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01/10 03:45
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call reveals mixed signals: a decline in net sales and profitability, yet optimism for future growth through new product launches and strategic pricing. The Q&A highlights some concerns, such as the impact of tariffs and e-commerce customer volatility, but also notes strong performance in certain brands and improved visibility post-Black Friday. The lack of long-term guidance and ongoing challenges with tariffs and demand volatility balance the positive aspects, leading to a neutral sentiment prediction.
Net Sales $57.2 million, a decrease of 5% year-over-year. The decline was attributed to lower sales in both the Outdoor Lifestyle and Shooting Sports categories, driven by decreases in meat processing equipment and gun cleaning/personal protection products, partially offset by increases in BOG, Grilla, and Caldwell brands.
Outdoor Lifestyle Category Net Sales $34.6 million, down 5% year-over-year. The decrease was mainly driven by a decline in meat processing equipment sales, partially offset by increases in BOG and Grilla brands.
Shooting Sports Category Net Sales Declined 5.1% year-over-year. The decrease was driven by lower sales in gun cleaning and personal protection products, partially offset by strong sales in the Caldwell brand due to expanded distribution of innovative products like the Caldwell ClayCopter.
Traditional Channel Net Sales Increased by 2.3% year-over-year. This growth was aligned with strong POS results and reflects the performance of brands across the omnichannel landscape.
E-commerce Channel Net Sales Decreased by 15.9% year-over-year. The decline was attributed to lower sales to the largest online-only e-commerce partner, partially offset by digital sales through traditional retailers' online platforms.
Gross Margin 45.6%, compared to 48% in the prior year. The decline was due to actions taken to clear slow-moving inventory. Without this action, gross margin would have been approximately 150 basis points higher.
GAAP Operating Expenses $24 million, compared to $25.8 million in the prior year. The decrease was driven by lower variable costs from the decrease in net sales and lower intangible amortization.
Non-GAAP Operating Expenses $21.3 million, compared to $22.7 million in the prior year. Non-GAAP operating expenses exclude intangible amortization, stock compensation, and certain nonrecurring expenses.
GAAP EPS $0.16, compared to $0.24 in the prior year. The decline reflects lower net sales and profitability.
Non-GAAP EPS $0.29, compared to $0.37 in the prior year. The decline reflects lower net sales and profitability.
Adjusted EBITDA $6.5 million, compared to $7.5 million in the prior year. This represents 11.3% of net sales, down slightly year-over-year.
Inventory Levels $124 million, up $12.4 million year-over-year. The increase was driven entirely by $14 million of incremental tariffs capitalized into inventory, while base inventory declined by $1.6 million.
Cash and Debt $3.1 million in cash and no debt. The company repurchased $662,000 of common stock during the quarter.
New product launches: Introduced major expansions to the Caldwell ClayCopter and Claymore lines for shotgun enthusiasts. The Caldwell ClayCopter was reimagined into a compact, lightweight wireless ground unit with a 50-disc hopper and integration with the Caldwell Clays app. The app allows for dynamic shooting experiences, including tethering multiple units together.
Innovation impact: New products drove over 31% of net sales. Over the past 5 years, the innovation pipeline has generated nearly $100 million in incremental annual new product revenue.
Recognition: The Caldwell ClayCopter was named the 2025 Innovation of the Year by Guns and Ammo Magazine and the Industry Choice Awards.
Retail expansion: Expanded product and brand offerings within existing retail partner networks. A major mass market retailer introduced Caldwell and BOG brands into thousands of stores for the first time, significantly increasing visibility.
Channel performance: Traditional channel sales, which make up 65% of the business, increased by 2.3%. E-commerce channel sales, accounting for 35% of the business, declined by 15.9%.
Gross margin: Gross margin for Q2 was 45.6%, slightly down from 48% last year due to actions to clear slow-moving inventory.
Inventory management: Inventory levels increased year-over-year due to $14 million in incremental tariffs but are targeted to reduce to $115 million by fiscal year-end.
Cost management: Identified cost-saving opportunities such as reducing travel expenses, consolidating remote offices, and allowing nonessential contracts to expire.
Omnichannel evolution: Traditional retailers are increasingly adopting omnichannel capabilities, with online sales representing up to 20% of their revenue. This shift is reflected in the company's traditional sales channel results.
Tariff mitigation: Implemented pricing actions, cost-sharing with suppliers, and sourcing optimizations to mitigate tariff impacts, expected to fully materialize by fiscal 2027.
Tariffs: The company is facing challenges due to incremental tariffs, which have increased costs and impacted inventory valuation. These tariffs are expected to continue affecting gross margins in the near term until mitigation actions fully take effect in fiscal 2027.
