Good day, everyone, and welcome to American Outdoor Brands, Inc. Fourth Quarter and Full Year Fiscal 2025 Financial Results Conference Call. This call is being recorded. At this time, I would like to turn the call over to Liz Sharp, Vice President of Investor Relations, for some information about today's call.

Thank you, and good afternoon. Our comments today may contain predictions, estimates and other forward-looking statements. Our use of words like anticipate, project, estimate, expect, intend, should, could, indicate, suggest, believe and other similar expressions is intended to identify those forward-looking statements. Forward-looking statements also include statements regarding our product development, focus, objectives, strategies and vision; our strategic evolution; our market share and market demand for our products; market and inventory conditions related to our products and in our industry in general; and growth opportunities and trends. Our forward-looking statements represent our current judgment about the future, and they are subject to various risks and uncertainties. Risk factors and other considerations that could cause our actual results to be materially different are described in our securities filings. You can find those documents as well as a replay of this call on our website at aob.com. Today's call contains time-sensitive information that is accurate only as of this time, and we assume no obligation to update any forward-looking statements. Our actual results could differ materially from our statements today. I have a few important items to note about our comments on today's call. First, we reference certain non-GAAP financial measures. Our non-GAAP results exclude amortization of acquired intangible assets, stock compensation, technology implementation, nonrecurring inventory reserve adjustments, other costs and income tax adjustments. The reconciliation of GAAP financial measures to non-GAAP financial measures, whether they are discussed on today's call, can be found in our filings as well as today's earnings press release, which are posted on our website. Also, when we reference EPS, we are always referencing fully diluted EPS. Joining us on today's call is Brian Murphy, President and CEO; and Andy Fulmer, CFO. And with that, I'll turn the call over to Brian.

Thanks, Liz, and thanks, everyone, for joining us today. Fiscal 2025 marked a pivotal chapter in the American Outdoor Brands story. Our performance not only exceeded expectations, it delivered compelling evidence that the roots of our long-term strategy have taken hold. Across all key metrics, we saw outperformance fueled by innovation, disciplined execution and leveraging our agile platform. Perhaps most importantly, we continue to demonstrate that our brands have significant runway for growth, expanding their reach into new categories, customers and geographies. At the core of everything we do is our mission, to deliver innovative solutions for the moments that matter. This could be on the lake, in the woods or at home on the patio. This mission is anchored in a clear and compelling vision, to reshape how consumers engage with and experience their favorite outdoor activities. Since our spin-off in 2020, we've been dedicated to building a focused, agile business that brings our mission and vision to life. We've done this by creating repeatable innovation, expanding distribution, elevating awareness of our brands, strengthening margins and laying the groundwork for long-term sustainable value even in the face of a dynamic external environment. We believe fiscal 2025 clearly demonstrated the result of that focus. We achieved net sales growth of over 10%, gross margin growth of 60 basis points, adjusted EBITDA growth of 81%, double-digit growth in our outdoor lifestyle category and double-digit growth in our traditional and international sales channels. Our performance this year is the direct result of our relentless commitment to innovation. By continually introducing differentiated IP-protected products that resonate with outdoor consumers, we have not only fortified the strength of our brands, but also deepened our partnerships with key retailers who seek instant turnkey access to a portfolio of brands that drive foot traffic and pull-through.…

Thanks, Brian. In fiscal 2025, we delivered net sales and profitability above our expectations and maintained a strong balance sheet, all while continuing to return capital to shareholders through our share repurchase program. We ended the year with several achievements and highlights. So let me walk you through the details. Net sales for the year were $222.3 million, an increase of 10.6% compared to fiscal 2024, driven by growth in every sales channel and category. Our traditional channel net sales grew by 18.1%, and our e-commerce net sales increased slightly compared to last year. As a reminder, our e-commerce channel includes direct-to-consumer sales from our own websites as well as sales by online retailers that do not have brick-and-mortar stores. Our direct-to-consumer net sales for fiscal '25 were $29.6 million compared to $29.1 million last year. Domestic net sales increased by almost 10%, while our international net sales grew 20% compared to fiscal 2024. Turning now to our sales categories. In our outdoor lifestyle category, which consists of products relating to hunting, fishing, outdoor cooking and rugged outdoor activities, net sales grew by 16.2%, driven mainly by sales in our BUBBA, MEAT! Your Maker and BOG brands. In our shooting sports category, which includes solutions for target shooting, aiming solutions, safe storage, cleaning and maintenance and personal protection, net sales grew by 3.8% compared to last year, driven mainly by sales in our Caldwell brand. It's worth noting that one of our long-term strategic goals is to grow our shooting sports business by expanding into more stable product categories, such as shotgun sports. We made great progress on that objective in fiscal 2025 with the launch of our Caldwell ClayCopter, which is getting great traction at retail. On a quarterly basis, net sales in Q4 came in well ahead of…

[Operator Instructions] And your first question today will come from Mark Smith with Lake Street Capital Markets.

