The 22nd Annual C.L. King's Best Ideas Conference. This is Kevin Holder, analyst here at C.L. King. I'm very pleased to welcome the management team of American Outdoor Brands. Representing the company, we have Brian Murphy, President and Chief Executive Officer, Andy Fulmer, Chief Financial Officer, and Liz Sharp, Vice President of Investor Relations. The format for today will be Brian and Andrew running through a 15 to 20-minute presentation, giving an overview of American Outdoor Brands, and then with the remaining time in the 35-minute session, we will be doing some Q&A. For those in the audience, if you wish to ask a question, we ask that you use the Ask a Question box at the bottom of your screen to type in your question, which will then be sent to me. That will integrate them into the Q&A.
So with that, Brian, Andrew, and Liz, thank you for participating today, and I'll now turn over the floor to you.
Great. Thank you, Kevin. So I'm Brian Murphy, President and CEO, and as Kevin mentioned, we have Andy Fulmer, our Chief Financial Officer, and Liz Sharp, our VP of Investor Relations, on the call as well. So what I'd like to do is first move in the presentation to the front, if it will allow me to do that. And start by talking about the consumer. I think that I would suspect a lot of you are. If you're interested in any consumer products company, you know, this is a big area of focus right now. So, you know, what I'd like to do is just simply start by thinking about recently when you've been in a store, could be any type of product, but, you know, where you felt very overwhelmed.
You know, if you were looking at all of the different types of products, maybe similar price points, could have been in a grocery store, could be in a sporting goods store, and consumers are reporting more and more that they're just overwhelmed by choice. You know, there's just a lot of options, and as a result, many of them are just simply choosing to opt out and not purchase at all if it's not something that they need, so this gets to the core of who we are. We've developed a way to differentiate our brands and really stand out from the noise, and this is it, innovation.
And if you are listening to any of the retailer earnings calls like Academy or, you know, Dick's Sporting Goods, et cetera, you'll hear a common theme, which is, you know, to bring consumers back into stores right now, they're focused on newness, and they're focused on innovation. And innovation is pretty incredible, right? Consumers are willing to pay more for it, generally. They're more willing to experiment with new products, and just generally, overall, they prefer to purchase new products, especially when they align with their values. And there's an interesting point here, just innovation is really an accelerator. It, you know, companies that have focused on innovation have overall outperformed companies that don't, which seems to stand to reason. So that's who we are. We are an innovation company.
We are an innovation company that's focused in the outdoor enthusiast industry, which I'll talk about in just a moment. Ultimately, we believe that consumers in those markets are looking for what's new, and they want innovation. They want people to solve their problems. They have different pain points. We like to ask big questions like you can see here, you know, what if we could change how 54 million people fish? That's a lot of people. That's about twice as many people that fish than play golf, which is a surprising statistic for people who don't fish. We operate in two categories: Outdoor Lifestyle and Shooting Sports. You can see those on the left and right. We have about 20 brands, and they cover everything from land management and hunting.
We've got an extensive cutlery portfolio, meat processing and outdoor cooking, fishing, and then several activities on the shooting sports side, but mostly centered around target shooting and some personal protection. So we're a consumer products company. We're an innovation company, and so where do we choose to spend our time? We could choose all sorts of different activities, and there's plenty in the outdoor space, but we really focus in on those activities where the consumers check three boxes for us, where they're super passionate, which means that they're gonna be sticky. They can participate for a lifetime. You know, some activities like basketball or team sports, it might be more difficult to participate for a lifetime, so we want that to be the case, but they can. And lastly, where they're gear-rich in nature. So imagine something like swimming or cycling.
You know, the person who's gonna be engaging in those types of activities, while they might be able to do those for a lifetime, they're not necessarily gear-rich in nature. The consumer isn't always looking to add to their arsenal of different products. Whereas in outdoor cooking or in fishing or in hunting, et cetera, they check that box. Tons of opportunities to continue to introduce new gear to those consumers. So getting back to innovation, like what do we do? How do we do it? Our superpower is uncovering consumer pain points, and you can see an example of that on the right. This is a product that, if going to the range, you probably see, if you have gone to the range, a lineup of our products that are green. They're our Caldwell Lead Sled family.
