Thank you for standing by, and welcome to the American Outdoor Brands Inc. meeting. I will now turn the call over to Barry Monheit.
The annual meeting of stockholders of American Outdoor Brands will please come to order. I am Barry Monheit, Chairman of the Board of Directors of American Outdoor Brands Inc., and as such, will act as chairman of this meeting. Seth Christensen, our Managing Attorney, will act as Recording Secretary of this meeting. Also attending with us here today are Brian Murphy, our President and Chief Executive Officer, Andrew Fulmer, our Executive Vice President and Chief Financial Officer, and Treasurer and Secretary, and Liz Sharp, our Vice President of Investor Relations. Representatives of Grant Thornton LLP, our independent auditor, are available at this meeting as well. Our agenda that outlines the order of business for this meeting and the rules of conduct for this meeting have been made available. Please note that use of any recording device or similar equipment by anyone attending this meeting is strictly prohibited.
I think it best that we proceed with the formal business matters to come before this meeting as set forth in the proxy materials previously furnished to stockholders. After the formal meeting is adjourned, Brian Murphy, our President and Chief Executive Officer, will make a few remarks, after which we will address stockholder questions. Though we may not be able to answer every single question, we will do our best to provide a response to as many questions as possible. I will now call on Andy Fulmer to report as to the mailing of the proxy materials and the notice of this meeting.
Mr. Chairman, an affidavit of distribution of written notice of this annual meeting has been prepared by Broadridge Financial Solutions Inc., the company's mailing agent. The affidavit states that the notice of meeting and accompanying proxy statement were duly mailed and deposited with the U.S. Post Office commencing on August 14th, 2026, to all stockholders of record at the close of business on August 3rd, 2026, the date fixed by the board of directors as the record date for stockholders entitled to vote at this meeting. The affidavit will be filed as part of the record of this meeting.
As established by the board of directors and as stated in the notice of this meeting, only stockholders of record of the company's common stock on August 3rd, 2026, may vote at this meeting. At this time, I appoint Kristi Polli of American Election Services LLC, as the Inspector and Teller of Election. I now request that she canvass the number of shares of common stock of the company represented at this meeting, either present, online, or by proxy, to determine the presence of a quorum. After we have voted on all of the matters to come before the stockholders, the inspector of teller of elections will report the preliminary results of each vote.
Chairman, we have so far counted a majority of the outstanding shares of common stock of the company present at the meeting, either online or by proxy and eligible to vote at this meeting. I will continue to be available during the meeting to count additional shares of common stock if more stockholders or proxies join them.
Based on the report of the Inspector and Teller of Election, I declare that a quorum is present at this meeting, and as such, the annual meeting of the stockholders of the company is called to order. At this time, we will proceed to vote on the matters properly presented before the stockholders of the company, as described in more detail in the proxy statement. The polls are now open. Any stockholder who has not yet voted or who wishes to change their vote may do so by clicking on the voting button on the web portal and following the instructions there. There are a total of five items on the agenda. The first order of business is the election of seven directors to serve until the 2027 annual meeting of stockholders and until their successors are elected and qualified.
The nominees for election as set forth in the proxy statement are Barry M. Monheit, Bradley T. Favreau, Mary E. Gallagher, Gregory J. Gluchowski, Kevin D. Leary, Luis G. Marconi, and Brian Murphy. The board of directors recommends that stockholders vote in favor of each of the nominees. The second order of business is the proposal to ratify the appointment of Grant Thornton LLP as independent registered public accountant of the company for the fiscal year ending April 30, 2027. The audit committee of the board of directors has appointed Grant Thornton LLP to audit the consolidated financial statements of the company for the fiscal year ending April 30, 2027, and the board of directors recommends that stockholders vote in favor of the ratification of this appointment.
The third order of business is the proposal to approve a non-binding advisory basis, the compensation paid to the company's named executives for the fiscal year 2026, as disclosed in the proxy statement, which we refer to as the say-on-pay vote. The board of directors recommends that stockholders vote in favor of the approval. The fourth order of business is the proposal to approve, on a non-binding advisory basis, the frequency of future say-on-pay votes. The board of directors recommends that stockholders vote in favor of the option of one year on the frequency of future say-on-pay votes. The fifth item on the agenda regarding the transaction of such other business as may properly come before the annual meeting or any adjournment or postponement thereof has been omitted because no other business has been properly brought before the annual meeting. We will now entertain any questions related to these matters.