Alex Sturnieks on the line for Mark Smith today. First one for me. You mentioned a little bit about the $8 million to $10 million of fiscal '26 demand that was pulled into Q4. Could you provide some more color on that? And then given that pull-forward into Q4, what else are you seeing early on in Q1 in terms of consumer discretionary spend?

Yes. Alex, this is Andy. I'll take part of this and then Brian can jump in, too. So yes, the $8 million to $10 million, again, we -- when we look back at Q4, our retailers, to the best of our knowledge, were kind of faced with future price increases from suppliers across the board. So many of our retailers were giving their buyers an allotment of open-to-buy dollars to invest in key brand inventory prior to those prices going up. So we benefited from that. So our -- if you take a look at kind of our workhorse brands, those were the brands that were in high demand, and we're seeing really good pull-through now at retail. So if you think BUBBA, Caldwell, BOG, those were the brands. And it's kind of a mixture of both in-line replans and some of the new products that Brian talked about.

Okay. And then the early Q1 trends for consumer discretionary spend?

Yes. So our...

Consumer, he said.

Oh, sorry.

You said for consumer discretionary spend?

Correct.

Yes. I'll start there. So the -- like we alluded to in the prepared remarks, our POS is very strong, and it's across the board. And so we're seeing a healthy trend that continued from last year into now this new fiscal year. So that's a great sort of underlying foundation for us. It's more the sort of, I'll call it, the bumpiness that's happening at the surface related to how retailers are trying to defend their inventory positions and kind of navigate their way through the policy changes. But overall, our products are clearly resonating with consumers and couldn't be happier about that.

That's helpful. And then next one for me. This quarter, it looks like traditional really outperformed. Can you help unpack what drove the strength in that channel? Was this more load-in related or something more structural?

You know what, it's a little bit of 2 things. So it is load in -- part of that is load-in related where traditionally, when we launch new products, traditional retailers actually do the best job of launching those products, whereas on e-commerce, think of like an Amazon, for example, so much of that buying behavior and those decisions are made via social proof, right? If it has a large number of reviews and it's got 5 stars, I'm more likely to buy it. And so traditionally, e-comm has just not done as good of a job of launching new products. So traditional usually takes the lead when it comes to some of the newer ones, especially some of the foundational ones we just launched. So I think it's just the nature of that dynamic for now, although I fully expect e-comm will catch up to that. And then what was the -- you had a second part of the question? Sorry, if I missed it.

No, you hit that one on the head there. And then just last one for me. Previously, you've mentioned there are some opportunities on M&A to bolster the outdoor lifestyle products. Just curious on your thoughts around the current M&A environment and your appetite there. And then also, are you looking at any other additional uses of capital?

Yes. Great question. We absolutely pride ourselves in having a clean balance sheet and capacity to go do some deals. We've been waiting very patiently. We didn't get caught up in the flurry that probably was very exciting to get caught up into a few years ago knowing that at some point, things would have to level out. And so we're in a great position to continue to look at acquisitions. We are seeing a pickup in volume, less so banker-led deals, more companies that we have facilitated a direct relationship with, who are just honestly, out of their skis. They're struggling with their supply chain side. They're struggling with maintaining shelf space. They're struggling with innovation. And I think there's a lot -- they see that there's a lot we can bring to the table there as an acquirer. So we actually have quite a few ongoing conversations currently. And a number of those would make nice tuck-in acquisitions for us at very, very attractive prices. So certainly, there's opportunity there. But again, like we always do, we don't go after everything. We want to be very cautious and make sure that 1 plus 1 equals 3 or more.

And your next question today will come from Matt Koranda with ROTH Capital.

Just wanted to make sure I understand the -- or can pinpoint the reason for the withdrawn guidance. So after the pull-forward in orders that you saw, did you actually see a pause in retail order flow in, call it, the late April, May, early June time frame? What does sort of order activity look like with your retail customers currently?

