PRISM Q&A CORNER
Brian Murphy , CEO, American Outdoor BrandsAmerican Outdoor Brands: Revolutionizing Adventure at the Peak of Innovation
With over 20 brands, CEO Brian Murphy explains how American Outdoor Brands redefines product innovation propelling the company growth strategy through brand expansion, introduction and acquisition opportunities.
We have all been the consumer standing in an aisle staring at a shelf displaying multiple versions of the same product. Many considerations come into play when deciding on which product to purchase such as price, packaging, technology, or ease of use. When you think about the amount of times you’ve encountered this situation, it begs the question, “How do consumer product companies compete, let alone survive?” These differentiators are the essential competitive advantages needed for companies to participate in the crowded market.
However, competition isn’t the only hurdle. Today, consumers’ tastes and preferences are constantly changing as new technologies quickly develop advancements more efficiently than before. This makes innovation a key competitive advantage for company success, especially in the ever evolving consumer products industry.
In 2020, American Outdoor Brands, Inc. (Nasdaq: AOUT) spun-off from its parent company, Smith and Wesson Brands, Inc. (SWBI) and became its own entity. Unlike its former parent company, American Outdoor does not manufacture or sell firearms and ammunition. However, it does offer accessories and related products for shooting sports. The company is a growth-oriented business and a provider of outdoor products and accessories, including hunting, fishing, camping, outdoor cooking, shooting, and personal security and defense products, for rugged outdoor enthusiasts. With innovation as its focus, American Outdoor has 21 brands and counting, touts a proven track record of creating new brands, is growing its existing brands, and is efficiently integrating acquired brands to expand its reach into new markets.
PRISM MarketView spoke with American Outdoor Brand’s CEO and President, Brian D. Murphy. Murphy provided insight on the company’s journey and accomplishments as it furthers its reputation as a true innovator and player, in the outdoor products industry.
Q:A:Thank you. With 21 unique outdoor consumer brands in our portfolio, we believe our success lies in our ability to leverage our culture of innovation to deliver product solutions for outdoor enthusiasts in moments that matter – those moments where core memories are created. Our brands operate across two major product categories. Our Outdoor Lifestyle category includes brands related to fishing, hunting, camping, land management, meat processing, and outdoor cooking, which makes up 54% of our business. Shooting Sports is our other category. It comprises the remaining 46% of our business, and includes target shooting, cleaning and maintenance, reloading, optics, and security solutions. While similar in the fact that they’re all outdoor related, each category is unique in its focus. We have strategically positioned each of our brands into what we call “brand lanes” to offer innovative products to feed the needs of major outdoor enthusiasts – adventurers, harvesters, marksmen, and defenders. Some of our brands include Grilla Grills, MEAT! Your Maker, BUBBA, Caldwell and BOG. Our “brand lanes” allow us to implement our unique “Dock and Unlock” strategy, in which we leverage the teams within those lanes to continually assess our brands’ potential, identifying “Permission to Play” in new product categories, establish brand expansion, and enter entirely new, large addressable markets. This creative process yields a tremendous pipeline of disruptive new products, backed by an accelerating portfolio of patents. In the past three years, our IP portfolio has swelled by ~30% to 392 patents filed or active, with more on the way. These patents will help protect our future revenue and profitability.
Q:A:Yes, as it relates to our utilization of innovation within product development, we have a few drivers that help us to stand out among the rest. First, our product pipeline is built to deliver approximately $200M in incremental sales which provides us 3-5 years of potential new product upside. We’re able to execute this by the strengthening of our patent portfolio which has supported our innovation and growth. We also like to focus on large sleepy markets where we can be seen as a disruptor. Our 40+ product designers, engineers and software developers are the talent behind the execution of this pipeline, driving the capability to develop 200+ new products, annually. We also pride ourselves on our quality which is why we prioritize investing in equipment that can accelerate time to market, which is housed in our on-site, state-of-the-art product development labs.
Q:Let’s discuss the numbers behind the innovation. You recently provided your first quarter results which beat Wall Street expectations across all metrics. Despite your net sales slightly declining year-over-year, you reported a significant increase of more than 76% in Adjusted EBITDAS and have illustrated how innovation remains at your core in executing your long-term growth strategy. Can you speak more about your recent financial release?
