AOUT · American Outdoor Brands, Inc.

Performance Summary

American Outdoor Brands reported challenging Q3 FY2026 results with net sales of $56.6 million, representing a 3.3% decline from $58.5 million in Q3 FY2025. The company recorded a net loss of $4.1 million compared to net income of $169 thousand in the prior-year quarter. Gross profit decreased to $23.2 million from $26.1 million, with gross margin contracting 370 basis points to 41.0%. Operating loss was $3.9 million versus operating income of $303 thousand in Q3 FY2025, impacted by a $3.4 million impairment charge related to assets held for sale. Basic and diluted loss per share were both $(0.32) compared to earnings per share of $0.01 in the prior-year period.

Revenue Analysis

Revenue performance was mixed across product categories and channels. Shooting sports sales declined 15.0% year-over-year to $21.2 million, while outdoor lifestyle sales increased 5.4% to $35.3 million. By distribution channel, e-commerce sales decreased 4.6% to $26.0 million, and traditional channel sales declined 2.1% to $30.6 million. Geographically, domestic sales represented 95.9% of total revenue at $54.2 million (down 3.4% YoY), while international sales were $2.3 million (up 0.3% YoY). The company noted that finished goods inventory increased due to higher tariff costs on products sourced from outside the U.S., with tariffs imposed starting in March and April 2025.

Margins & Profitability

Gross margin declined to 41.0% from 44.7% in the prior-year quarter, primarily due to higher tariff costs and sales mix. Operating expenses totaled $27.1 million, including $3.4 million impairment of assets held for sale related to the ust brand divestiture plan. Excluding this impairment, operating expenses were $23.7 million, down from $25.8 million in Q3 FY2025. Research and development expense decreased to $1.3 million from $1.9 million, while selling, marketing and distribution expense declined to $14.4 million from $15.0 million. General and administrative expense decreased to $8.0 million from $8.9 million. The effective tax rate was 0.0% for Q3 FY2026 compared to 25.6% in the prior-year quarter.

Cash Flow & Balance Sheet

For the nine months ended January 31, 2026, net cash used in operating activities was $5.1 million, compared to $6.4 million used in the prior-year period. Net cash used in investing activities was $2.6 million, primarily for property and equipment ($2.0 million) and patents/software ($550K). Net cash used in financing activities was $5.4 million, including $4.6 million for treasury stock repurchases and $1.1 million for employee withholding taxes on restricted stock units. Cash and equivalents decreased by $13.0 million to $10.4 million. Total assets were $225.0 million, with inventories of $110.2 million and accounts receivable of $32.9 million. Total liabilities were $59.3 million, including $32.8 million in lease liabilities. Total equity was $165.7 million with a retained deficit of $83.5 million.

Outlook

The company's Board approved a plan to divest the ust branded product line in December 2025, with completion expected within twelve months. The disposal group, primarily inventory and intangible assets, was impaired by $3.4 million. The company amended its secured loan agreement in March 2026, extending the maturity to March 2031. Significant uncertainty exists regarding tariffs following a February 2026 Supreme Court ruling striking down tariffs imposed under IEEPA, with potential impacts on the business from new tariffs and regulatory developments. The company continues to monitor these developments and assess their potential impact on financial condition and results of operations.