Matt, it's Brian. So that's pretty accurate. I would say the 3 weeks of orders towards the end of our fiscal year, those were orders that we had anticipated receiving in the first few months of Q1. So they really were accelerated into our Q4. With that said, Q1 was off to a slower start because those orders obviously took place just before that. With that said, the underlying POS trends, again, remain very, very strong. So as those 2 begin to converge, as retailers continue to see the sell-through of our products, Andy alluded to 1 large retailer just giving a hat tip to the Caldwell ClayCopter outselling their other clay throwers combined. So the strength is there. I think it's just going to take them kind of selling that through and then coming back. I think they're also -- just from their perspective, from the retailers, they're trying to, again, navigate this environment with their own balance sheets. And one of the key themes we've seen coming out of the destocking that occurred 2 years ago is, generally, they want to maintain lower levels of inventory. They don't want to get -- they want to have too high like they did before. And we're also seeing them shift their preference towards a fewer number of brands, but where they're seeing a lot of traction, especially where they bring in foot traffic. So that's where we believe we're very, very well positioned. We actually see it as a positive that we were -- our retailers came to us off the bat asking for these opportunities, which, by the way, came without any discounting and things like that, which is purely organic. So I'm not worried about it per se, but the -- certainly, in Q1, we started off a little bit slower just because of the differences in timing.

Okay. That helps clarify a little bit. Also curious, I guess, you alluded to it in your answer just now, but -- so POS has been strong and there's been a pause in sort of order activity, I guess, that maybe creates a little bit of an air pocket in the first quarter. Like what do your retail customers need to see before they come back to the well? Is it just a thinning out of inventory? And so as they cycle through stuff over a quarter or so, they'll come back to the well as long as POS looks normal. Do they need other things to be happening? Maybe just a little bit more on what you think drives them back for kind of the replenishment later in the fiscal year in '26?

Yes. I think they're trying to balance -- obviously, these retailers sell thousands and thousands of different products from different vendors, and they're trying to manage that overall portfolio. Again, I think it goes back to which of the brands and products that have strong sell-through. Those are going to take the priority. And then I think they also go down to the price, right? Am I seeing a significant increase in price here? Or can I get it close to where I could 3 or 6 months ago? And I think that's driving a lot of their repurchase behavior. I think that we're well positioned there to continue to capture that. But going back to the suspending guidance, it's -- what they've communicated to us is that, look, there's going to be some lumpiness ahead. As we continue to navigate this, not sure what's going to happen with the IEEPA tariffs. A lot of -- remember, too, a lot of these retailers have their own private label businesses, and they can range from anywhere from 5% of their total net sales to I've seen as high as 30% to 40% of their net sales. So they're also sourcing a lot of this product directly. And they, in some cases, have just limited supply chains and ability to move things. So they're trying to manage those pieces. But going back to AOB, where do we fit in with that? I think it's -- I mean it's possible we'll see some lumpiness, which just gives us a little bit less visibility. But overall, again, I'm encouraged by that underlying strength and what we're seeing with the consumer pull-through.

Okay. Maybe just one other one on the near-term sales commentary that you gave. I guess just so you level set everybody that's on the call, maybe if we think about first quarter in a normal environment, probably would have been kind of in line with the prior guidance in the mid-single-digit percentage growth range. If we just take that and then strip out sort of the $8 million to $10 million in pull- forward that we saw, is that directionally the right way to think about the first quarter as things stand?

Yes. I think that's -- directionally, you're right with that, Matt.

Okay. All right. I appreciate that. And then just maybe the last one is on tariffs and just kind of get a sense for if you're willing to talk about how much exposure you have within your cost of goods to China. How should we think about that in '25? Are we making any incremental sourcing decisions that move some of that away from China in '26 that would sort of materially change the percentage of your COGS coming from China?

Sure. So this is Brian again. So the way that we're thinking about the year is if you recall, we did build up our inventory position to -- in anticipation that there may be some moves, right? And we saw that on Liberation Day on April 2. And so we're in a much -- I think we're in a much better inventory position than others in our space, which we're also benefiting from because we have that inventory that retailers can purchase. And that's going to give us some breathing room out through the next few months. With that said, we're waiting to see what happens with July 9 in IEPA tariffs. Like I said, we have a playbook in place, vendors identified, many of whom we already work with, where we can move capacity very, very quickly. And so we have the ability to move. We have moved some of our products like Andy alluded to, but it really comes down to just what are the facts and circumstances we're presented with as we move forward and then controlling what we can control. But like Andy said, the impact of the tariffs, the increased tariffs really won't start hitting until the back half of this year for us, back half of the fiscal year. So from a full year kind of income statement perspective, there will be some impact, but we're going to do our best to try to mitigate even what impact there might be again, to taking price where we can. I think we're in a good spot there, bleeding off our good inventory that we have right now and then just being agile. Let's just -- let's get the products in the right places with the right quality. And ultimately, everything that we do is going to be through the long-term loans. We're not going to do anything in the short term that's going to jeopardize the long term.

This concludes our question-and-answer session. I would like to turn the conference back over to Mr. Brian Murphy for any closing remarks.

Thank you, operator. I want to thank our employees whose tireless commitment to innovation allows us to remain focused on executing our long-term vision. And thank you to everyone who joined us today. We look forward to speaking with you again next quarter. .

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.