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Firearms and outdoor products icon Smith & Wesson parent American Outdoor's stock surged for the second day after reporting better than expected earnings the day it ripped higher on an analyst raising profit targets over 10% in the two days.

 American Outdoor

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American Outdoor Brands Corp NASDAQ: AOBC Reported Earnings After Close Tuesday

$0.09 Beat $0.07 EPS And $154.4M Beat $149.5 Million Forecast in Revenue

Earnings

American Outdoor Brands (NASDAQ: AOBC) reported Q2 EPS of $0.09, $0.02 better than the analyst estimate of $0.07. Revenue for the quarter came in at $154.4 million versus the consensus estimate of $149.5 million.

  • Quarterly GAAP net income was $1.3 million, or $0.02 per diluted share, compared with net income of $6.7 million, or $0.12 per diluted share, for the comparable quarter last year.
  • Quarterly non-GAAP net income was $5.2 million, or $0.09 per diluted share, compared with $11.0 million, or $0.20 per diluted share, for the comparable quarter last year.
  • Quarterly non-GAAP Adjusted EBITDAS was $20.9 million, or 13.5% of net sales, compared with $26.7 million, or 16.5% of net sales, for the comparable quarter last year.

The $8.1 million incremental revenue in the latest quarter was the result of a change required by the Tax and Trade Bureau related to the timing of federal excise tax assessment within the Firearms segment.

American Outdoor Brands Corp NASDAQ: AOBC

Market Reaction - After hours $9.90 +0.46 (+4.93%)

Pre Earnings: $9.44 +0.40 (+4.37%) Closed: Dec 5, 4:00 PM EST

 Highlights

  • Gross margin for the quarter was 32.6% compared with 34.9% for the comparable quarter last year.
  • At the end of the quarter, our balance sheet remained strong with cash of $43.8 million and total net borrowings of $159.4 million. That, combined with twelve-month trailing EBITDAS, translates to a net leverage ratio of approximately 1.7 to 1.0.
  • The company expect to substantially reduce that ratio by the end of the current fiscal year.

Outlook

  • American Outdoor Brands sees Q3 2020 EPS of $0.20-$0.24, versus the consensus of $0.26.
  • American Outdoor Brands sees Q3 2020 revenue of $180-190 million, versus the consensus of $172.4 million.
  • American Outdoor Brands sees FY2020 EPS of $0.76-$0.84, versus the consensus of $0.74.
  • American Outdoor Brands sees FY2020 revenue of $680-700 million, versus the consensus of $638.54 million..

Spin Off

"Subsequent to the end of the second quarter, we announced a plan to spin-off our outdoor products and accessories business as a tax-free stock dividend to our stockholders. We expect to complete the transaction in the second half of calendar 2020, thereby creating two independent publicly traded companies: Smith & Wesson Brands, Inc. (the firearm business) and American Outdoor Brands, Inc. (the outdoor products and accessories business), each of which are leaders in their industries.

Wedbush analyst James Hardiman Raised Earnings Estimates

The day ahead of earnings Wedbush raised it's estimate well above consensus expecting earnings per share of 11 cents, up from 7 cents. That compares with the FactSet consensus of 6 cents as of Nov. 29 and the company's guidance range of 3 cents to 7 cents.

Hardiman said his improved outlook is based on the "significant outperformance" in National Instant Criminal Background Check System (NICS) data, which showed 13% growth on a weighted average basis versus his estimate of 3% growth coming into the quarter.

The stock has now soared 60% since it closed at a 7 1/2-year low of $5.62 on Oct. 3, 2019.  Last month, the company said it planned to spin off its Smith & Wesson gun-maker business into an independent publicly traded company, with the spinoff expected to be completed in the second half of 2020. Year to date, American Outdoor shares have shed 30%, while the S&P 500 has advanced 24%

About American Outdoor Brands Corporation

American Outdoor Brands Corporation (NASDAQ Global Select: AOBC) is a provider of quality products for shooting, hunting, and rugged outdoor enthusiasts in the global consumer and professional markets.

The Company reports two segments: Firearms and Outdoor Products & Accessories. Firearms manufactures handgun, long gun, and suppressor products sold under the iconic Smith & Wesson®, M&P®, Thompson/Center Arms™, and Gemtech® brands, as well as provides forging, machining, and precision plastic injection molding services.

AOB Outdoor Products & Accessories is an industry leading provider of shooting, reloading, gunsmithing and gun cleaning supplies, specialty tools and cutlery, and electro-optics products and technology for firearms. This segment produces innovative, top quality products under the brands Caldwell®; Crimson Trace®; Wheeler®; Tipton®; Frankford Arsenal®; Lockdown®; BOG®; Hooyman®; Smith & Wesson® Accessories; M&P® Accessories; Thompson/Center Arms™ Accessories; Performance Center® Accessories; Schrade®; Old Timer®; Uncle Henry®; Imperial®; BUBBA®; UST®; and LaserLyte. For more information on American Outdoor Brands Corporation, call (844) 363-5386 or log on to www.aob.com.

Source: American Outdoor Brands Corporation

From The TradersCommunity Research Desk

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