And this is just one example, but we eliminate the ouch in this case. So when you're shooting at the range, and it can hurt, and it can impact your accuracy. And so this is a line of products that are meant to eliminate up to 95% of felt recoil, which is very unique in our space and has allowed us to really become a dominant player in that product category for the 40 million or so target shooters. But when looking to solve consumer problems, 'cause a lot of companies want to be innovative, but it's sometimes not so obvious.
One of the things that surprises people who get to know American Outdoor Brands is they might say: "Look, we understand this outdoor lifestyle side of your business, you know, hunt, shoot, outdoor cooking, et cetera, and then you have this shooting sports side. Well, how is it possible that these two sides can really collaborate in a way that's going to create more innovation? It doesn't seem like that would be the case." But it absolutely is the case. Most of our innovations, our most disruptive innovations, actually come from, I'll call it, both sides of the aisle, where we'll get an innovation insight in shooting sports. We'll develop something over there, and then we'll actually see an opportunity to deliver that and use part of that product on the other side.
And so this is the scale that I showed you a few slides ago. And, the best way to understand what this product does and how we've taken different technologies is, imagine yourself, you know, fishing along the bank of a river, and you don't have a boat, but you are one of the 30 million anglers that target just bass. And it's competitive. It's a sport fish, and you live to do this activity. You know, you work to live, and you love fishing. You love fishing with family and friends, and, but there's not a good way to do it at the same time.
If they're fishing on a different part of the lake or they're on a different lake, there's really been no technology to bridge these people together and also find a way for them to sort of track their progression as they get better and better as an angler. And so we've introduced a scale here that allows you to track everything. This is the Strava. What Strava is for running and for cycling, this is for fishing, and has quickly become a winner for us. So this resonates with the consumer. We just recently launched this product. It's already become the official scale of Major League Fishing, which, if you're not into fishing, is like becoming the official ball of the NBA, and it's already our one of our top-selling products. This is our number three best-selling product in this last quarter that we reported.
So this just speaks to the consumer. This resonates with them. They're going into stores to find innovation, and we're delivering. We're one of the few companies in our space, but that's what we do. But we also innovate in other areas. If we see a consumer problem, and we don't have a product today that can solve that problem, we're not afraid to start our own brands. So we've acquired some in the past, but we'll also start our own. So we started a meat processing business called MEAT! Your Maker which just last year did $14 million in sales. Started out all direct to consumer, but this was developed entirely in-house and was developed just a few years ago and is already one of our, a very successful brand for us that we're now taking into retail.
Like I said, consumers are responding to the innovation. It's starting to stack up. Each of these layers of this cake, it's really meant to give you the visual image of, you know, each year that we introduce innovation, it stacks on top of each other, and you can see that here. So we spun out of our former parent company in FY 2020, and products that were released in that year did about $20 million in sales on the far left there. Well, fast-forward, if you were to stack all of the innovations in each year, right, by vintage, you'd see that in FY 2024, $83 million of our roughly $200 million in revenue came from products that were released since FY 2020.
That's a tremendous growth for us, 40+% CAGR, and we'll get this a little bit later, but just given the choppiness with COVID, you know, there was a tremendous increase in sales for companies like ours, and then we saw a decrease, and now an increase again, at least for our company. So there's been a lot of choppiness with the consumer, with the macro environment, with retailers destocking, but this is a really nice chart to see that innovation is our growth engine, and this is our staircase that we're building as we step out of these choppy waters. It's also a way for us to grow going forward, right? It's our innovation engine.
It's our growth engine, and we don't reveal our pipeline here, but I can tell you it is the most extensive, and I'll use the word disruptive pipeline we've ever had since I've been at this company for the last six years. We've never been more excited about the potential and the size of some of these products. Innovation is also the key to unlocking growth potential with retailers. Like I said, if you've listened to any of their earnings calls recently, they're all saying largely the same thing, right? "We need to get people back into doors." They're seeing slower same-store sales growth, or they're seeing declines, and they need a reason to bring the consumers back into their stores.
