Release Date: September 05, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Significant increase in adjusted EBITDA of more than 76% year-over-year.
- Strong performance of new products, contributing to 23% of net sales in the first quarter.
- Expansion of distribution channels, including new retail locations and international markets.
- Solid balance sheet with over $23 million in cash and no debt.
- Positive growth in international net sales, particularly in Canada, with a 21% increase.
Negative Points
- Net sales declined by 4.1% year-over-year, with Shooting Sports down 7% and Outdoor Lifestyle down 1.7%.
- E-commerce sales decreased by 10.2%, driven mainly by outdoor cooking products.
- GAAP EPS was a loss of $0.18, although an improvement from the previous year's loss of $0.31.
- Continued headwinds expected in the Shooting Sports category, impacting overall growth.
- Inventory levels increased significantly, using $4.4 million of cash from operations in Q1.
Q & A Highlights
Q: Can you provide some color on the performance of Meat and Grilla in the quarter and expectations for fiscal 2025?
A: New products generated a significant share of revenue, with notable growth in international markets, particularly Canada. Over the last four years, innovation has added over $60 million in revenue. We expect continued growth from new products throughout the year. (Brian Murphy, CEO)
Q: Are you seeing more M&A opportunities in the Outdoor Lifestyle segment compared to Shooting Sports?
A: Yes, we are seeing more opportunities in the Outdoor Lifestyle segment. The Shooting Sports market, especially personal protection, is more volatile. Most M&A targets are sub-$30 million in revenue, with many around $10 million. (Brian Murphy, CEO)
Q: Can you update us on the rollout of Grilla to retail and its performance?
A: Grilla products are performing well on Amazon, and we are strategically planning retail partnerships. We have several innovative new products coming out later this year. Retailers are increasingly interested in our brands due to our focus on innovation and pricing stability. (Brian Murphy, CEO)
Q: What type of behavior are you seeing from retail partners as they prepare for the hunting and holiday seasons?
A: Retailers are cautiously optimistic, with many having managed their inventories well. We expect stronger assortments and better line reviews. Some retailers are still unwinding excess inventory, which presents opportunities for us. (Brian Murphy, CEO)
Q: Can you provide more details on the growth in international markets and the impact of the new distribution facility in Columbia, Missouri?
A: Canada has shown strong growth, particularly for our Outdoor Lifestyle brands. The new distribution facility in Columbia has improved efficiency and cost savings, positioning us well for future growth. We are optimistic about the new factory store opening later this year. (Brian Murphy, CEO)
Q: What are you seeing in the Shooting Sports market following a better month of mixed checks in August?
A: The Shooting Sports market has cooled compared to a year or two ago. We are focusing on stable parts of the business, like target shooting, to drive growth. The upcoming election adds uncertainty, but we remain optimistic about consumer demand. (Brian Murphy, CEO)
Q: Can you explain the expected deceleration in gross margins from 46% to 45%?
A: The year-over-year increase in gross margins is due to better freight rates. Quarterly fluctuations will occur based on inventory purchases and amortization of freight and tariff variances. (H. Andrew Fulmer, CFO)
Q: Are you considering the election cycle in your Shooting Sports segment outlook?
A: Our guidance does not include any potential bump from the election. We are focusing on stable parts of the Shooting Sports business to drive growth. (Brian Murphy, CEO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
