...Good morning, and welcome to the American Outdoor Brands Corporation Annual Meeting of Stockholders. I would now like to turn the conference over to Barry Monheit. Please go ahead.
Thank you. The annual meeting of the stockholders of American Outdoor Brands will please come to order. I'm Barry Monheit, Chairman of the Board of American Outdoor Brands Corporation, and as such, will act as chairman of this meeting. Rob Cicero, our Senior Vice President, General Counsel, Chief Compliance Officer, and Secretary, will act as recording secretary of this meeting. Also here with us today are James Debney, our President and Chief Executive Officer, Jeff Buchanan, our Executive Vice President, Chief Financial Officer, Chief Administrative Officer, and Treasurer, and Liz Sharp, our Vice President of Investor Relations. Representatives of Deloitte & Touche LLP, our independent auditor, are available at this meeting via telephone conference call. We are excited to be hosting our third annual meeting, which allows us to be more inclusive and reach a greater number of stockholders.
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 any recording device or similar equipment by anyone attending this meeting via the webcast or telephone is strictly prohibited. I think it would be best that we proceed with the formal business matters to come before this meeting as set forth in the proxy material previously furnished to all stockholders. After the formal meeting is adjourned, James Debney, 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 very best to provide a response to as many questions as possible.
I now call on Robert Cicero 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 16, 2019. To all stockholders of record at the close of business on July 31, 2019, 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 a 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 as of July 31st, 2019, may vote at this meeting. At this time, I appoint Crystal Pauli 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, present, either in person or by proxy, to determine the presence of a quorum. After we have voted on all the matters to come before the stockholders, the Inspector and Teller of Election will report the preliminary results of each vote.
Chairman, I have so far counted a majority of the outstanding shares of common stock of the company present at the meeting, either in person 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 the meeting.
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 may proceed. At this time, we will proceed to vote on the matters properly before the stockholders of the company, as described in more detail in the proxy statement. The first order of business is the election of nine directors to serve until the company's next 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, Robert L. Scott, P. James Debney, Anita Britt, John Furman, Gregory J. Gluchowski, Jr., Michael F. Golden, Mitchell A. Saltz, and I. Marie Wadecki.
The second order of business is the proposal to provide a non-binding advisory vote on the compensation of the company's named executive officers for fiscal 2019. The third order of business is the proposal to ratify the appointment of Deloitte & Touche LLP as the independent registered accountant of the company for the fiscal year ending April 30, 2020. The Audit Committee of the Board of Directors has appointed Deloitte & Touche LLP to audit the consolidated financial statements of the company for the fiscal year ending April 30, 2020, and the Board of Directors recommends that the stockholders vote in favor of the ratification of the appointment. The fourth and final order of business is the vote upon a shareholder proposal.
The stockholder proposal was submitted on behalf of the Sisters of the Holy Names of Jesus and Mary, for consideration by our stockholders at this meeting. Identical proposals were also received from other stockholders. The company's Board of Directors strongly opposes this proposal and unanimously recommends that stockholders vote against this proposal. I will now recognize Sister Judy Byron, an authorized representative of the Sisters of the Holy Names of Jesus and Mary, for a period of no more than three minutes for the purpose of formally presenting the stockholder proposal for consideration by the stockholders of the company. Sister Judy Byron, you may now proceed.
Can you hear me? Can you hear me?
Yes, we can.
Okay, thank you. Good morning. I am Sister Judy Byron, here representing the Sisters of the Holy Names and nine religious shareholder proponents, who are all members of the Interfaith Center on Corporate Responsibility.... We ask for your support for Proposal Four, requesting that our company develop a human rights policy to help it mitigate human rights violations through its operations, supply chain, and through its sales of firearms to civilians. Some of you may recall that I presented a proposal at last year's meeting, just a few months after the school shooting in Parkland, requesting the development of a gun safety report. That proposal passed, thanks to your support. We had hoped in developing its report to shareholders, AOBC's management would undertake a thoughtful consideration of changes it might make to its business to help reduce the risk that its products would be misused.
