American Outdoor Brands (NASDAQ:AOUT) reported third-quarter fiscal 2026 results that management said reflected “disciplined execution” amid shifting tariff policies, uneven retailer ordering patterns, and continued consumer uncertainty. While net sales declined year over year, executives emphasized strong retail sell-through, a robust new product pipeline, and ongoing portfolio actions aimed at concentrating resources on higher-growth brands and categories.
Quarterly sales down, but point-of-sale trends remained positive
Net sales for the quarter were $56.6 million, down 3.3% from $58.5 million in the prior-year period, though the company said results were ahead of its expectations. CEO Brian Murphy attributed difficult comparisons and near-term headwinds to two primary factors: an ongoing inventory reset at the company’s largest e-commerce retailer and extended softness in the aiming solutions category.
By segment, the outdoor lifestyle category accounted for more than 62% of quarterly net sales and posted 5.4% growth to $35.3 million, driven by strength in the BOG and MEAT! Your Maker brands. The shooting sports category declined 15% year over year, primarily due to aiming solutions softness, though management pointed to growth in Caldwell, citing consumer and retailer response to the ClayCopter platform.
Innovation pipeline contributed more than a quarter of sales
Management said product development remains a central driver of its strategy, with new products representing over 26% of third-quarter net sales. Murphy pointed to the company’s focus on combining “innovative hardware with integrated digital capabilities,” particularly in categories where connectivity can enhance the user experience.
As the company enters peak fishing season, Murphy said American Outdoor Brands is preparing an initial rollout in April of ScoreTracker LIVE, which integrates Major League Fishing ScoreTracker technology into the BUBBA app. The company said the platform is designed to provide real-time tournament hosting and live scoring for a range of events, from local clubs to regional circuits, and supports catch-and-release tournament formats.
Management also described Caldwell’s momentum in shotgun sports, including strong engagement at SHOT Show in January around ClayCopter and Claymore connected products, and said retailers are increasingly seeking differentiated innovation to drive traffic and engagement.
Portfolio actions: UST divestiture plan and aiming solutions inventory reserve
During the quarter, the company took two actions that executives said reflected a disciplined approach to capital allocation and portfolio management.
- Divestiture plan for UST: Murphy said the company decided to divest its camping and survival brand, UST, concluding that the category has become increasingly price-driven and that additional investment is unlikely to generate returns consistent with expectations. The company said it will continue fulfilling customer orders from existing inventory while evaluating opportunities to transition the brand and remaining inventory to a buyer.
- Aiming solutions inventory reserve: In response to weak trends in aiming solutions, the company took an inventory reserve as it prepares to accelerate sell-through of a portion of this inventory and redeploy capital into higher-growth categories.
CFO Andy Fulmer said the company recorded a $1.2 million inventory reserve related to aiming solutions, which weighed on gross margin in the quarter. He added that the company expects to monetize a meaningful portion of the inventory over time, supporting working capital improvement and financial flexibility.
Separately, following the decision to divest UST, the company reclassified related assets as held for sale and performed a valuation based on expected future cash flows. Fulmer said this resulted in a non-cash impairment charge of $3.4 million, recorded in operating expense during the quarter. Management characterized UST’s contribution as minimal and said it does not anticipate an impact to the fiscal 2026 outlook.
Margins pressured by tariffs and inventory actions
Gross margin was 41% for the quarter, down 370 basis points year over year. Fulmer said the decline was driven by the impact of new tariffs, including IEEPA tariffs, and the aiming solutions inventory reserve. Excluding the reserve, he said gross margin would have been 43.1%, slightly ahead of the company’s original expectations.
Fulmer also noted that on Feb. 20, the U.S. Supreme Court issued a ruling striking down tariffs previously imposed under IEEPA. He said the third quarter was the first period in which the company began to see IEEPA tariff impacts flow through cost of goods sold, with approximately $1.7 million recognized in the quarter. He explained that tariffs are capitalized into inventory and recognized in cost of goods sold as the inventory turns.
During the Q&A portion of the call, Fulmer said it is a “safe assumption” that tariff-driven gross margin pressure could continue into the first half of fiscal 2027 as capitalized tariffs flow through the P&L, though he did not provide specific margin expectations. Murphy added that the company has historically used pricing actions and new product velocity as key levers to recover margin over time, referencing prior experience with 301 tariffs.
Earnings, cash flow, balance sheet, and guidance reiterated
GAAP operating expenses were $27.1 million, up from $25.8 million a year earlier, driven by the UST impairment charge, partially offset by lower variable costs and lower intangible amortization. On a non-GAAP basis, operating expenses were $21.0 million, down from $22.7 million last year.
GAAP EPS was a loss of $0.32, compared with GAAP EPS of $0.01 in the prior-year quarter. Non-GAAP EPS was $0.12, down from $0.21 a year earlier. Adjusted EBITDA was $3.3 million, compared with $4.7 million last year, which Fulmer attributed primarily to the inventory reserve and IEEPA tariffs.
The company ended the quarter with $10.4 million in cash and no debt, after repurchasing $1.4 million of common stock. Operating cash flow was an inflow of $9.9 million in the quarter, reflecting decreases in accounts receivable and inventory. Inventory declined by $13.8 million sequentially to $110.2 million, down from $124.0 million at the end of the second quarter (including UST-related assets held for sale). Fulmer said the company expects inventory to be approximately $110 million at year-end, lower than originally planned.
Fulmer also said the company ended the quarter with no balance on its $75 million line of credit, resulting in total available capital of over $100 million, and noted that the company amended its agreement with TD Bank to extend the maturity date to March 2031.
Looking ahead, management reiterated full-year fiscal 2026 guidance for net sales, gross margin, and adjusted EBITDA. The company continues to expect:
- Net sales of approximately $191 million to $193 million
- Gross margin of 42% to 43% (with lower gross margins implied in Q4 due to increased amortization of tariff variances)
- Adjusted EBITDA of 4% to 4.5% of net sales
In the Q&A, management said third-quarter sales did not pull forward demand from the fourth quarter, describing quarter-to-quarter order flow as normal. Fulmer also said the company’s outlook does not include potential tariff refunds, which remain subject to further guidance from U.S. Customs and Border Protection.
To close the call, Murphy said the company plans to participate in the Roth Conference in California on March 23 and the Lake Street Virtual Conference on March 31.
About American Outdoor Brands (NASDAQ:AOUT)
American Outdoor Brands, Inc designs, manufactures and distributes a broad range of outdoor sports and recreational products for consumers and commercial end users. Through its Shooting & Accessories and Functional Outdoor Approaches segments, the company offers shooting sports equipment, hunting and fishing accessories, archery gear, tactical and personal defense solutions, outdoor apparel, fitness products and knife and tool categories. Its portfolio encompasses well-known brands such as Wheeler®, Tipton®, Caldwell®, Hogue®, Manticore Arms® and other specialty labels.
Formed as a standalone public company in 2016 following a spin-off from Smith & Wesson, American Outdoor Brands has its headquarters in Columbia, Missouri, with manufacturing, distribution and sales operations across North America.
