Welcome to the Share Series. I am Matt Koranda. I'm a Senior Research Analyst and Managing Director with Roth MKM. I cover the consumer growth space as a Research Analyst for the firm. Today, to present to us for the next 30 minutes, we've got American Outdoor Brands. The ticker is AOUT, AOUT. It's just over $100 million market cap company with about $200 million in revenue this year. And to present for us, we have Brian Murphy, the President and Chief Executive Officer of American Outdoor Brands. Brian, I wondered if maybe you could just kick us off to level set everybody, and provide a little bit of background on the company. Maybe you can just give us background on American Outdoor Brands, the genesis of the company, and then what brands you have and what segments that you operate in, in the outdoor space. Sure, yeah. Again, thanks for having me. So I think that a good way to understand American Outdoor Brands and where we came from is we spun out from our former parent company, Smith & Wesson, about 3.5 years ago, and at that time, it was really when COVID was just taking off. So a lot of people were, you know, spending time at home. They were going outside to try all kinds of new activities. And we participate in the outdoor industry, which comprises about 164 million-165 million people in the United States. It's a lot of people, and we saw a significant influx in the number of participants during that period, which is great for us because we operate in certain segments within the outdoor industry, namely, you know, fishing, hunting, camping, outdoor cooking, and shooting sports and activities like that. And the reason that we spun out, you know, 3.5 years ago from Smith & Wesson is, one, we don't make any firearms, we don't make ammunition, we don't make any of those types of products. We certainly support that industry with other products and accessories. It's a very large industry, but ultimately, we have a very different profile, so we're much more growth-oriented. You know, as Matt said, we're about $200 million in sales, and we have some very ambitious plans to double in size, along with that capability over the next 4-5 years. And a great way to think about us is we're a bet on innovation. You know, that's what we do best. That's how we've really organized our company to do that, and the reason is really simple. You know, if you or people that are listening have—you know, I'm sure have some activity they like to do outside, and they're passionate about it. People want the latest gear, and they want the latest technology to deepen their appreciation and involvement in that activity, and unfortunately, there are some big categories, product categories, that are underserved. We like to target those categories with our 21 brands in the categories that I mentioned and disrupt them. Really, again, we're a bet on innovation and that's really what leads us to be a growth company. Great. Thanks for that, Brian. I guess you've talked about the brands that you have being able to transcend their traditional and narrowly defined product categories. And I think you've called this historically, like permission to play. There aren't that many brands that sort of, you know, broaden out and achieve that goal, and I'm curious if maybe you could provide us some examples of success that you've seen where maybe you've taken a more narrowly defined product that either you purchased or spun up organically and then applied that to a broader category. I guess one of the examples for me that comes to mind is Bubba, but maybe use whatever example you'd like to in terms of kind of expanding your addressable market. Yeah, that's a great question. So, you know, just kind of industry backdrop. You know, when I first came in here and worked for other companies, we were looking to acquire brands, and before I came to AOB, what first struck me is just while it's a large industry, because there are so many, you know, different areas that you can play, a lot of times these brands would pop up, and it would really be a branded product, you know? And so, for example, some of our brands previously used to be called, like, Bubba Blade, the one that you referenced, Matt. Now we call it BUBBA, but it used to be Bubba Blade, and Bubba Blade was very focused on fillet knives for saltwater fishing. But that's, that's a pretty good indication of how the industry operates with this really long tail of these branded products. And so a lot of times, what companies will do is either top out because of that sort of limited size of that very narrowly defined product category, or they'll go out and acquire additional brands. But ultimately, what they're doing is just adding the number of brands and not really addressing what we saw was sort of a, an overlooked opportunity in the industry, which is, what if we looked at where these brands have permission to play, as you mentioned, and what if they're based on that permission to play earlier in their growth cycle? And so we began looking at our brands through that lens, and, you know, you mentioned fishing and BUBBA, which is a great one. When we purchased that brand, which, to give you some context for the size of that industry, in the United States, there are about 54 million anglers, 54 million people that fish. That's a big market. That's about twice as large as golfers. And when we looked at that, the business had 22 SKUs that were focused on saltwater. Saltwater anglers are about 14 million, very similar in size to the number of hunters in the United States. And we were making manual fillet knives, but we said: "Look, how can we take this brand and really kind of open it up, open up the aperture to go after a much bigger market, which is freshwater fishing?" Freshwater fishing is about 40 million people. And so that led us to basically go down the road and say: "What are the big categories that are asleep at the wheel within fishing, that a lot of people are using, but there's been no innovation?" Kind of go back to my earlier statement. So we've taken that brand from