A:Yes, innovation allows us to forge strong relationships with our consumers and retailers and expand our access to new markets. New products launched within the past 24 months generated 23% of our net sales in the first quarter. In Outdoor Lifestyle, new products from our BOG and BUBBA brands, including our Smart Fish Scale, delivered strong hunting and fishing performance, and helped to largely offset softness in outdoor cooking and rugged outdoor. In Shooting Sports, new products from our Caldwell Claymore family, including our Solo and PullPup clay target throwers, drove strength in shooting accessories and helped partially offset weakness in personal protection products, which is reflective of recent trends in that market. We believe our consumer is resilient, and with innovation as our growth engine, we are excited about the new products we have in store and the future growth they can fuel. Our balance sheet remained strong in the first quarter, and we continued to demonstrate disciplined capital management. We ended the quarter with $23.5 million in cash and no debt after replenishing our inventories in preparation for the fall hunting and holiday seasons, and after repurchasing our common stock during the quarter. We remain excited about the opportunities that lie ahead for fiscal 2025 and beyond. While we anticipate that headwinds in the Shooting Sports category may continue, we believe that our initiatives to drive channel expansion, combined with our robust new product pipeline, will help deliver growth in our Outdoor Lifestyle category. Therefore, we continue to believe that we remain well positioned to deliver growth in both net sales and profitability in fiscal 2025.
Q:A:Thank you. As it relates to fiscal 2025, which ends April 30th, 2025, we believe net sales could grow organically by as much as 2.5% compared to 2024. This increase in net sales is independent of any potential acquisitions and is expected to come from the continued strong growth in our Outdoor Lifestyle category that will be slightly offset from continued headwinds in our Shooting Sports category. Our full year 2025 gross margins are expected to slightly improve to about 45% as we expect a decrease in inbound freight costs and continuation of a promotional environment. As we think through longer term outlook beyond 2025, we believe that over time we have the potential to generate $400M+ in net sales and over $70M of EBITDAS. This assumption is based on our innovation pipeline, identified expansion opportunities, and infrastructure already in-place. We also do consider several elements outside of our control that could impact timing, such as consumer demand and spending patterns, health of retailers, geopolitical changes, and potential changes in legislation.
Q:Both organic growth and M&A have been two important elements of your growth strategy success. You have boosted organic growth through expansion of product lines and launching new brands from scratch while you’ve also mentioned your plan to continue expanding through acquisitions. Can you share what brands have boosted your organic growth from product expansion or have been newly launched from scratch as well as some acquisitions you have made and how they are performing?
A:We find disciplined capital allocation imperative in executing our growth strategy. Our highest priority is to invest in our business which is what, we believe, will drive our longer-term goal of achieving organic net sales to $400M, deliver sustainable profitability and yield strong returns and free cash flow. One great example is our MEAT! Your Maker brand, which was developed internally, and which has achieved over $14M in net sales since its creation just a few years ago. At the same time, we will seek out M&A opportunities to supplement organic growth by applying strict criteria, finding brands to “Dock & Unlock” and maximizing ROIC. We acquired our Grilla Grills brand whose consolidation contributed towards $1.5M savings and is providing new products/channels in FY25. As it relates to capital allocation, we also will continually assess opportunities to return capital to shareholders as we currently have a share buyback plan in place through Sept 2025.
Q:A:While I love all of our brands for different reasons, I identify most closely with our Adventurer and Harvester brands. I really enjoy hunting, fishing, camping, and cooking, so you’ll find plenty of products from our BOG, BUBBA, UST, and Grilla brands in my garage. I also take great pride in maintaining our home and property, so I can often be found using our Hooyman land management tools, with our tree trimmers, shovels, and seed spreaders getting the most “yard time.” Lastly, we’re currently clearing space in our backyard to make room for an outdoor kitchen from our Grilla brand, complete with a sink, fridge, pellet grill, and gas grill. We’re very proud to own a brand known for innovating the outdoor cooking space with unique modular kitchen pieces. Our neighbors are already calling dibs on coming over for burgers – the future moments that matter!