What we instead received was a strongly worded defense of the status quo, along with elaborate argumentation as to why, in spite of mounting pressure from the public, legislators, the business community, and its own stakeholders, AOBC could not meaningfully change its policies and practices to promote gun safety. Mr. Debney and members of the board, since I last addressed you, there have been 455 mass shootings in our country, 31 of which occurred in K-12 schools. That averages out to a school shooting every 12 days. I ask you, in light of these continuing horrors, whether you still believe maintaining a business as usual approach is the wisest course of action for our company?
Proponents of these resolutions have never suggested that AOBC and other firearms manufacturers are directly liable for the misuse of guns, nor have we argued in any way against Second Amendment protections of civilians' right to bear arms, in spite of management's strenuous attempts to convince you otherwise. What we have argued, however, is that rather than stubbornly resisting change, gun makers should be leading the charge to help curb the misuse of firearms because they are best positioned to do so. Clearly, ongoing gun violence poses an enormous threat, not just to our society, but to AOBC's ongoing social license to operate. In presenting last year's proposal, I said, quote, "While shareholders will always seek a good return, this can never be our only concern.
The investment community has been more closely scrutinizing the societal impacts of corporations and choosing to align their portfolios with those whose policies and practices demonstrate a respect for the license to operate, granted them by society." End quote. In conclusion, a human rights policy aligned with the UN Guiding Principles on Business and Human Rights would help AOBC demonstrate this respect to all stakeholders and show that it is neither tone deaf nor callous to the cries for change and solutions to gun violence. Hundreds of companies, large and small, without anywhere near the risk profile of AOBC, have these policies in place, and as a result, are better prepared to mitigate these risks. A vote in favor of Proposal Four will be a vote for positive and much-needed change. Thank you.
Thank you, Sister Judy Byron. The polls with respect to these matters are now open. Any stockholder who has not yet voted or wishes to change their vote may do so by clicking on the voting button on the web portal and following the instructions there. 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. Chairman, the preliminary vote report shows that each of the 9 nominated directors received a majority of the votes cast. The preliminary vote report also shows that the non-binding advisory vote on the proposal to approve the compensation of the company's named executive officers for fiscal 2019 has received more votes against than in favor. The proposal for the ratification of the appointment of Deloitte & Touche LLP has been approved, and the stockholder proposal has not 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. Pauli. As there is no further business to come before the meeting, I declare the annual meeting of the stockholders of American Outdoor Brands adjourned. Now I'll turn the call over to Liz Sharp, Vice President of Investor Relations. Liz?
Thank you, Barry. James Debney, our President and Chief Executive Officer, will give a brief presentation before we proceed with the question and answer period. Before James 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, 2019. Also, if you have questions for us on today's call, please remember to enter them online now.
We will begin with a few questions that we received in advance of the meeting, after which we will take stockholder questions that are being answered today on the web portal. Please note that we will 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 will turn the meeting over to James.
Thank you, Liz. First, I'll share some highlights from our two business segments and our progress in those two segments in fiscal 2019. I will be brief to preserve time for questions at the end. So with that, we have a slideshow. So turning first to our outdoor products and accessories segment. We made important progress here. Within our outdoor products and accessories business, we structured our organization into dedicated teams to address opportunities within our four targeted consumer segments. This really did expand our addressable market and is already delivering exciting progress and very positive results. So in total, these four consumer segments represent a very large addressable market for us to take share in, and that's what the teams are focused on right now. We think that market is about $11 billion in size.
Going to the next slide, where we talk about new products, you can see that introducing innovative new products is a key driver of our organic growth strategy, and it really, truly is a core competency of our OP&A new product development team. They clearly demonstrate their capability, and as you can see here, across all four of our targeted consumer segments, over 300 new products were launched in one year. And to create competitive barriers, we obviously are very focused as we innovate on what IP can we harvest, and we have seven new patents expected from that group of new products introduction. So again, clearly demonstrating a great capability here to create a competitive advantage in what is a very competitive market. Turning to the next slide, we're going to talk about our Bubba brand. This is a recent tuck-in acquisition.