And so this really forms the basis for our, we call it our four-pillar growth strategy, and it's pretty straightforward, right? Let's use innovation to gain market share on the bottom left. Let's use innovation to enter new product categories that we haven't been in historically. For example, we were in grills with our Grilla acquisition. But we're getting into some of these adjacent product categories like vertical smokers, which is a top seller for us. Three, enter new consumer markets, right? Who are the consumers that we are already kind of speaking to on some of our legacy products, but where with just a slight shift in some innovation, we can begin talking to a much larger market? So property owners is a big, a big focus of ours. And what does that do? It leads to expanded distribution.
So instead of just buying our products at a place like Bass Pro or Cabela's, Academy, now this opens the door to home and hardware stores, the Home Depots, the Lowe's, Ace Hardwares of the world, who are also looking for what's new. And as they look to become more one-stop shops, consumers are expecting these types of products to be in those stores, which benefits us. And we're also. You can see sometimes companies will acquire, you know, serial acquirers, or they'll build out their infrastructure, and they'll take on manufacturing facilities, et cetera. That's not what we want to do. We've been very disciplined here, and actually, we've sought to simplify our business to become as asset light as possible.
And really, what you'll see when Andy talks about the financials is it gives us tremendous leverage ability, so financial leverage. And so what does it mean to be intentionally asset light? Well, we've got a small footprint. We have just a few offices. We have fewer than 300 employees, and we want to keep it that way. We design all the products ourselves. We outsource everything else. We don't manufacture anything. We do some light assembly, but that's it. You know, very simple but effective supply chain and low CapEx needs. You know, roughly 2% of net sales spent on CapEx. So at the bottom here, you can see we got to focus on innovation, and that is our core competency. And before I hand it off to Andy, I think this is just a good slide.
You know, when we're talking to newer investors, you know, so at the end, sometimes they'll say, "Look, you guys are small. You know, you're $200 million. You know, back when we were having these conversations initially, you're under $200 million in net sales. And understand you're larger for a company in the outdoor space, but still, it's $200 million. You know, what type of leverage ability are we going to see from a business like yours, and what do you really think you can go do organically? I get you guys are going to be acquisitive, but what can you do organically?" And so if you look at that pipeline that we have in place with that wave we had, we have a roadmap in place today, which is very rare for companies like ours.
We have a five-plus year product pipeline roadmap, where we're targeting those four pillars I discussed, to double the size of our business organically. And then on top of that, as Andy will show you, we've got a flexible balance sheet for us to go and add acquisitions that are going to be highly accretive to us and highly accretive to EBITDA, so that's our plan, and you'll see this, some of these new products coming out over the next year that are incredibly exciting, but Andy, do you mind touching on our leverage ability and balance sheet?
Yeah. Thanks, Brian. So as Brian talked about, you know, being asset light, we have really designed our operating model to be very accretive. So what you see on this slide is kind of a historical snapshot of both net sales and profitability, adjusted EBITDA. And really leveraging our infrastructure and fixed cost, you can see that we expect roughly 30% of EBITDA's contribution when we have sales above $200 million. So how do we have, you know, confidence in that? If you look back to fiscal 2021, the roughly, you know, 100+ million dollar increase over fiscal 2020, we're able to really put a significant amount of that, those revenues to the bottom line in adjusted EBITDA.
So yeah, so we're very confident as we grow going forward, that we'll be able to get that 30% Adjusted EBITDA's contribution. Then on the balance sheet, so we've built a really rock-solid balance sheet here, and it allows us to be flexible with our capital allocation priorities. So as of July 31st, which is our first quarter end, where our fiscal year- end is April 30th, we had $23.5 million of cash on hand and no debt. We haven't had debt in just over a year or so. And really, what that balance sheet allows us to do is focus on our three capital allocation priorities, and these are in order for us, order of importance. So the first is fueling organic growth.
You know, we believe that our cash from operations will allow us to keep investing in the CapEx, the 2% that Brian showed before, as well as investments in R&D and marketing programs and sales programs. Number two is M&A, really smart acquisitions. So again, that balance sheet allows us. You know, we have plenty of liquidity with our line of credit to do smart acquisitions, ideally, kind of tuck-in acquisitions that will allow us to leverage our infrastructure investments even more. And then third, in the absence of attractive M&A, we're going to continue to buy our stock back. You know, right now, I think the prices are attractive to do so. We have an active program right now.