With over 20 brands, CEO Brian Murphy explains how American Outdoor Brands redefines product innovation propelling the company growth strategy through brand expansion, introduction and acquisition opportunities.
We have all been the consumer standing in an aisle staring at a shelf displaying multiple versions of the same product. Many considerations come into play when deciding on which product to purchase such as price, packaging, technology, or ease of use. When you think about the amount of times you’ve encountered this situation, it begs the question, “How do consumer product companies compete, let alone survive?” These differentiators are the essential competitive advantages needed for companies to participate in the crowded market.
However, competition isn’t the only hurdle. Today, consumers’ tastes and preferences are constantly changing as new technologies quickly develop advancements more efficiently than before. This makes innovation a key competitive advantage for company success, especially in the ever evolving consumer products industry.
In 2020, American Outdoor Brands, Inc. (Nasdaq: AOUT) spun-off from its parent company, Smith and Wesson Brands, Inc. (SWBI) and became its own entity. Unlike its former parent company, American Outdoor does not manufacture or sell firearms and ammunition. However, it does offer accessories and related products for shooting sports. The company is a growth-oriented business and a provider of outdoor products and accessories, including hunting, fishing, camping, outdoor cooking, shooting, and personal security and defense products, for rugged outdoor enthusiasts. With innovation as its focus, American Outdoor has 21 brands and counting, touts a proven track record of creating new brands, is growing its existing brands, and is efficiently integrating acquired brands to expand its reach into new markets.
PRISM MarketView spoke with American Outdoor Brand’s CEO and President, Brian D. Murphy. Murphy provided insight on the company’s journey and accomplishments as it furthers its reputation as a true innovator and player, in the outdoor products industry.
Thank you. With 21 unique outdoor consumer brands in our portfolio, we believe our success lies in our ability to leverage our culture of innovation to deliver product solutions for outdoor enthusiasts in moments that matter – those moments where core memories are created. Our brands operate across two major product categories. Our Outdoor Lifestyle category includes brands related to fishing, hunting, camping, land management, meat processing, and outdoor cooking, which makes up 54% of our business. Shooting Sports is our other category. It comprises the remaining 46% of our business, and includes target shooting, cleaning and maintenance, reloading, optics, and security solutions. While similar in the fact that they’re all outdoor related, each category is unique in its focus. We have strategically positioned each of our brands into what we call “brand lanes” to offer innovative products to feed the needs of major outdoor enthusiasts – adventurers, harvesters, marksmen, and defenders. Some of our brands include Grilla Grills, MEAT! Your Maker, BUBBA, Caldwell and BOG. Our “brand lanes” allow us to implement our unique “Dock and Unlock” strategy, in which we leverage the teams within those lanes to continually assess our brands’ potential, identifying “Permission to Play” in new product categories, establish brand expansion, and enter entirely new, large addressable markets. This creative process yields a tremendous pipeline of disruptive new products, backed by an accelerating portfolio of patents. In the past three years, our IP portfolio has swelled by ~30% to 392 patents filed or active, with more on the way. These patents will help protect our future revenue and profitability.
Yes, as it relates to our utilization of innovation within product development, we have a few drivers that help us to stand out among the rest. First, our product pipeline is built to deliver approximately $200M in incremental sales which provides us 3-5 years of potential new product upside. We’re able to execute this by the strengthening of our patent portfolio which has supported our innovation and growth. We also like to focus on large sleepy markets where we can be seen as a disruptor. Our 40+ product designers, engineers and software developers are the talent behind the execution of this pipeline, driving the capability to develop 200+ new products, annually. We also pride ourselves on our quality which is why we prioritize investing in equipment that can accelerate time to market, which is housed in our on-site, state-of-the-art product development labs.
Let’s discuss the numbers behind the innovation. You recently provided your first quarter results which beat Wall Street expectations across all metrics. Despite your net sales slightly declining year-over-year, you reported a significant increase of more than 76% in Adjusted EBITDAS and have illustrated how innovation remains at your core in executing your long-term growth strategy. Can you speak more about your recent financial release?