It's a great example of taking a small acquisition and rapidly creating value. So we took the Bubba Blades business, we rebranded it to Bubba. We wanted to lose the blade so that we could rapidly expand the product portfolio in the fishing tool category. And here, the team did a great job, did that very quickly. As you can see here, some great example with our electric fillet knife, which is actually an award-winning product. It's doing very well out in the marketplace, and again, going back to what I said earlier, is allowing us to take market share in a much bigger addressable market. Now let me turn to our firearms business. So again, we've organized our firearms business in a similar fashion to our outdoor products and accessories business. It's very focused on the target consumer segments, and you can see these listed below.
I won't go through the text in detail. I said I'll be brief. Just talking, touching on the main drivers for purchase, they remain the same, but pretty consistent. Protection being by far the biggest, but healthy interest in both target shooting and hunting. Again, going to the next slide, you see a clearly demonstrated strong track record of meaningful new product launches. And again, this is how our firearm segment, the team there does a very good job of differentiating themselves from the competition. Very, very strong in that respect. Major new product launch planned for this fiscal year, so fiscal 2020. So we're extremely excited about that. So that's the firearm segment. Now, just turning very briefly to our Missouri campus. So here, we created our logistics and customer services division.
We obviously made important progress with establishing that facility in fiscal 2019 and continue to make exciting progress there. That's extremely important as, as we think about our future go-to market strategy. It's rapidly simplifying that process about how we go to market, making us easier to do business with. Most importantly, it will allow us to lower our costs and drive efficiency gains as we shutter a significant number of locations. A lot of those locations have come from our M&A activity. Of course, as we acquire businesses, we do pick up real estate. Now that we have the logistics and customer services facility, we can rapidly integrate future tuck-in acquisitions and shutter those facilities as quickly as possible.
So here we have a clear strategy on how to lower our costs, drive efficiencies, integrate acquisitions rapidly, but most importantly, learn how to better serve our customers, and we have a great strategy here that will allow us to, again, differentiate ourselves from the competition. And you've heard me say that a number of times. That differentiation from the competition is critical for our success in the future. We deal in highly competitive markets, and we have the teams, the talent, and the people, the products, and the brands to be able to be very successful there. So with that, that ends my presentation.
All right, I think we're ready for a few questions. James, our first question is: congratulations on opening your new Missouri logistics center. Can you please describe how that will benefit the overall business and quantify the potential margin expansion opportunity?
Sure. I really, I really touched on that earlier in the presentation, but I'll go through it again, so everybody's clear. There are three areas where the Missouri campus will add value. Just starting with the most important one again, it's how to better serve our customers. You know, we're- we have centralized distribution now, so we have all the products under, under one roof. That allows us to consolidate shipments to, to our customers rather than sending them, you know, fragments of an order from different locations, as an example. We've also consolidated order management, so that's gone to phase two of our customer base as well. Moving on to the next one. So as I said, we're gonna improve our acquisition integration capability so that we can rapidly harvest synergies, meaningful synergies from any acquisition, and integrate those acquisitions into...
For example, if it's into our outdoor products and accessories business, rapidly integrate those into our brand lane structures as well. So, you know, here you think about a tuck-in. We're really interested in, most importantly, buying the brand, the customer that that brand serves, the product portfolio, and any talent that we feel is appropriate to join the existing team. It also allows us to be very competitive in bidding processes. Those processes, as we know, can be highly competitive, and it's important to us that we see meaningful synergies to allow us to be a more competitive bidder. And I said, overall, you know, we can be a more competitive bidder because we're driving operational efficiency, we're lowering our costs, and that, over time, will allow us to expand our margins. And going forward, we'll be able to give more detail on that margin expansion.