And you know, we're gonna be opportunistic when we believe the share price is ripe for buying stock back.
One note on this, too. I think we can't oversell this enough. There are lots of companies in our space, I guess even across consumer in general, that don't have a picture that looks like this. I think that there are elements that are keeping them up at night, and for us, we've been very disciplined when looking at acquisitions. We've been very disciplined in where we deploy capital for our organic growth and making sure that we have the infrastructure in place to grow. That's not on this slide, but it is absolutely the case. We've invested previously to make sure that we've got a facility and facilities that can support $400 million plus in revenue, and all of that is in place.
No, no need for a new ERP system, you know, there's nothing kind of lurking behind the corner that we need to invest in. This really is, and people that have visited our office here would attest, this is an incredibly clean, simple company that's focused on innovation. So I love this slide. And then, just lastly here, you know, look, you know, as we're talking to different investors, and they're thinking about investing in American Outdoor Brands, I say this, you know, owning a stake in AOB is simply owning a stake in innovation. It's what we do. It's what we're gonna continue to do. Again, it's our strong belief, and we're hearing it from retailers and from consumers, that that is what they want, and that is what they're willing to spend money on.
And in this environment, we're very well-placed to be that service provider to provide those new products. So, we've got some other slides here, Kevin, but I think this might be a good point to turn it back to you for some Q&A.
Perfect. Thank you, Brian and Andy. That's a great overview of the business, a lot of insights there. Just to remind the audience, if you do have a question, please type it into the Ask a Question box, and I'll incorporate it into the Q&A here. But I guess, Brian, to start off, since the spin-off from Smith & Wesson, how have you as CEO transformed the business, and what were some of your initial goals, and what has your progress been on achieving those goals?
Yeah, so great, great question. You have to rewind, and when we were part of a bigger company, we were competing for resources. You know, we've always tended to be more entrepreneurial. We've always tended to be more acquisitive, and we were competing for resources with a larger division at the time, which was Smith & Wesson. And so when we spun out, that was really the main thing, right? Let's establish our identity. Let's make sure that we are fully rallying around what we know to be our core competency, which is innovation.
And really, the first few years, we're not even far from that, but the first few years were answering the question: How do we make sure that we put ourselves in a position where we have sustainable pipeline of new products that are actually disruptive. That word gets thrown around a lot, but actually disruptive, and where we have the ability to outgrow the industry, our peers, by just simply executing on that pipeline, and then the infrastructure in place to be able to support that? Andy and I, you know, obviously, Andy comes from a finance background. That's mine as well. I used to be an investment banker.
But when we started putting this together, we said, "How can we gear this thing?" Let's gear the model up front instead of trying to figure it out on the back end. How do we gear this business so that it is highly accretive, and where we don't have to continue to invest in this business with each additional dollar of revenue? And we are. That's where we're at, right? So that was the biggest thing coming out of it, and I believe we've made the right investments. We're on the right platforms. We've got all the right people, the pipeline to make to now harvest, you know, those investments. And then, I think, you know, Kevin, you said on the back end, you know, what were.
I think you said, what were some of the biggest sort of goals, and then how, how we've made progress against those goals. Is that correct?
Yeah.
Yeah, so our biggest goals, outside of just making sure that we're set up to support the growth, is also to tell the story the right way. You know, I think that. And it's not just with investors, it's with retailers. Because as we were separating and standing on our own, you know, they really wanted to understand, like, "How are you gonna be different? We've seen some great products come out from you in the past. The brands are really strong, but are we gonna see, you know, what you've said?" You know, which is that we're gonna be this innovation engine. And so that was one of our biggest goals, and it has come true. You know, we've got a slide in here. I'll just speak to it quickly.
