EPS of $-0.54 decreased by 200% from previous year
Gross margin of 46.7%
Net income of -6.83M
"Innovation for us is more than new products. It’s a mindset that enabled us to drive stronger point of sale performance versus peers across several strategic product categories. We took share, strengthened our brand equity, and extended our long-term runway for growth." - Brian Daniel Murphy
American Outdoor Brands Inc (AOUT) QQ1 2026 Results: Margin Resilience in a Tariff-Driven, Volatile Retail Environment with Strategic Innovation
Executive Summary
American Outdoor Brands Inc reported a first quarter of fiscal 2026 (Q1’26) with a meaningful top-line decline but notable margin discipline and strategic investment activity. Net sales were $29.7 million, down 28.7% year over year, largely driven by retailer order timing (roughly $10 million accelerated into the prior quarter) and weakness in the e-commerce channel (down 35.2% YoY). When adjusting for the Q4 revenue acceleration, management indicated that Q1’26 would have declined ~5% YoY, with traditional channel sales up about 15% absent order-pull effects. The mix of new products remained robust, representing nearly 29% of net sales in Q1, underscoring the company’s ongoing product velocity and the channel-driven replenishment dynamics observed across retailers.
Despite the revenue compression, gross margin expanded by 130 basis points to 46.7%, supported by proactive margin management, product-origin diversification, pricing actions, and ongoing optimization of product velocity. GAAP operating expenses declined modestly to $20.7 million, while non-GAAP operating expenses were $18.2 million, reflecting disciplined cost control in a volume-down quarter. EBITDA for the quarter was a loss of $3.1 million and net income was a loss of $6.83 million ($0.54 per share on a fully diluted basis). The company ended Q1 with $17.8 million of cash and no debt per management commentary, though accompanying balance-sheet data shows total debt of $33.3 million and net debt of about $15.5 million, highlighting a notable discrepancy between reported debt metrics in filings and management’s debt-free assertion. Inventory rose by $21.1 million during the quarter, with a target inventory level of roughly $125 million for Q2–Q3 and about $120 million for Q4 to support the hunting/holiday season and tariff-related resilience.
Management signaled cautious near-term demand dynamics with an expected Q2 net sales decline of approximately 15% YoY, while maintaining an optimistic longer-term view anchored by POS strength, a growing subscription revenue stream, and strategic product initiatives including ScoreTracker Live (MLF ScoreTracker Live integration via Bubba app) launching in spring 2026. The leadership emphasized continued emphasis on innovation, retail partnerships, and cost discipline as levers to preserve gross margins and drive longer-term EBITDA contributions in the 25–30% range as the model matures. Conversely, macro tariff volatility, retailer ordering behavior, and international exposure remain key risk factors that could influence margin trajectory and demand visibility.
Key Performance Indicators
Revenue
29.70M
QoQ: -52.05% | YoY:-28.67%
Gross Profit
13.86M
46.66% margin
QoQ: -45.24% | YoY:-26.78%
Operating Income
-6.82M
QoQ: -615.53% | YoY:-164.92%
Net Income
-6.83M
QoQ: -588.41% | YoY:-188.75%
EPS
-0.54
QoQ: -575.00% | YoY:-200.00%
Revenue Trend
Margin Analysis
Key Insights
Q1’26 net sales: $29.7 million, down 28.7% YoY; down 52.05% QoQ. Management notes six-month net sales (Q4’25+Q1’26) up 4.2% versus the prior year, driven by consolidation of orders in the prior year and normalization after the tariff-driven pull-forward.
Traditional channel net sales: down 24.4% YoY; e-commerce: down 35.2% YoY. Without the Q4 acceleration, traditional channel would have been +15% YoY.
By category, shooting sports: -25.1% YoY; outdoor lifestyle: -31.6% YoY. Domestic sales were down ~25% YoY; international down 58.2% YoY (impacted by Canada/intl trade dynamics).
Gross margin: 46.7% in Q1’26, +130 bps YoY. EBITDA (GAAP) a loss of $3.1 million; EBITDA margin (EBITDA/Net sales) roughly -12.6% (EBITDARatio = -0.1257).
Revenue and Volume
- Q1’26 net sales: $29.7 million, down 28.7% YoY; down 52.05% QoQ. Management notes six-month net sales (Q4’25+Q1’26) up 4.2% versus the prior year, driven by consolidation of orders in the prior year and normalization after the tariff-driven pull-forward.
- Traditional channel net sales: down 24.4% YoY; e-commerce: down 35.2% YoY. Without the Q4 acceleration, traditional channel would have been +15% YoY.
- By category, shooting sports: -25.1% YoY; outdoor lifestyle: -31.6% YoY. Domestic sales were down ~25% YoY; international down 58.2% YoY (impacted by Canada/intl trade dynamics).
Margin and Profitability
- Gross margin: 46.7% in Q1’26, +130 bps YoY. EBITDA (GAAP) a loss of $3.1 million; EBITDA margin (EBITDA/Net sales) roughly -12.6% (EBITDARatio = -0.1257).
- Operating income: -$6.82 million; operating margin: -22.96%.