E-commerce Sales Decline: Sales in the e-commerce channel, which constitutes 35% of the business, declined by 15.9% due to lower sales to the largest online-only e-commerce partner. This decline is partially offset by digital sales through traditional retailers' online platforms.
Consumer Spending Volatility: Evolving consumer spending patterns and fractured consumer health, particularly among lower-income cohorts, are creating volatility in retail order patterns and demand elasticity.
Inventory Management: The company is dealing with slower-moving inventory and higher inventory levels due to incremental tariffs. Efforts are being made to reduce inventory levels, but this remains a challenge.
Macroeconomic Environment: The uncertain macroeconomic environment, including cautious retailer buying and consumer spending pressures, is impacting sales and creating challenges for forecasting and planning.
Gross Margin Pressure: Gross margins are under pressure due to the amortization of higher tariff costs and actions to clear slow-moving inventory. Gross margin is expected to remain lower in the near term.
Cost Management: The company is implementing cost-saving initiatives, such as reducing travel expenses and consolidating remote offices, but these measures may take time to show significant impact.
Net Sales Outlook: The company expects full fiscal year 2026 net sales to decline approximately 13% to 14% year-over-year from last year's $222 million. Adjusting for $10 million of orders accelerated into the prior year, the underlying net sales decline would be roughly 5%.
Third Quarter Net Sales: Net sales are expected to decline approximately 8% year-over-year in the third quarter, reflecting macroeconomic challenges and retailer dynamics.
Gross Margin: Gross margin for both the third quarter and the full fiscal year is expected to be in the range of 42% to 43%, impacted by the amortization of higher tariffs.
Operating Expenses: Total operating expenses are expected to decline in the third quarter and for the full fiscal year 2026 due to cost-saving initiatives such as reducing travel expenses, consolidating remote offices, and allowing nonessential contracts to expire.
Adjusted EBITDA: Adjusted EBITDA for the full fiscal year 2026 is expected to be in the range of 4% to 4.5% of net sales. The company anticipates improving upon this range in fiscal 2027 due to tariff mitigation actions.
Tariff Mitigation: The company expects to fully mitigate the financial impact of incremental tariffs starting in fiscal 2027 through pricing actions, cost concessions, and new product velocity.
Inventory Levels: Inventory is targeted to be slightly lower in the third quarter and drop to roughly $115 million by the end of fiscal year 2026.
Capital Expenditures: Capital expenditures for full fiscal year 2026 are expected to be $4 million to $4.5 million, consistent with the company's asset-light operating model.
Share Repurchase Program: During the second quarter, the Board of Directors approved a new $10 million share repurchase program, effective October 2025 through September 2026. In Q2, the company repurchased roughly 74,000 shares of common stock at an average price of $8.76 per share.
The earnings call reveals mixed signals: a decline in net sales and profitability, yet optimism for future growth through new product launches and strategic pricing. The Q&A highlights some concerns, such as the impact of tariffs and e-commerce customer volatility, but also notes strong performance in certain brands and improved visibility post-Black Friday. The lack of long-term guidance and ongoing challenges with tariffs and demand volatility balance the positive aspects, leading to a neutral sentiment prediction.
The earnings call reveals several concerns: revenue guidance suspension, tariff impact on margins, and cautious retailer orders. While there is optimism about product innovation and strong growth in certain brands, the lack of clear guidance, particularly on order normalization and pricing adjustments, raises uncertainty. The Q&A section highlights cautious consumer behavior and macroeconomic pressures, further supporting a negative outlook. The lack of a market cap makes it difficult to assess impact magnitude, but overall sentiment suggests a negative stock price movement in the short term.
The earnings call shows strong financial performance with significant growth in net sales and adjusted EBITDA, alongside improved margins and reduced operating expenses. The Q&A section reveals proactive strategies to manage inventory and tariffs, and an optimistic outlook on consumer trends and potential acquisitions. Despite some concerns over pulled-forward sales and withdrawn guidance, the overall sentiment remains positive due to strong brand demand and financial health.
The earnings call highlights strong financial performance, with increased net sales, improved gross margins, and significant growth in adjusted EBITDAS. Positive guidance for FY'25 and FY'26, alongside a robust product pipeline and strategic market expansion, supports a positive outlook. While there are challenges like tariffs and competition, the company's asset-light model and focus on innovation mitigate these risks. The share repurchase program further boosts shareholder returns. Despite some unclear responses in the Q&A, the overall sentiment is positive, suggesting a likely stock price increase of 2% to 8%.
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