American Outdoor Brands, Inc. (NASDAQ: AOUT) Q4 2025 Earnings | 6/27/2025

American Outdoor Brands (AOB) Q4 2025: Exceeding Expectations, Navigating Tariffs, and Strategic Evolution

American Outdoor Brands (AOB) reported a pivotal fiscal year 2025, exceeding expectations across key metrics. The company highlighted strong performance fueled by innovation and disciplined execution, with particular emphasis on its "asset-light" and agile business model. While proud of its achievements, AOB acknowledged evolving tariff landscapes and related uncertainties, leading to a suspension of its fiscal 2026 net sales guidance.

Q4 and Full-Year Fiscal 2025 Financial Highlights:

• Net Sales (Full Year): $222.3 million, an increase of 10.6% compared to FY24.

  • Q4 Net Sales: $61.9 million, almost 34% above the prior year quarter, significantly ahead of expectations due to $8-$10 million of accelerated orders pulled forward from FY26.

• Gross Margin (Full Year): Increased 60 basis points to 44.6%, in line with the long-term target in the mid-40s.

• Operating Expenses (Full Year GAAP): Decreased to $99.4 million (45% of net sales, down from 50%), reflecting strong operating leverage.

• Non-GAAP EPS (Full Year): $0.76, up from $0.32 in FY24.

• Adjusted EBITDA (Full Year): $17.7 million, up 80.8% over FY24.

• Balance Sheet: Ended the year with $23.4 million in cash and no debt, after repurchasing $3.8 million in common stock. Approximately $115 million in total available capital.

• Inventory: Ended at $104.7 million, expected to be around $100 million by end of FY26.

Strategic Evolution and "Win Now" Actions:

Since its 2020 spinoff, AOB has transformed into an innovation-driven company with expanded reach:

• Diversification:

  • Outdoor Lifestyle category grew to 57% of net sales (from 46% in FY20).

  • International sales grew to 6.5% of net sales (from 4% in FY20).

  • E-commerce grew to 38% of net sales (from 32% in FY20), with D2C sales representing over 13% (from ~3% in FY20).

• Innovation as a Driver: Sales from new products introduced after FY20 have a 5-year CAGR of over 40%, representing roughly 50% of FY25 net sales.

  • Highlighted new products: Bubba SFS Lite (Smart Fish Scale with gamification, expanding subscription model), Caldwell ClayCopter (revolutionary target system, gaining strong retail traction), and Grilla Pyro (first self-monitoring, pellet-fed, outdoor pizza oven).

  • Secured 170 new patents, growing its portfolio by over 65%.

• Retailer Confidence: Accelerated orders in late Q4 FY25 underscore retailers' confidence in AOB's innovation to drive store traffic and category growth. The company sees this as a positive sign, as these orders came without discounting.

• Asset-Light Model: Designed for agility and operating leverage, enabling adaptation to dynamic environments.

Outlook and Macro Factors:

• Fiscal 2026 Guidance Suspension: AOB is suspending its previously issued net sales guidance for FY26. This reflects:

  • Uncertain macro environment and evolving tariff policies.

  • Anticipated conservative retailer posture, focusing on optimizing current inventory levels built up in anticipation of price increases.

  • The $8-$10 million of orders pulled forward into Q4 FY25, which will have an "outsized impact" on Q1 FY26 net sales.

• Seasonality: Q1 is typically the lowest net sales quarter, with Q2 and Q3 being the highest. This pattern is expected to continue, though Q1 will be impacted by the pull-forward.

• Tariff Landscape:

  • Impacted by Section 301 China tariffs (7.5% or 25%), Section 232 steel/aluminum tariffs (50%, impacting grills), and IEPA tariffs (incremental 30% - 10% reciprocal + 20% fentanyl, impacting most China-sourced products not under Section 232).

  • Higher tariff costs are capitalized into inventory and will impact the P&L more significantly in Q3 and Q4 of FY26.

  • Proactively mitigating risks by identifying flexible sourcing solutions outside of China (e.g., Vietnam, Cambodia, Indonesia, Thailand) and implementing selective price adjustments. The asset-light model and IP ownership allow for timely production shifts (6-12 months).

• POS Trends: Underlying POS (Point of Sale) trends remain very strong, indicating continued consumer demand for AOB products. Retailers are trying to balance inventory levels and prioritize brands with strong sell-through and competitive pricing.

• Operating Expenses: Committed to disciplined cost management, but expects approximately $1 million in additional annual public company costs starting FY26 as it no longer qualifies as an emerging growth company.

• Russell Inclusion: Slated to join the Russell 3000 Index and Small Cap Russell 2000 Index effective June 30th, enhancing visibility within the investment community.

Capital Allocation & M&A:

• Maintains a clean balance sheet with capacity for M&A.

• Seeing a pickup in M&A volume, particularly from companies struggling with supply chain, shelf space, and innovation. AOB is actively engaging in conversations for potential "tuck-in acquisitions at very, very attractive prices," seeking deals where "one plus one equals three or more."