If you look at the two sides of our business, of outdoor lifestyle and shooting sports, pre-pandemic on the far left, TTM on the far right, we've grown significantly in outdoor lifestyle, and we expect that that will continue. We said we believe that outdoor lifestyle will be roughly two-thirds of our business in the near term, or, you know, call it four to five years. Shooting sports would be the remainder. But what you can't see in the shooting sports, 'cause it looks like it's flat is a higher percentage of that business in FY 2020 was related to personal protection. And if you know anything about personal protection, and around that time was COVID. COVID was really beginning to take off, and the unfortunate events around George Floyd were. There was a tremendous interest in personal protection, and that has shifted.
So if you look at our TTM period, a good portion of that $90 million is strong, stable parts of the shooting sports industry, like target shooting, hearing and eye protection, and shooting rests. So we're a larger business today. We have a better mix than we did when we spun out, and especially in shooting sports, that $90 million is a solid, stable, you know, largely stable $90 million. So those were the goals. How can we be more stable? How can we set ourselves up for success and prove out the innovation engine? And we believe we've done that, and we're on our way.
Thanks for that, Brian. That's great. So my next question is, you've talked about your brands being able to transcend their traditional narrowly defined product categories, and American Outdoor Brands has been successful at this. Can you tell us why, and maybe give us an example or two?
Yeah, sorry, transcending different categories, like the brands?
Yeah, so different product categories. So your brands being able to transcend those narrowly defined product categories.
Yeah, great question, Kevin. And you bring up a great point, and something that if people are jumping in to understand the outdoor space a little bit better is they will spend a lot of time trying to understand it. And what they'll quickly, you know, find is it's a very fragmented market with lots of brands, and I call them product-oriented brands that are. Go back to this page here. There we go. That's just it. Like, they're focused on one product category, and so that their upside is largely limited. And so what do a lot of companies do is they go acquire all of these little brands, and pretty soon you've got this portfolio of brands.
There are some that have over sixty brands, and they each do something very different. But the problem with that is it's very, very challenging to manage a portfolio that's that large. And also, the brands are relegated to those product categories and are easily displaced by somebody coming in with a better product. And so when we looked at our portfolio, we said: "Where do our brands have permission to play? And let's go execute where we believe they have permission to play." So, for example, with, I'll take Bubba. You can see here, Bubba, on the fishing side, bottom left-hand corner. That used to be called Bubba Blade, and Bubba Blade, when we bought it, was literally twenty-two SKUs, and they were manual fillet knives. You just, like, fillet, you know, largely saltwater fish.
And most companies would just keep it a manual fillet knife brand. But what we saw was a DNA of a brand that could play in a much, you know, wider universe, and especially wanting to get it into freshwater fishing. Freshwater fishing is huge. It's for, you know, 40 million people target, you know, freshwater fishing, and the whole market is roughly 54 million. And so but what do we do? We take the DNA within each of these brands, and we say, "Where do these brands have permission to play? And specifically, what are the activities that are most attractive, that fit the things that I had mentioned earlier?
And then where is there just an underserved consumer in those activities?" And that's how we choose to focus, you know, where our brands play, whether it's the Smart Fish Scale, which got us into freshwater fishing with Bubba, or it's Grilla getting into vertical smokers. We've got some other really cool categories later this year, et cetera. So it's all about permission to play and ultimately, where's the biggest bang for our buck? Where is the consumer hurting most in these categories?
Yeah, that makes sense. Thank you for that. I guess that's a good way to transition into the organic growth part of your capital allocation strategy that's driven by innovation. So maybe talk about your internal process of relative innovation, specifically Dock and Unlock, and then maybe one or two examples. I think you touched on Bubba, but think that would be helpful.
Yeah. Yeah, so what we do is we take our brand. This is taking it behind the counter a little bit, but, you know, how do we create this sort of perpetual engine for innovation? It is after we have defined what the brand position is. Take this screen, for example. You can see Caldwell. This product down below is one of the legacy products from Caldwell. Caldwell, we said, "Okay, what's the brand positioning?" And we decided that it's, we eliminate the variables that make you miss, okay? So when you go to the range, you know, the over 40 million people go to the range each year. Is you want to hit the target. And what are the things that are gonna help you eliminate the distractions and help you hit the target?
