Executive Summary
- Q2 2025 net sales totaled $60.2 million, up 4% year over year, with international net sales rising ~15% to $3.4 million (roughly 6% of total). Gross margin expanded to 48.0%, a 230bp year-over-year improvement, driven by favorable inbound freight costs and the timing of promotions. EBITDA stood at $6.45 million on a GAAP basis, with non-GAAP/adjusted EBITDA reported by management at $7.5 million for the quarter. GAAP EPS was $0.24 and non-GAAP EPS was $0.37; weighted average diluted shares were ~13.1 million.
- Management articulated a robust innovation-driven strategy, highlighting a steady new product pipeline, revitalized brand merchandising, and cross-category innovation as a differentiating asset in a dynamic retail environment. Retail partner engagement was positive, with retailers showing early order indications and willingness to expand shelf space ahead of planned launches. The company also noted record October shipping volume from its Columbia, MO facility, underscoring improved logistics execution.
- Outlook reflects an accelerated growth trajectory into fiscal 2026 anchored by stronger inline product performance, continued distribution gains, and anticipated new product launches. Fiscal 2025 net sales were guided up to $205–$210 million, with gross margins seen near 45.0–45.5% for the full year and Q3 margins around 45%. Adjusted EBITDA guidance was raised to $13.5–$15.0 million (roughly 6.6%–7.1% of net sales). For fiscal 2026, net sales are guided to $220–$230 million (midpoint about 8.4% growth), with an implied contribution margin of roughly 30% on incremental net sales, absent tariff-related headwinds. These targets reflect the company’s asset-light model, balance-sheet flexibility, and ongoing capital investment in product tooling and store development.
Key Performance Indicators
QoQ: 219.27% | YoY:14 054.55%
QoQ: 231.54% | YoY:3 940.26%
QoQ: 233.33% | YoY:2 300.00%
Key Insights
Revenue: Q2 2025 revenue of $60.2M (+4% YoY; no QoQ data shown in call). Gross margin: 48.0% (+230 bps YoY; drivers include favorable inbound freight and promo timing). Operating income: $3.07M (GAAP) with an operating margin ~5.1%. EBITDA: $6.446M (GAAP); Adjusted EBITDA: $7.5M (quarter). Net income: $3.11M; Net income margin: ~5.2%. EPS (GAAP): $0.24; EPS (diluted): $0.24; Non-GAAP EPS: $0.37. Cash: $14.2M; Debt: management states no debt as of quarter end, with a stated plan to maintain an as...
Financial Highlights
Revenue: Q2 2025 revenue of $60.2M (+4% YoY; no QoQ data shown in call). Gross margin: 48.0% (+230 bps YoY; drivers include favorable inbound freight and promo timing). Operating income: $3.07M (GAAP) with an operating margin ~5.1%. EBITDA: $6.446M (GAAP); Adjusted EBITDA: $7.5M (quarter). Net income: $3.11M; Net income margin: ~5.2%. EPS (GAAP): $0.24; EPS (diluted): $0.24; Non-GAAP EPS: $0.37. Cash: $14.2M; Debt: management states no debt as of quarter end, with a stated plan to maintain an asset-light balance sheet. Share repurchases: ~$1.0M in Q2 (111k shares) under a refreshed $10M authorization. International sales: $3.4M, ~6% of total, up ~15% YoY. CapEx: $0.468M in Q2; full-year CapEx guidance $3.5–$4.5M. Inventory and AR dynamics: AR up ~+$17M sequentially; inventory up $4.9M in Q2 as the company staffs for the holiday season; expects inventory to normalize toward ~$110M by year-end 2025. Guidance: FY25 net sales $205–$210M; FY26 net sales $220–$230M; gross margins ~45.0–45.5% for FY25; Q3 gross margins ~45%.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
60.23M |
3.97% |
44.64% |
| Gross Profit |
28.91M |
9.12% |
52.74% |
| Operating Income |
3.07M |
14 054.55% |
219.27% |
| Net Income |
3.11M |
3 940.26% |
231.54% |
| EPS |
0.24 |
2 300.00% |
233.33% |
Key Financial Ratios
operatingProfitMargin
5.1%
operatingCashFlowPerShare
$-0.62
freeCashFlowPerShare
$-0.53
Management Commentary
- Strategy and Innovation: Brian Murphy emphasized the three forms of innovation advantage: a steady pipeline of new products, distinctive merchandising, and cross-category innovation, positioning AOUT as a turnkey partner for retailers. Quote: “Our innovation advantage comes in three forms; our consistent pipeline of new products, our distinctive merchandizing solutions, and our role as a cross-category innovation partner.” Significance: Framework for sustainable growth and retailer pull-through.