As you know, Jeff has already started to do that. So, I would say that's it.
All right. Thank you. Our next question: Please discuss the longer-term fundamental view on your firearms segment as it relates to both ASPs and units, as well as how AOBC can gain market share if we remain in a flattish NICS background without sacrificing gross margin?
I'll start with the easiest part. I'll answer it, I think, in two parts, so I'll start with the easy part first, and that's just you've got to continue lowering your costs and driving efficiencies so that you can be extremely cost competitive. That helps you preserve margins in a highly competitive market, particularly if you have to spend some money back to promote your products to drive either share or just sustain your share in an ever-growing competitive market. But the most important, by far, is what I talked about across both segments of our business is new product introductions. We have to be a leading innovator when it comes to new products. And as I said before, and shown and given evidence in the presentation, we're clearly very good at that.
It's a core competency in both of our business segments, and we're gonna continue to do that, because if we can meet the needs, wants, and desires of our consumers, we delight them, they want to buy our product, they buy our product, we take share. That drives... As we drive volume, that drives a lot of efficiencies within our business as well. New products are exciting. You generally harvest better margins from those products as you hold on to higher, higher ASP, particularly, you know, in the first, let's say, 18 months 3 years of their life in the market.
Great! As a company, you are one of the more innovative in the industry. Could you provide us with the vitality index of your sales? For example, as a % of sales contributed by products introduced over the last three or five years.
I don't have that detail in front of me, but absolutely, it's something we think about all the time, as you've just heard me say as well. I'd say, you know, in the last 3-5 years, we've been in the range of about 15%-20% of each year of our total revenue coming from products introduced in that year. So we're pretty hard on ourselves for that metric as well. So it takes a lot of new product introductions to be able to generate that much, that higher percentage of revenue in their first year of introduction. And I think from memory, in fiscal 2019, we had about 17% of our revenue from new products.
Great. Thank you. Now, can you please discuss the current backdrop for retail inventory levels?
Okay. Obviously, the retail space, as it comes to both our firearms business and our outdoor products and accessories business, is fairly fragmented. There are a lot of mom-and-pop stores out there. So it is somewhat challenging to understand accurately the levels of inventory that are out in the marketplace. But we do closely monitor our wholesale, wholesaler inventory when it comes to firearms products. And our wholesale partners, our two-step distribution partners, are responsible for serving the majority of those independents that we see in the market. So very closely monitoring that. The larger retailers, so the most important ones to us, so for example, Bass Pro, we know, and Cabela's, and Academy as two great examples of great businesses, we monitor their inventory very closely as well, because obviously, we need that information to best serve them as well.
So, you know, am I concerned about the level of inventory that we've seen out in the summer? No, I've said that before in prepared remarks at the last earnings call. It's normal in a seasonal slowdown, which is summer, that you will see inventory build. And inventory build is important, particularly if you have new product launches coming. But most important, as you're coming into the full hunting season and the busy gift-giving season as well. So I think with that in mind, we're in a good place. We're looking forward to what we hope is, is a strong season when it comes to the consumer shopping for our products.
We were encouraged to see the NICS results in August, and no doubt that created somewhat of a pull, and we'll be helping manage some of the inventory that probably exists, that likely exists down in the right direction. We know that many retailers, you know, are always focused, and consumers as well, are always focused on what the next promotion may be in this type of market. And as a reminder, it's a pretty soft market when it comes to firearms right now, so being strategic about your promotions is extremely important. So we think that there's no doubt a little bit of pause as people think about that, but we'll be deploying our promotional plans as we've always done in the past.
All right. Thank you. As we have no additional questions queued up online, this concludes our question and answer period. If we did not answer your question today or you have additional questions, please feel free to email me directly at lsharp@aob.com, and I'll be happy to reply to you. With that, James, I will now turn the call over to you.
Thanks, Liz, and thank you very much, everyone, for joining us today. We look forward to a very prosperous fiscal 2020. Thank you.
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.