[Management View]
American Outdoor Brands (AOUT) reported a significant year-over-year revenue decline due to accelerated retailer orders in the prior quarter, ongoing retailer caution, and macroeconomic uncertainty. Management emphasized innovation and new product launches, with nearly 29% of net sales driven by new offerings. Strategic supply chain shifts, measured pricing adjustments, and inventory management supported a 130-basis-point increase in gross margin.

[Outlook]
Management projected a 15% net sales decline for the second quarter and refrained from providing full-year guidance, citing persistent macro headwinds and changing tariff conditions. Investments in new product development and technology are expected to bolster gross margin and offset some tariff impact.

[Financial Performance]
- Net sales: $29.7 million, down 28.7% YoY
- E-commerce net sales: Down 35.2% YoY
- Traditional channel net sales: Decreased by 24.4%
- New products: Represented nearly 29% of net sales
- Gross margin: 46.7%, up 130 basis points
- GAAP operating expenses: $20.7 million, down from $21.5 million
- Adjusted EBITDA: Loss of $3.1 million, compared to a $2 million loss last year
- Cash position: $17.8 million with no debt and a $75 million undrawn credit line

[Q&A Highlights]
Question 1: Is there still excess tariff-related inventory at your retail partners?
Answer: Retail partners accelerated orders ahead of price adjustments in key categories. The inventory is not considered excess but strategically placed.

Question 2: Can you elaborate on the pricing adjustments related to tariffs?
Answer: Pricing adjustments are part of a broader strategy including supplier concessions, product redesigns, and maintaining new product velocity. Pricing will be calibrated based on the effectiveness of these measures and market conditions.

Question 3: How important is product innovation in the current consumer environment?
Answer: Innovation is critical. The company has a steady pipeline of new products and strategically times launches to maximize impact and marketing efficiency.

Question 4: When do you expect order choppiness to settle down?
Answer: Retailers are cautious due to tariff uncertainty. As inventory positions normalize, order flow should align better with strong POS trends, improving visibility through FY '26.

Question 5: Which brands are showing the strongest POS trends?
Answer: Growth brands like Caldwell, Bubba, and Bog are performing well. Other brands are also outperforming their peers despite overall category weakness.

Question 6: What is the current state of the M&A pipeline?
Answer: Fewer targets are coming to market, with more distressed assets. The company is patient and also considering launching new brands in key categories.

Question 7: Are buyers shifting towards more value-oriented products?
Answer: The consumer shift varies by retailer. A more affluent or enthusiast consumer base continues to support premium products, while lower-income households are under pressure and reducing spend.

Question 8: What factors could impact gross margin outlook?
Answer: Tariff landscape, supplier concessions, pricing adjustments, and new product launches are key factors. The company monitors these daily to maintain margins.

Question 9: How much of the portfolio still needs to be assessed for production shifts outside China?
Answer: Significant progress has been made, but some complex, high-tech products remain in China due to cost and quality advantages. Future moves depend on tariff stability and supplier readiness.

Question 10: Are there strategies to broaden the e-commerce mix?
Answer: Traditional retailers have increased their online sales significantly. The company aims to be where consumers expect to find them, with traditional retailers taking a larger share of e-commerce sales.

[Sentiment Analysis]
The tone of the management was cautiously optimistic, focusing on strategic adjustments and innovation to navigate the challenging environment. Analysts' questions reflected concerns about inventory, pricing, and the impact of tariffs, with a focus on understanding the company's adaptability and future growth prospects.

[Quarterly Comparison]
| Metric | Q1 FY2025 | Q1 FY2024 | Change |
|-------------------------|-----------------|-----------------|----------------|
| Net Sales | $29.7 million | $41.6 million | -28.7% |
| E-commerce Net Sales | -35.2% YoY | | |
| Traditional Channel | -24.4% YoY | | |
| Gross Margin | 46.7% | 45.4% | +130 bps |
| GAAP Operating Expenses | $20.7 million | $21.5 million | -$0.8 million |
| Adjusted EBITDA | -$3.1 million | -$2 million | -$1.1 million |
| Cash Position | $17.8 million | | |

[Risks and Concerns]
- Continued retailer caution and macroeconomic uncertainty
- Impact of tariffs on purchasing patterns and costs
- International sales decline due to trade concerns
- Dependence on key e-commerce partners

[Final Takeaway]
American Outdoor Brands faced a challenging first quarter with significant revenue declines due to retailer caution and macroeconomic factors. However, the company's focus on innovation, strategic supply chain adjustments, and new product launches helped mitigate some impacts. Looking ahead, management remains cautiously optimistic, emphasizing the importance of adaptability and long-term growth strategies. Investors should monitor the company's ability to navigate tariff uncertainties and maintain strong POS performance.