It's gonna be hearing protection, eye protection, you know, a shooting rest like this to help stabilize your rifle if you're using one, and make sure that you're dialed in with your scope. et cetera, and so we will define what that universe looks like, those product categories that would fill those needs, in this case, eliminate the variables that make you miss, and then we'll go through and start picking out, you know, what are the, what are the biggest pain points for that consumer that we can help address? One of the other ones we came up with in Caldwell, which we had a picture of up here, is shooting clays. So lots of people like to go shoot clays, and but the problem with that is you have to haul a clay thrower, and you have to haul a car battery with it.
And a car battery can, you know, weigh anywhere from 50 to 75 pounds, and it's not cheap, you know, $150 to $200. And then the clay thrower itself, just to throw the clays, is, you know, 50 to 75 pounds and, you know, up to $400. So it's not only costly, but it's a pain in the butt to bring those things out and go enjoy that activity. But because Caldwell helps eliminate the variables that make you miss, we said, "Look, the same should be true within shotgun sports.
What if we created a clay thrower that's all mechanical, performs just as well, if not better, than a battery-operated clay thrower, and only weighs 30 pounds, 30, 35 pounds, and you can fit it under your arm and carry it, you know, out to the field?" So those are the types of things that we look at to say, you know, "Where's this complete unmet need, and how can we go solve that problem using this?" So that would be what we call Dock and Unlock, right? We dock it, the brand, into our brand lanes, and then our teams, because they're focused on activities, they go to town and say, you know, basically like bloodhounds, "Where's the pain?
You know, we gotta find the pain," and they report back and say, "Look, we get the biggest, you know, juice for the squeeze over here than if we did this one over here.
Thank you for that. I guess turning to new product launches, so about 23% of your sales in the first quarter were from new product launches, I believe. So do you expect that that trend on slide 16, I believe it was, to continue, where that contribution of revenue from new products will increase?
So the best way to think about it is, like I said, kind of like the staircase that's coming out of the choppiness, you know, that all consumer product companies are faced with right now. And we truly mean this, that this is our growth engine. So we do expect that innovation like this will continue to stack. You know, whether it's, if it's a 40% CAGR, I'll be overjoyed. I mean, that's, that's tremendous progress. And certainly, that's a great goal to have. But you can see, as you extrapolate this out, how $400 million in revenue is achievable. It won't be easy, but it is achievable. And so, yes, to a degree, we do expect the stacking to continue.
The reason why, and if we can see, like, products introduced in FY 2024 is lower than the other years, the other vintages, is because if you recall, retailers were destocking their inventory levels across the board, and so they were way more promotional to move through that inventory overhang. And so we said publicly, "Look, we're gonna hold off a little bit, and we're gonna move some of those product launches in FY 2024 towards the back half and into FY 2025." So, you'll probably see a lot more new product launches in FY 2025 to 2026 than you would've seen here in FY 2024, but it will continue a similar path. That's what we would expect.
Perfect. Thank you for that. We got about a minute left here, so Brian, to finish up, what makes American Outdoor Brands attractive to the investors here, to the average investor or is there anything that we didn't touch on that you would like to add?
Yeah, it's that's the big question, right? And I think that you had a tremendous spotlight over the outdoor space during COVID because it's everybody was jumping in and doing things outside and had stimulus money, and then the focus has shifted outside of that. You look at our peers in this space, and they're all trading at low levels. You take that, plus the fact that the consumer's under pressure, and I can see how it's tough to see where am I gonna spend my time? Which companies am I going to really get behind? I go back to obviously, innovation.
Probably that's gonna be my answer, but I think you'd be hard-pressed to find another company in our space that's publicly traded right now, or another consumer products company, with the exception of perhaps, SharkNinja, which is a consumer products company. We share very similar thoughts around innovation and growth. And so I think you have the opportunity to look at a company that is trading at some low levels relative to historicals, still relatively new, no large investments that are looming, strong balance sheet that is truly geared to continue to grow this thing. And I can't think of many other companies out there that have the same dynamics.
Thank you for that, Brian, and thank you, Brian, Andy, and Liz, for joining us today. We appreciate your participation, and thank you to the audience members for joining as well. Have a great rest of your day.
Yep. Thank you, Kevin.
Thank you.
Thank you, everybody.