just manual fillet knives, and we've gone into first, you know, close adjacencies, so electric fillet knives. We now have the best-selling electric fillet knives on the market. We're raising ASPs, average selling prices, along with these product introductions, which is increasing the brand. And then we've gone into some other categories as well, like our most recent product, which is a fish scale. And you might be thinking, fish scale, that doesn't sound very sexy, and that's exactly why we went into it. There are a lot of people that fish with a fish scale. There are 30 million people in the U.S. that target just bass. A lot of times, in order to measure success, you use a scale. So what we've done is we've taken that idea and really introduced a high price point product, but that's tethered to an app that ultimately gamifies fishing. So taking a very, very different approach to that category and that activity for the consumer that really hasn't seen any innovation in decades. If you're familiar with Strava, we want to be the Strava of fishing, you know, and have that subscription service. Very sticky activity, and ultimately, you know, be, get one of those on every boat. Since then, we've become the official partner of Major League Fishing to be their scale. They're like the NBA of the fishing world. We've done that across other brands as well. BUBBA is just one example, but our goal is to look at where else can we take these brands. We would rather have fewer brands than more brands, and we want our brands to be complementary, so they're not stepping on each other's toes. But as a result of that, we're looking at okay, where can we go with these brands. Our pipeline, when I talk about doubling in size, there is an identified pipeline in place today that we're simply executing against. So that's, that's really the story, and that's how we approach it, and that's why we think that we're, we're very different from some of our peers in the space. Yeah. Great overview, Brian. Thanks. Maybe just, I wanna zoom out for a second, and then I wanna talk about sort of the, the goal to essentially double the revenue base over the next several years. But first, I wanted you to provide some context for people around COVID and sort of the tailwinds that, that sort of exemplified for your business, what it did, in terms of, you know, enabling you to grow, and then some of the headwinds as those tailwinds have reversed over the last couple of years. And maybe where are we, if you wanna opine on sort of what inning we're in, in terms of sort of the, the post-COVID hangover, if you will, in terms of demand for outdoor products. It seems like it's lasted a while here over the last, call it, you know, a year and a half, two years. So where do you think we are in terms of sort of, you know, the headwinds playing out, post-COVID? Sure. So, you know, as I'll talk about COVID, I think it's important to note that, you know, we have, again, 21 brands, and they cross over these different activities that I mentioned. Our brands tend to play on the higher end. So when I'm talking about BUBBA, for example, BUBBA. It's not a cheap product. You know, for example, on scales, you can go buy a scale at Cabela's or Bass Pro for $15. Our scale is $200. It's a very different price point. Now, that's not the case for all of our brands, but we tend to play in that sort of mid to high-level price point, because I think that's a, an important differentiating factor on the tail end here of where we stand. After all of these new participants, sort of the barriers came down, people were more willing to try new activities, so we saw an influx, millions of people trying, you know, different activities for the first time. Within shooting sports, for example, we had a tremendous increase in the number of new firearm owners, you know, and we service that consumer with all the gear that you would need if you go to the range or when you go to the range. And today, that consumer, you know, there were approximately 18 million or so people, new firearm owners. They bought their first firearm in the last three years, and that's the number one demographic that's going to the range today, which is a great sign. So there's a lot of stickiness within some of these categories. And like I said, we tend to play on the high price point. So, you know, for somebody who's looking to dabble in these activities, and let's say they were doing that during COVID, a lot of times they're trying to buy it at a lower price point to try it out. And then, if it sticks, they're eventually gonna continue to kind of step it up. They want to get more serious with their equipment. That's really where we play. That's where we hit our stride. And so even with inflation, if you add that as another dynamic in the whole, you know, mosaic of what's been happening in the last few years, is we've sort of seen a bifurcation of the consumer. The consumer that is no longer getting stimulus, you know, that has been hit hardest by inflation, that tends to play in that entry to mid-level price point, they're not purchasing as much. And whereas the person who has sort of moved up and they're a more avid user within our categories. They also tend to be more insulated, you know, from some of the inflation, have higher household income. We haven't seen as much of a change in demand. What has happened, though, is, and Matt, you know, I've spent a lot of time talking about this, and we've talked about our earnings calls, is at retail, there was a tremendous demand for those products in the outdoor space and many other categories. And then inflation began to rise, and ultimately, demand began to sort of taper off, where there was perceived demand softening. And then retailers went from having no inventory to having too much inventory. And so we had lower foot traffic, and the retailers took their time, you know, over the course of about a year to try to wind down those inventories, and during that period, they weren't replenishing as quickly. Now, the other thing that was happening