Yes, innovation allows us to forge strong relationships with our consumers and retailers and expand our access to new markets. New products launched within the past 24 months generated 23% of our net sales in the first quarter. In Outdoor Lifestyle, new products from our BOG and BUBBA brands, including our Smart Fish Scale, delivered strong hunting and fishing performance, and helped to largely offset softness in outdoor cooking and rugged outdoor. In Shooting Sports, new products from our Caldwell Claymore family, including our Solo and PullPup clay target throwers, drove strength in shooting accessories and helped partially offset weakness in personal protection products, which is reflective of recent trends in that market. We believe our consumer is resilient, and with innovation as our growth engine, we are excited about the new products we have in store and the future growth they can fuel. Our balance sheet remained strong in the first quarter, and we continued to demonstrate disciplined capital management. We ended the quarter with $23.5 million in cash and no debt after replenishing our inventories in preparation for the fall hunting and holiday seasons, and after repurchasing our common stock during the quarter. We remain excited about the opportunities that lie ahead for fiscal 2025 and beyond. While we anticipate that headwinds in the Shooting Sports category may continue, we believe that our initiatives to drive channel expansion, combined with our robust new product pipeline, will help deliver growth in our Outdoor Lifestyle category. Therefore, we continue to believe that we remain well positioned to deliver growth in both net sales and profitability in fiscal 2025.
Thank you. As it relates to fiscal 2025, which ends April 30th, 2025, we believe net sales could grow organically by as much as 2.5% compared to 2024. This increase in net sales is independent of any potential acquisitions and is expected to come from the continued strong growth in our Outdoor Lifestyle category that will be slightly offset from continued headwinds in our Shooting Sports category. Our full year 2025 gross margins are expected to slightly improve to about 45% as we expect a decrease in inbound freight costs and continuation of a promotional environment. As we think through longer term outlook beyond 2025, we believe that over time we have the potential to generate $400M+ in net sales and over $70M of EBITDAS. This assumption is based on our innovation pipeline, identified expansion opportunities, and infrastructure already in-place. We also do consider several elements outside of our control that could impact timing, such as consumer demand and spending patterns, health of retailers, geopolitical changes, and potential changes in legislation.
Both organic growth and M&A have been two important elements of your growth strategy success. You have boosted organic growth through expansion of product lines and launching new brands from scratch while you’ve also mentioned your plan to continue expanding through acquisitions. Can you share what brands have boosted your organic growth from product expansion or have been newly launched from scratch as well as some acquisitions you have made and how they are performing?
We find disciplined capital allocation imperative in executing our growth strategy. Our highest priority is to invest in our business which is what, we believe, will drive our longer-term goal of achieving organic net sales to $400M, deliver sustainable profitability and yield strong returns and free cash flow. One great example is our MEAT! Your Maker brand, which was developed internally, and which has achieved over $14M in net sales since its creation just a few years ago. At the same time, we will seek out M&A opportunities to supplement organic growth by applying strict criteria, finding brands to “Dock & Unlock” and maximizing ROIC. We acquired our Grilla Grills brand whose consolidation contributed towards $1.5M savings and is providing new products/channels in FY25. As it relates to capital allocation, we also will continually assess opportunities to return capital to shareholders as we currently have a share buyback plan in place through Sept 2025.
While I love all of our brands for different reasons, I identify most closely with our Adventurer and Harvester brands. I really enjoy hunting, fishing, camping, and cooking, so you’ll find plenty of products from our BOG, BUBBA, UST, and Grilla brands in my garage. I also take great pride in maintaining our home and property, so I can often be found using our Hooyman land management tools, with our tree trimmers, shovels, and seed spreaders getting the most “yard time.” Lastly, we’re currently clearing space in our backyard to make room for an outdoor kitchen from our Grilla brand, complete with a sink, fridge, pellet grill, and gas grill. We’re very proud to own a brand known for innovating the outdoor cooking space with unique modular kitchen pieces. Our neighbors are already calling dibs on coming over for burgers – the future moments that matter!
