 |
42.5% |
$ 86,658 |
41.1% |
$ 284,485 |
42.2% |
$ 201,743 |
40.2% |
|||||||
Fair value inventory step-up and backlog expense |
777 |
0.3% |
— |
— |
4,601 |
0.7% |
— |
— |
|||||||
Discontinued operations |
— |
— |
— |
— |
— |
— |
52 |
0.0% |
|||||||
Non-GAAP gross profit |
$ 100,088 |
42.9% |
$ 86,658 |
41.1% |
$ 289,086 |
42.9% |
$ 201,795 |
40.2% |
|||||||
GAAP operating expenses |
$ 49,102 |
21.0% |
$ 36,510 |
17.3% |
$ 129,597 |
19.2% |
$ 99,996 |
19.9% |
|||||||
Amortization of acquired intangible assets |
(5,620) |
-2.4% |
(2,652) |
-1.3% |
(12,730) |
-1.9% |
(7,381) |
-1.5% |
|||||||
Accessories transition costs |
(63) |
0.0% |
(10) |
0.0% |
(63) |
0.0% |
(161) |
0.0% |
|||||||
Discontinued operations |
(22) |
0.0% |
(21) |
0.0% |
(66) |
0.0% |
(65) |
0.0% |
|||||||
DOJ/SEC costs including insurance recovery costs |
— |
— |
(9) |
— |
— |
— |
1,781 |
0.4% |
|||||||
Corporate rebranding expenses |
(525) |
-0.2% |
— |
— |
(525) |
-0.1% |
— |
— |
|||||||
Acquisition-related costs |
(629) |
-0.3% |
(27) |
0.0% |
(3,785) |
-0.6% |
(27) |
0.0% |
|||||||
Non-GAAP operating expenses |
$ 42,243 |
18.1% |
$ 33,791 |
16.0% |
$ 112,428 |
16.7% |
$ 94,143 |
18.8% |
|||||||
GAAP operating income |
$ 50,209 |
21.5% |
$ 50,148 |
23.8% |
$ 154,888 |
23.0% |
$ 101,747 |
20.3% |
|||||||
Fair value inventory step-up and backlog expense |
777 |
0.3% |
— |
— |
4,601 |
0.7% |
— |
— |
|||||||
Amortization of acquired intangible assets |
5,620 |
2.4% |
2,652 |
1.3% |
12,730 |
1.9% |
7,381 |
1.5% |
|||||||
Accessories transition costs |
63 |
0.0% |
10 |
0.0% |
63 |
0.0% |
161 |
0.0% |
|||||||
Discontinued operations |
22 |
0.0% |
21 |
0.0% |
66 |
0.0% |
117 |
0.0% |
|||||||
DOJ/SEC costs including insurance recovery costs |
— |
— |
9 |
— |
— |
— |
(1,781) |
-0.4% |
|||||||
Corporate rebranding expenses |
525 |
0.2% |
— |
— |
525 |
0.1% |
— |
— |
|||||||
Acquisition-related costs |
629 |
0.3% |
27 |
— |
3,785 |
0.6% |
27 |
0.0% |
|||||||
Non-GAAP operating income |
$ 57,845 |
24.8% |
$ 52,867 |
25.1% |
$ 176,658 |
26.2% |
$ 107,652 |
21.5% |
|||||||
GAAP net income |
$ 32,453 |
13.9% |
$ 31,434 |
14.9% |
$ 100,162 |
14.9% |
$ 58,311 |
11.6% |
|||||||
Bond premium paid |
— |
— |
— |
— |
— |
— |
2,938 |
0.6% |
|||||||
Fair value inventory step-up and backlog expense |
777 |
0.3% |
— |
— |
4,601 |
0.7% |
— |
— |
|||||||
Amortization of acquired intangible assets |
5,620 |
2.4% |
2,652 |
1.3% |
12,730 |
1.9% |
7,381 |
1.5% |
|||||||
Debt extinguishment costs |
— |
— |
— |
— |
— |
— |
1,723 |
0.3% |
|||||||
Accessories transition costs |
63 |
0.0% |
10 |
0.0% |
63 |
0.0% |
161 |
0.0% |
|||||||
Discontinued operations |
22 |
0.0% |
21 |
0.0% |
66 |
0.0% |
117 |
0.0% |
|||||||
DOJ/SEC costs including insurance recovery costs |
— |
— |
9 |
0.0% |
— |
— |
(1,781) |
-0.4% |
|||||||
Corporate rebranding expenses |
525 |
0.2% |
— |
— |
525 |
0.1% |
— |
— |
|||||||
Acquisition-related costs |
629 |
0.3% |
27 |
0.0% |
3,785 |
0.6% |
27 |
0.0% |
|||||||
Tax effect of non-GAAP adjustments |
(2,497) |
-1.1% |
(941) |
-0.4% |
(7,119) |
-1.1% |
(3,889) |
-0.8% |
|||||||
Non-GAAP net income |
$ 37,592 |
16.1% |
$ 33,212 |
15.8% |
$ 114,813 |
17.0% |
$ 64,988 |
13.0% |
|||||||
GAAP net income per share - diluted |