during that period, over that three-year period or so, is it wasn't normal course in terms of how they were purchasing their products and bringing in new products. They were just trying to get any product. You could slap YETI on a two-by-four and sell it during that period of time. And so they're just now getting back to a normal cadence of going through line reviews, and they're trying to entice that consumer that maybe tried, you know, one of these activities for the first time, or rediscovered it, to get them to come back into the store and shop online. And the number one way to listen to any of their earnings calls, and it sounds like we've got a few coming up in the next few weeks, is they're talking about innovation. They're out with the old. They can finally see what's not performing, and they want to bring in what's innovative because they want to entice that consumer to come back in the store, and that's, that's where we play. That's, that's our strong suit. Matt, I want to make sure I addressed anything else there. Did I miss something? Yeah, no, I think you, you hit on all the high points. I was just gonna ask you sort of where you think we are in terms of that, that destock cycle, and how far, you know, how many innings deep are we into that sort of post-COVID sort of headwind playing out? It feels to me like we're in the latter stages of that, from what I've observed, but curious if you agree or disagree with that statement. Yeah, I would agree. We began to kinda going back to this, you know, depending on the retailer, you know, a winding down over about a year or so, and then because they were getting back into a normal line review process, they began making decisions last year to bringing in new product this year and really going through and cycling through and cycling out the old products, the ones that were underperforming. So we had some line of sight over the last year or so, what was gonna get placed and where we would start to see traction. So probably three quarters or so ago, we started seeing nice increases in our business, to that were also reflected nice sell-through of our existing product on shelves. We've seen the benefit there, and I think just speaks to the fact that innovation is where they're really focused right now. I think when you zoom out, you look at retail in general. I would say that most, in our conversations with our retailers, that doesn't come up anymore. There are very few, very few, that I think it still is a problem, and I think it's more isolated to product categories that they still need to wind down before that kind of frees up their open-to-buy dollars to make more, you know, purchases on a going forward basis. For us, we're just not really seeing that impact anymore. Yeah. Okay, great. So you mentioned innovation as kind of a key linchpin to the growth strategy over the next several years, and if I look at your long-term targets, I guess they would suggest, like, a high teens rate of growth. Can you just clarify for folks on the call maybe how much of that is organic versus M&A, you know, contemplated in that growth rate that you've highlighted over the next several years? And then maybe just for the organic growth piece of it, talk about the innovation strategy, the internal process for innovation. You guys have talked about a Dock and Unlock strategy and just cross-pollination between some of your brands. So just curious if you could maybe talk about the internal process for innovation and accelerating your top-line growth. Sure. And, and sorry, can you remind me of the first part of the question, Matt? Yeah, the- Yeah. First part of the question was just for the long-term targets. Got it. Okay, yeah. I guess it would suggest that you guys are gonna be growing at a high-teens rate of sales growth with the $400 million revenue target that you put out there for, you know, for the, you know, five-year out sort of plan. Is any of that inorganic, or is that all organic? Yeah. So on the targets that we've set out, it's based on that, that pipeline that I mentioned. So... And that's a pipeline that we've been executing against over the last, I'll call it, last 3-4 years is really when we began to see the fruits of the investments we've made, you know, prior to that. We call it our Dock and Unlock process. It's a, it's a real process that we go through with each of our brands to make sure that we understand what the positioning is, which ultimately sets into place the goalposts. Then, that then which our teams can go execute against, and really, we go out, we survey the landscape, we find these big categories that are underserved, and that's really where we, we try to infuse innovation in a way that gives us a, a beachhead. So if we see a new category we want to get into, we use IP with a new product to establish that beachhead. It gives us that protection and really relevance with those retailers and ultimately the consumer... that then allows us to kind of flank in behind it. And so we've got plenty of examples like that. But when you look at the capability, you know, the fact that we said, "Look, we want to double in size, get to $400 million in revenue," and I think we had set $70 million+ in EBITDA. Our business and the way that we've geared this model around this idea of Dock and Unlock in our pipeline, we're highly, highly leverageable. So, for every dollar or so of revenue, above $200 million in revenue, which is—we're right around $200 million today, we drop about 30%, 30 cents on every dollar down to EBITDA. So it's very, very leverageable, and there's not much required for us to continually add. We can really leverage that fixed base all the way up to $400 million. And then just giving some credibility behind that $400 million number, a few things. One, the consumer needs to continue to show up, so this is sort of based on what we know. The other thing is, it is I want to stress the word capability. I think it could be more, I think we could be more than $400 million. I think we could be a little under 400, but generally, we need to make sure that we have product and product categories that we've identified, and specifically to have IP where we can go take the shelf space, getting into new categories and ultimately new channels. And that's what gives us that comfort, right? The capability piece over the next 4-5 years. And then, you know, as we look at, you know, the innovation piece, which I just talked about a little bit, our process of Dock and Unlock, it reveals very clearly to our internal teams where kind of the bloodhound sniffs out those categories that are large, lots of users. So we spend a lot of time looking at participation rates. For example, like I said, there are 54 million anglers. 