- Execution and Retail Momentum: The company highlighted record October shipping performance from the Columbia facility, enabled by lease expansion and vertical control of the Missouri operation. Quote: “highest ever shipping month in October from our Columbia, Missouri facility” and “retailers provided us with strong early order indications and commitments for expanded shelf space.” Significance: Demonstrates operational capability and retailer confidence, supporting the accelerated load-in thesis.
- Market Conditions: Shooting sports remained mixed with strength in shotgun-related products (Claymore family) offsetting softness in personal protection; international expansion (Canada) contributed to ~15% YoY growth in that region. Quote: “the shooting sports category tends to align with adjusted NICS background check results, which were up by about 1% for the same period.” Significance: Highlights category diversification benefits and exposure to broader consumer demand drivers.
- Capital Allocation and M&A: The company reaffirmed a three-pronged capital allocation policy: organic growth first, then M&A, then buybacks; also noted a slowdown in M&A activity in recent months with ongoing diligence for “the right vessel” for sustainable innovation. Quote: “Our capital allocation philosophy has remained unchanged... organic growth. M&A is our second priority... buyback.” Significance: Indicates disciplined capital management and strategic flexibility given an uncertain M&A backdrop.
- Tariffs and Currency/Policy Risk: Management discussed tariffs as an ongoing uncertain variable but stressed the ability to preserve margins via innovation-based pricing power and maintaining an agile, asset-light structure. Quote: “we’re not going to start making big changes to our business based on unknowns... focus on what we can control.” Significance: Frames risk management approach amidst policy shifts.
"Our second quarter performance surpassed our expectations, showcasing the strength of our strategy."
— Brian Murphy
"Net sales for Q2 were $60.2 million, a 4% increase over the $57.9 million in Q2 last year."
— Andrew Fulmer
Forward Guidance
- FY2025 guidance updated to Net Sales of $205–$210 million, implying mid-point growth of ~3.2% for the full year. Q3 growth expected around +5%, underpinned by load-ins and retailer velocity for upcoming product launches. Gross margins anticipated to be roughly 45% for Q3 and ~45.0–45.5% for the full year, with amortization of tariff and freight variances as a headwind in H2.
- FY2025 OpEx expected to increase modestly versus prior year due to higher variable selling and distribution costs from higher net sales; SHOT Show marketing/trade show spend contributes to Q3 OpEx elevation.
- FY2025 Adjusted EBITDA guided to $13.5–$15.0 million (6.6%–7.1% of net sales), representing ~46% year-over-year growth at the midpoint.
- FY2026 net sales guided to $220–$230 million, implying ~8.4% growth at the midpoint, with an indicative margin around 30% contribution on incremental net sales, assuming tariff environments and other macro factors stay within reasonable bounds.
- Key factors investors should monitor: (1) retailer load-in timing and shelf commitments, (2) progression of new product launches (Meat processing, Grilla outdoor kitchens, Caldwell shotgun sports innovations), (3) tariff/regulatory developments and potential supply chain realignment, (4) continued expansion into international markets and channel diversification, (5) execution of cost control and CapEx alignment with growth.
- Assessment: The guidance reflects a disciplined, visibility-driven outlook rooted in retailer confidence and a robust product pipeline. Achievability appears favorable given the cross-category demand drivers and the company’s asset-light model, but remains contingent on tariff dynamics and potential shifts in consumer discretionary spending. Investors should watch retailer line-load timing, gross margin trajectory in H2 given tariff/freight amortization, and the pace of modular product launches especially in Caldwell and Grilla styles.