- Net income: -$6.83 million; net income margin: -22.99%; EPS (diluted): -$0.54.
- SG&A and R&D: GAAP operating expenses $20.7 million; non-GAAP operating expenses $18.2 million guidance excludes intangible amortization and stock comp.
Liquidity, Balance Sheet and Cash Flow
- Cash: $17.8 million; debt: $33.3 million; net debt: $15.5 million. Management characterized the balance sheet as strong and debt-free, but reported debt exists in the balance sheet data, signaling potential data or reporting inconsistency.
- Inventory: $125.8 million (up $21.1 million QoQ) to support seasonal build and tariff resilience; capex: $0.37 million; free cash flow: -$1.99 million.
- Shareholder activity: repurchased ~240k shares at an average price of $10.47; remaining buyback availability ≈ $4.6 million of a $10 million program.
Outlook and Guidance
- Near-term: Q2 expected net sales decline ~15% YoY; POS momentum remains a positive indicator, with management citing a disciplined ordering cadence by retailers.
- Medium-to-long term: ScoreTracker Live launch and ongoing new product pipeline to support recurring revenue and higher-margin mix; ongoing tariff mitigation and cost-control measures; no formal full-year guidance is provided, but management remains optimistic on long‑term EBITDA entributions of 25–30% and growth through brand expansion and new revenue streams.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
29.70M
-28.67%
-52.05%
Gross Profit
13.86M
-26.78%
-45.24%
Operating Income
-6.82M
-164.92%
-615.53%
Net Income
-6.83M
-188.75%
-588.41%
EPS
-0.54
-200.00%
-575.00%
Key Financial Ratios
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Key management insights from the QQ1’26 earnings call, grouped by themes:
- Strategy and Innovation: Murphy emphasized that innovation is a mindset, not just product launches, and cited the expansion of the Bubba/Major League Fishing partnership and the planned ScoreTracker Live program as catalysts for recurring revenue and broader engagement with anglers. He stated that new products represented nearly 29% of net sales in Q1 and highlighted the firm’s track record of “innovating while staying close to consumers” to sustain long-term growth.
- Quote: “Innovation for us is more than new products. It’s a mindset that enabled us to drive stronger point of sale performance... we took share, strengthened our brand equity, and extended our long-term runway for growth.”
- Margin and Cost Discipline: Fulmer highlighted margin resilience, noting gross margin of 46.7% and ongoing efforts to preserve margins through tariff-based origin shifts, cost-sharing with suppliers, pricing actions, and product redesigns. He stressed the long-term EBITDA target of 25–30% and the commitment to continue to feather in higher-margin products.
- Quote: “Gross margin was 46.7%, up 130 basis points compared to Q1 last year.”
- Tariffs and Supply Chain: The executives detailed proactive supply-chain moves, including moving some production away from China and migrating to more advantageous origins where cost and service levels justify the shift. They also described tariff dynamics and how pricing and product redesigns help offset tariff costs.
- Quote: “We’ve already shifted production to countries outside China... preserve product quality, protect margins, and maintain supply continuity.”
- Retail and Channel Dynamics: They described replenishment cycles that retail partners use to balance pricing, inventory, and cash flow, noting Q1’s net sales decline was driven by order timing rather than fundamental demand weakness. They also discussed the e-commerce channel’s weakness due to a major partner adjusting purchasing patterns to tariff impacts.
- Quote: “Retailers accelerated about $10 million in orders...иф” (paraphrased from call; exact phrasing in transcript references acceleration.)
- Product Portfolio and Brand Momentum: Murphy highlighted growth brands Caldwell, Bubba, BOG, Gorilla, and Meet Your Maker as being the “horse brands” with strong POS traction, while other categories performed relatively better-than-peers in their segments.
- Quote: “Our growth, brands that we’ve called our horse brands or growth brands have done very well… Caldwell, Bubba, Bog, Gorilla, meet your maker.”
- Outlook and Ambition: Management signaled a continued focus on balancing near-term volatility with long-term growth drivers such as POS performance and ScoreTracker Live, expecting continued demand visibility as inventory normalizes and retailer pricing strategies adapt.
- Quote: “We expect a continuation of a measured ordering cadence… as they balance inventories, optimize pricing, and align with evolving consumer buying patterns.”
Innovation for us is more than new products. It’s a mindset that enabled us to drive stronger point of sale performance versus peers across several strategic product categories. We took share, strengthened our brand equity, and extended our long-term runway for growth.
— Brian Daniel Murphy
Gross margin was 46.7%, up 130 basis points compared to Q1 last year. Our actions to preserve margins—pricing adjustments, product redesigns, and supplier concessions—are designed to sustain margins while we feather in higher‑margin products.
— H. Andrew Fulmer
Forward Guidance
Forward-looking view and assessment of near-term plans and risks:
- Near-term revenue trajectory: Management expects Q2 net sales to decline about 15% YoY, reflecting ongoing tariff uncertainty and retailer ordering patterns. This aligns with a broader industry backdrop where consumer demand is choppy and retailers are managing working capital amid evolving tariffs.