$ 0.57 |
$ 0.56 |
$ 1.75 |
$ 1.05 |
|||||||||||
Bond premium paid |
— |
— |
— |
0.05 |
|||||||||||
Fair value inventory step-up and backlog expense |
0.01 |
— |
0.08 |
— |
|||||||||||
Amortization of acquired intangible assets |
0.10 |
0.05 |
0.22 |
0.13 |
|||||||||||
Debt extinguishment costs |
— |
— |
— |
0.03 |
|||||||||||
Accessories transition costs |
— |
— |
— |
— |
|||||||||||
Discontinued operations |
— |
— |
— |
— |
|||||||||||
DOJ/SEC costs including insurance recovery costs |
— |
— |
— |
(0.03) |
|||||||||||
Corporate rebranding expenses |
0.01 |
— |
0.01 |
— |
|||||||||||
Acquisition-related costs |
0.01 |
— |
0.07 |
— |
|||||||||||
Tax effect of non-GAAP adjustments |
(0.04) |
(0.02) |
(0.12) |
(0.07) |
|||||||||||
Non-GAAP net income per share - diluted |
$ 0.66 |
$ 0.59 |
$ 2.01 |
$ 1.16 |
AMERICAN OUTDOOR BRANDS CORPORATION AND SUBSIDIARIES |
|||||||
RECONCILIATION OF NET OPERATING CASH FLOW TO FREE CASH FLOW |
|||||||
For the Three Months Ended |
For the Nine Months Ended |
||||||
January 31, 2017 |
January 31, 2016 |
January 31, 2017 |
January 31, 2016 |
||||
Net cash provided by operating activities |
$ 48,150 |
$ 50,982 |
$ 109,524 |
$ 73,743 |
|||
Net cash used in investing activities |
(41,032) |
(4,678) |
(237,702) |
(18,842) |
|||
Acquisition of businesses, net of cash acquired |
33,010 |
— |
211,069 |
— |
|||
Receipts from note receivable |
(15) |
(15) |
(58) |
(56) |
|||
Free cash flow |
$ 40,113 |
$ 46,289 |
$ 82,833 |
$ 54,845 |
AMERICAN OUTDOOR BRANDS CORPORATION AND SUBSIDIARIES |
|||||
RECONCILIATION OF GAAP NET INCOME TO NON-GAAP ADJUSTED EBITDAS |
|||||
For the Three Months Ended |
|||||
January 31, 2017 |
January 31, 2016 |
||||
GAAP net income |
$ 32,453 |
$ 31,434 |
|||
Interest expense |
1,854 |
2,140 |
|||
Income tax expense |
15,809 |
16,630 |
|||
Depreciation and amortization |
12,974 |
9,555 |
|||
Stock-based compensation expense |
2,465 |
1,639 |
|||
Fair value inventory step-up and backlog expense |
777 |
— |
|||
Acquisition-related costs |
629 |
27 |
|||
Corporate rebranding expenses |
525 |
— |
|||
Discontinued operations |
22 |
21 |
|||
Accessories transition costs |
63 |
10 |
|||
DOJ/SEC costs |
— |
9 |
|||
Non-GAAP Adjusted EBITDAS |
$ 67,571 |
$ 61,465 |
|||
AMERICAN OUTDOORS BRANDS CORPORATION AND SUBSIDIARIES |
|||||
RECONCILIATION OF GAAP NET INCOME TO NON-GAAP ADJUSTED EBITDAS |
|||||
For Nine Months Ended |
|||||
January 31, 2017 |
January 31, 2016 |
||||
GAAP net income |
$ 100,161 |
$ 58,311 |
|||
Interest expense |
6,222 |
11,714 |
|||
Income tax expense |
48,562 |
31,844 |
|||
Depreciation and amortization |
35,462 |
28,372 |
|||
Stock-based compensation expense |
6,383 |
4,885 |
|||
Fair value inventory step-up and backlog expense |
4,601 |
— |
|||
Acquisition-related costs |
3,785 |
27 |
|||
Corporate rebranding expenses |
525 |
— |
|||
Discontinued operations |
66 |
117 |
|||
Accessories transition costs |
63 |
161 |
|||
DOJ/SEC costs, including insurance recovery costs |
— |
(1,781) |
|||
Non-GAAP Adjusted EBITDAS |
$ 205,830 |
$ 133,650 |
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/american-outdoor-brands-corporation-reports-third-quarter-fiscal-2017-financial-results-300417290.html
SOURCE