Please note that we will only address specific questions related to these matters properly before the stockholders of the company, as described in more detail in the proxy statement. Now that everyone has had the opportunity to vote, the polls with respect to these matters are closed. At this time, I will ask for the report of the Inspector and Teller of Election on the preliminary voting results of the stockholders of the company.
Mr. Chair, the preliminary vote report shows that each of the seven nominated directors received a majority of the votes cast. The preliminary vote report also shows that the proposal for the ratification of the appointment of Grant Thornton LLP has been approved. The preliminary vote report also shows that the proposal to approve, on a non-binding advisory basis, the compensation paid to the company's named executive officers for fiscal year 2026, as disclosed in the proxy statement, has been approved. Lastly, the preliminary vote report shows that the proposal to approve, on a non-binding advisory basis, the frequency of one year for future say-on-pay votes has been approved. The company will be reporting the final vote results in a current report on Form 8-K to be filed with the Securities and Exchange Commission within four business days.
Thank you, Ms. Polli. As there is no further business to come before the meeting, I declare the annual meeting of the stockholders of American Outdoor Brands Inc., to be adjourned. Now I'll turn the call over to Liz Sharp, Vice President of Investor Relations. Liz?
Thank you, Barry. Brian Murphy, our President and CEO, will deliver some brief remarks, and we'll take any questions. Before Brian speaks with you, I'd like to remind you that what we say today may contain forward-looking statements. Forward-looking statements include statements regarding our expectations, intentions, beliefs, projections, and other similar words regarding the future. Such forward-looking statements represent our current judgments about the future and are subject to various risks and uncertainties. Forward-looking statements and the various risks and uncertainties to which they are subject are detailed in our securities filings, including our annual report on Form 10-K for the fiscal year ended April 30, 2026. Also, if you have questions for us on today's call, please remember to enter them online now. We'll begin with a few questions that we've received in advance of the meeting.
After which, we will take stockholder questions that are being entered today on the web portal. Please note, we'll attempt to answer as many questions as time allows, but we will only address questions related to the business of the meeting. Out of consideration for others, please limit yourself to one question. With that, I'll turn it over to Brian.
Thanks, Liz, and good afternoon, and thank you for joining us. Today's meeting formally looks back at fiscal 2026. Before I do that, I want to start with where American Outdoor Brands is today. We entered fiscal 2027 from a position of strength, and after recently reporting our first quarter results, we're off to a great start to the year. Q1 net sales increased 25% to $37.3 million. Even after adjusting for the approximately $6 million of orders that shifted into the prior year, sales grew approximately 4%. Consumer demand also remained healthy with our sixth consecutive quarter of positive year-over-year POS growth and new products representing more than 36% of sales. Those results are important not simply because we had a strong quarter, but because they reflect a strategy that we've been building and executing for years.
That strategy has remained remarkably consistent and is backed by AOB's growth algorithm, which is protected innovation, which creates enduring consumer demand. Our portfolio of growth brands, which provide a long runway as we scale, and lastly, our asset-light operating leverage model, which efficiently converts that growth into earnings and cash flow. Fiscal 2026 presented its share of challenges, tariffs, changes in retailer ordering patterns, and a consumer environment that remained measured. Throughout that environment, we stayed focused on the things we could control. We continued investing in innovation in our brands, and new products represented approximately 29% of fiscal 2026 sales. We continued to see favorable POS performance across our key brands, giving us confidence in underlying consumer demand, even when retailer ordering patterns affected reported sales.
We managed the business with discipline, maintained strong gross margins, reduced inventory by approximately $9.5 million, ended the year with approximately $21 million of cash and no debt, and returned more than $5 million to shareholders through share repurchases. While the reported top line in fiscal 2026 did not fully reflect the underlying progress we were making, we exited the year with stronger inventory, a strong balance sheet, healthy consumer demand, and an innovation pipeline we believe positioned us well for fiscal 2027. The clearest through line from fiscal 2026 into fiscal 2027 is innovation. Going back to the first quarter, what we are seeing today did not happen overnight. The strong start to fiscal 2027 reflects investments, capabilities, and strategic decisions we have been making over several years. In Q1, both outdoor lifestyle and shooting sports delivered positive growth, even after adjusting for the prior year order shift.