- Margin and cost management: Margin protection remains a priority. The company is pursuing tariff mitigation (origin diversification), supplier concessions, selective pricing by category, and the introduction of higher-margin products to feather in pricing. They anticipate EBITDA contribution of 25–30% over the long term as they scale new products and optimize the mix.
- Growth catalysts: ScoreTracker Live (MLF ScoreTracker Live) launches in Spring 2026 via Bubba app, expanding an integrated hardware/app model and subscription revenue. Other growth vectors include continued momentum in Bubba, Caldwell Claycopter, Gorilla, and Meet Your Maker, with a hunting/holiday season push anticipated.
- Balance sheet and capital allocation: The team highlighted a strong liquidity profile with a cash position of $17.8 million and ongoing share repurchases. They expect CapEx of $4–4.5 million for the year and a target inventory around $125 million in Q2–Q3 (rising season) before trimming to ~$120 million in Q4. Investors should monitor working capital dynamics and the pace of vendor concessions and tariff developments, which could materially influence near-term margins and cash flow.
- Key risks to monitor: Tariff policy volatility remains the principal near-term risk to cost of goods and pricing; retailer inventory normalization timelines will affect visibility; the e-commerce channel remains sensitive to large partner purchasing patterns; and international exposure (e.g., Canada) remains a potential swing factor for growth in select geographies.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
AOUT Focus
46.66%
N/A
N/A
N/A
CLAR
34.40%
-8.68%
-2.29%
-6.86%
JOUT
29.90%
-18.80%
-3.47%
-5.75%
ESCA
26.70%
6.58%
1.55%
20.06%
JAKK
34.40%
-3.32%
-1.02%
-28.86%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Near-term earnings visibility remains challenged by tariff-driven revenue lags and retailer ordering volatility, with Q2 revenue expected to decline ~15% YoY. However, margin discipline and a differentiated growth strategy support a constructive long-term outlook. The ScoreTracker Live initiative, expanding Bubba’s ecosystem, and ongoing new-product velocity provide potential accelerants to recurring revenue and higher-margin mix. The company’s balance-sheet strength and capital allocation (share repurchases and modest capex) bolster resilience amid macro uncertainty. Investors should monitor: (1) tariff developments and the effectiveness of margin levers (pricing, sourcing diversification, supplier negotiations), (2) the pace of retailer inventory normalization and POS trends, (3) progression of ScoreTracker Live adoption and subscriber penetration, and (4) cadence of new product introductions and potential M&A opportunities. Overall, the investment thesis rests on a stabilizing demand environment combined with a durable innovation engine and a path to improving EBITDA margins toward the 25–30% range as the platform scales.
Key Investment Factors
Growth Potential
Strong growth potential from core brands (Caldwell, Bubba, Gorilla, Meet Your Maker) and a widened product portfolio, including higher-margin “horse brands.” ScoreTracker Live launches in 2026 enabling recurring revenue via Bubba app and expansion of hardware/app integration; potential to accelerate margins through ongoing tariff mitigation and product redesigns. New product introductions and a scalable subscription component can enhance long-term revenue stability and cash flow generation.
Profitability Risk
Tariff volatility and ongoing macro uncertainty affecting consumer demand; near-term channel inventory volatility and retailer ordering patterns may suppress near-term growth; dependence on a few large e-commerce partners could amplify channel risk; discrepancies in reported debt versus management statements require attention for liquidity assessment; Canada/intl trade tensions and regulatory developments could impact international volumes.
Financial Position
Solid liquidity with cash around $17.8 million and a multi-year view toward a debt-free position per management commentary, though balance-sheet data shows total debt of $33.3 million and net debt of $15.5 million. Inventory elevated to support seasonality and tariff resilience (~$125 million target). The company repurchased ~$2.5 million of stock and maintains ~$4.6 million remaining on a $10 million buyback program. CapEx guidance of $4–4.5 million supports an asset-light model while sustaining product tooling and IP protection.
SWOT Analysis
Strengths
Strong gross margins (46.7% in Q1’26) vs peers in the sample, supporting profitability despite a material top-line decline
Brand momentum across growth brands (Caldwell, Bubba, Gorilla, Meet Your Maker); early success with new products (Claycopter) and expansion into subscription revenue (ScoreTracker Live potential
Cash position and liquidity: $17.8m cash, no debt per management statements, and a significant buyback program partially completed
Weaknesses
Significant YoY and QoQ revenue decline in Q1’26 driven by retailer order timing and tariff-related weakness
Heavy reliance on a major e-commerce partner whose purchasing patterns shifted (tariff-driven) causing channel volatility
Inventory buildup to support seasonality and tariff mitigation adds carrying costs and potential obsolescence risk
Opportunities
ScoreTracker Live launch in 2026 to drive recurring revenue and ecosystem lock-in
Expansion of Bubba/Major League Fishing collaboration; broader adoption of hardware/app integration continues to build higher-margin products
Opportunities to scale M&A or new brand launches in lower-risk categories with IP fit and lower integration complexity
Threats
Tariff policy volatility and ongoing regulatory changes that impact sourcing and pricing
Retail partner inventory management and macro consumer headwinds could prolong volume normalization
International exposure (e.g., Canada) and geopolitical risks affecting cross-border trade and demand
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