40 million of those are focused on freshwater. Like, that's an insane number of people, you know? I mean. And so what are all those people doing on a regular basis? And if it's a low price point product, great! Like, we'll look at that. And that's where we identified scales, for example, and we improved the ergonomics, we added gamification. Ultimately, you can go onto a lake, and you can compete against other people on the lake. You can compete against yourself from 2 weeks ago. You can. It gives you so much data and the ability to compete. It's, you know, could be the Topgolf of fishing, and has a nice subscription revenue component to it. So when you stack all of those up, it's called innovation stacking. It really supports that $400 million capability that I'm talking about. And also, we've, over the course of my career, I've looked at acquiring a lot of different companies. I've had the opportunity to go acquire some of those companies. And you look at the size of some of these brands, and it takes just a few product categories that can be $20 million, $40 million, $50 million in size, and we certainly have that within our business as well. Some big categories that have resulted from Dock and Unlock. It doesn't take a whole lot to get to $400 million. And then, you also asked about organic versus inorganic. We are acting, you know, acquisitive. We're looking at companies all the time. That 400 number is just based on our existing business, so that's purely organic. Anything we do to, on the acquisition side would be icing on the cake for us. Yeah. Okay, very clear. That's why, yeah, I wanted to hear you state that it was all organic, 'cause that was my understanding as well. On the M&A front, I guess, since we've got, like, a little less than 10 minutes here, I want to cover that, and then capital allocation. From an M&A standpoint, maybe you could walk us through some examples of acquisitions that you've made in the past, how you've essentially integrated those into your operating system, what success you've seen with them, how you've scaled those acquisitions over time. Maybe just give us some examples. I was thinking about Grilla as maybe a good one, but, yeah, take your pick in terms of what you'd like to discuss in terms of M&A. Yeah. So our business was really created off on M&A. So when we were owned by Smith & Wesson, Smith & Wesson was looking to diversify beyond firearms, and so they went out and acquired most of the brands that we have today. And then over the last, call it 4, you know, 4 years or so, we have done a few more acquisitions. We bought BUBBA, which was one of them. We bought Grilla, which you referenced. BUBBA is our fishing brand, Grilla is an outdoor cooking business. And then we also, when we talk about permission to play, we also look at, you know, if there's an area that we're not served, we're not serving today as a company, we can fill that, but we should be. We can either fill that with an acquisition or, you know, we'll even look at launching our own brand. So in addition to those acquisitions, we have launched our own brands before. One of them is MEAT! Your Maker, which is a meat processing company, and started out all direct to consumer and quickly grew from 0 to $8 million-$9 million+. And we've since taken that brand into retail, or starting to anyway, and it's been very successful. So when we're looking at acquisitions, it really comes down to what I just described, you know, what is going to be most complementary to the existing brands? And when we think about that, it's really about the consumer activity, right? Like, what are they doing? And a lot of people will focus on the product categories, and especially if you have a company that is big into manufacturing, they're very focused on the product category. And in many ways, it's the tail that wags the dog because they're focused on: How do I keep my factory, you know, focused and churning out widgets related to what it is that we're manufacturing? We try to be agnostic to that. So everything we do is designed in-house, and then we typically outsource the manufacturing of it. But we look at acquisitions in the same way: How can we find areas that we're not playing in today or that will be complementary? And then we think about the integration, to your question about integration, we think about it in the same way that we do organic growth. So kind of the clearinghouse for us is great. Checks the box, this is gonna be highly complementary, but we wanna make sure that it's gonna continue to add that, call it, 25%-30% EBITDA margin contribution. And if it's gonna provide that out of the gate, right, that's a, that makes a great acquisition for us. But we're also seeing opportunities where, you know, maybe it's a nice top-line business, it's growing, some great fundamentals, great consumer interest, but it's not very profitable. And so we'll look at that business and say: "Well, okay, if we had to make certain changes, the easier, the better for us, because we don't wanna distract ourselves." But oftentimes, it's just some simple tweaks within the supply chain, which we do very, very well. And then we have a wonderful facility in Columbia, Missouri, 632,000 sq ft, that we look to leverage, you know, this facility and gain some of the benefits of being centrally located and shipping to our major customers. So