POS remained positive in both categories. Our key growth brands once again delivered positive net sales growth collectively, and new products represented more than one-third of our sales. As we look ahead, we know the environment can change quickly, so our focus is to keep doing what has served us well, stay close to our consumers and retail partners, continue to innovate, execute with discipline, and remain agile as conditions evolve. We are proud of what we accomplished in fiscal 2026, very pleased with our strong start to fiscal 2027, and confident in the strategy we have built and the opportunities ahead. We could not be more excited about what the future holds for AOB. Finally, I want to thank our employees for their dedication, creativity, and commitment, and our shareholders for your continued support. With that, I will turn it over to Liz Sharp to lead our Q&A.
Thank you, Brian. All right. Our first question is a couple of sentences, so I will read it all to you at one time. It is clear that new products are extremely important to the company's strategy and revenue stability and growth. Please comment on the importance to profitability and margin expansion of the new product percent of sales. A tangential question here would be about the directional profitability of the percent of net sales covered by IP.
Okay. That is a great question. I think the broader question is whether innovation is simply a source of revenue growth or whether it also improves the quality and profitability of that growth. I think it is both. New products are important because they give us an opportunity to create differentiated consumer value, support price and mix, and I would say they build stronger competitive positions for us. That is particularly true when the innovation is protected by intellectual property. As you know, over 50% of our revenue has IP protection. That is a number we just recently started reporting, which helps create enduring consumer demand, one of those reference points I gave in our growth algorithm. I would not suggest that every product necessarily carries a higher margin, although that is our goal, and historically, new products have been accretive. The economics vary by product, by category, and launch.
Strategically, our objective isn't innovation for innovation's sake. Ultimately, what we're trying to do is create differentiated products that consumers value and that can contribute to attractive, sustainable returns. So when you see the metrics like new product sales and the percentage of sales covered by IP, I would think of them less as isolated KPIs and more as indicators of the health and, I would say, defensibility of our innovation engine.
That's great. Okay. I have another one for you, and it's a two-part. If revenue growth were to slow due to macroeconomic conditions or a temporary shortfall in new product success, how flexible is the company's cost structure? What levers would management have to protect margins and cash flow? Are there meaningful opportunities for incremental operating efficiencies that could help offset slower top-line growth?
Yeah. I think, again, a great question. The way that we think about our business is around growth and resiliency. Certainly over the last six years since we've gone public, we've seen different macro events, acute events that have pressure tested our strategy. What we found is a unique opportunity to grow in both sort of situations, right? Where there's a slowdown, let's say, with the consumer, or pressures in other areas. When there's a slowdown with the consumer, our business is actually really well suited for that. We've got a tremendous lever with innovation, because retailers are ultimately looking for something enticing to bring consumers into their stores to drive foot traffic, which we've talked a lot about. Interestingly, when there is a slowdown in consumer spending, we actually tend to do pretty well, and we can begin to take share in those environments.
Then in terms of new product introductions, the times in the past where I think we've fallen short of our percentage target has been when the market's actually running pretty hot, where our retailers have a hard time determining what's successful versus what's not successful because there's just a lot of consumer demand. We saw that in 2020 and 2021, which also benefits us. Our legacy products continue to perform well in those environments. As we look at the business now, we believe that we've got significant growth levers. We maintain a lean operating model that's highly leverageable and asset light. We're always looking to shave costs. Our goal is to not add more people and things like that. Also, don't forget, we think about gross margin efficiency.
We are recently introducing some new products that provide us with recurring revenue through Caldwell and subscription services, and those come at higher margins for us. We are not just looking at OpEx discipline here. We are also looking for opportunities on the top line that will be accretive to contribution margin, ultimately help us create a more resilient, enduring business.
Terrific. All right. Well, those are all the questions that we have today. To our listeners, if you come up with additional questions, please feel free to email me at lsharp@aob.com, and I will be happy to reply to you directly. Brian, I will turn the call back over to you.
Thanks, Liz, and thanks everyone for joining us for today's meeting. We look forward to speaking with you again soon.
This concludes today's meeting. You may now disconnect.