Grilla is a great example of that. We bought Grilla, we paid $27 million for that business. We've since entirely paid it off with cash, and... But our whole goal with Grilla was, we have this MEAT! Your Maker brand that we started in-house, all geared around meat processing. But there isn't a single company out there today that's looking at the consumer and seeing that, hey, the person that's doing their outdoor cooking is also becoming increasingly obsessed with knowing where their food comes from. So that was complementary for us, and then when we looked at the infrastructure, it used to be based in Holland, Michigan. We, we moved it. We moved it to Columbia, Missouri, and we were able to achieve that EBITDA margin contribution that I was, that I was mentioning. So we want our acquisitions to be as simple as possible, and also to, to leverage the, the operating model that we've put, we've put forward. And then once you put that into our process, right, if it's a new brand that we've acquired, we go through that same Dock and Unlock process, which then opens up the aperture. And so for Grilla, for example, which made mostly Pellet Grills, Gas Grills, we're getting now into some new categories. We just launched a Vertical Smoker that we can't keep in stock. It's a higher ASP, it's $1,000, but it's all part of an outdoor kitchen ecosystem that we're looking to build and leverage. And then we've got a lot of other really neat product launches planned even this year, but definitely think about it. Yeah. Okay. Super helpful overview. I guess since we're now running up against time, 4 minutes left here, Brian. Maybe I just wanted to ask you in closing, maybe just talk about why investors should care about American Outdoor Brands, and why you think the business is attractive. One other thing I wanted you to touch on as well is just, you know, one of the hallmarks of why I like the story is your focus on maintaining a really clean balance sheet and being very disciplined about cash flow generation, not getting over your skis in terms of leverage, even though there are maybe some attractive M&A opportunities out there. So just wanted you to also touch on sort of the strength of the balance sheet, if you could, in terms of net cash and no debt. But also just kinda wrap it up for us and discuss why sort of people should care here. Yeah. Yeah, I think, I think it's really simple. You know, you had a lot of interest in our categories and the consumer, you know, over the last three years. You know, there was tremendous. Go look at anybody in our space, YETI, you know, et cetera, and we had some nice run-ups. You know, there was tremendous demand supporting them. And I think with inflation and some other dynamics, there, the spotlight has turned, and consumer discretionary, and especially the outdoor space, is an overlooked neighborhood right now. I call it an overlooked neighborhood right now. And I think what people are missing is the tremendous increase in the number of participants, the size and scale of some of these categories, and then ultimately, the stickiness, you know. The fact that these consumers are obsessing over these categories and willing to spend a lot of money, especially on gear, that's gonna help them, you know, further the activities. And then this is where, going back to where I think we absolutely shine and where we have a differentiated strategy. We're not about, you know, leveraging the top line and you know, we don't have something like ammunition to sort of force over our retailers, nor do we want that. Our goal is to find these categories that are gonna be home runs, and take as many smart shots on goal that ultimately could make this a billion-dollar company, you know, with our existing brands, and so our next milestone is getting to $400 million. And I think that we're best set up of any company that I'm aware of in this space to go do that. And not only that, but we've also made significant investments in this business at a time when people were getting very, you know, acquisitive happy over the last couple of years, and high multiples and paying a lot. We were pretty conservative. So getting to the balance sheet question, we made one acquisition, it was Grilla, and it was because we had a very, very unique perspective on how to grow that business. We also liked that it was all direct to consumer. But ultimately, we wanted to sort of look at the market at the time, and then when, you know, multiples come down, that's when we want to be more acquisitive. And we wanna make sure that we've got cash, and we've got a war chest to go take advantage of those opportunities. So we were pretty conservative during that period of time, collecting cash and really looking at our own stock price, and seeing that it's undervalued, just given the nature of the neighborhood, is that we've been buying back our own shares. And we have no debt. As of our last filing, we had $16 million of cash, and we're on the hunt for acquisitions, smart acquisitions, but where, like I said, they can be highly accretive to EBITDA, and where we. We're not gonna overpay. So I think we've got a great team looking at the right opportunities. Most of our opportunities are proprietary, so we've a proprietary pipeline of M&A opportunities. I think coming out of this over the next 2-3 years, looking back, I think that the companies that are the most innovative and the ones that have thought outside the box, and that have the best retailer relationships, and also have some degree of control over their future when it comes to direct to consumer, which we haven't really touched on, but is a big part of our business, I think they're gonna be the winners. So when you look at the market today, where we stand relative to the opportunities in front of us and the traction we're already seeing, I just I would rather be on this team than any other team right now in the industry. I think that's an excellent place to end it, Brian, and appreciate all your thoughts. Thanks, everybody, for joining us on the Share Series.