Earnings Call Transcript - AOUT Q2 2021

Operator, Operator

Good day, everyone, and welcome to American Outdoor Brands, Inc. Second Quarter Fiscal 2021 Financial Results Conference Call. This call is being recorded. At this time, I would like to turn the call over to Liz Sharp, Vice President of Investor Relations, for some information about today's call.

Liz Sharp, Vice President of Investor Relations

Thank you, and good afternoon. Our comments today may contain predictions, estimates and other forward-looking statements. Our use of words like anticipate, project, estimate, expect, intend, should, indicate, suggest, believe, and other similar expressions is intended to identify those forward-looking statements. Forward-looking statements also include statements regarding our product development, focus, objectives, strategies and vision; our strategic evolution; our market share and market demand for our products; market and inventory conditions related to our products and in our industry in general; and growth opportunities and trends. Our forward-looking statements represent our current judgment about the future, and they are subject to various risks and uncertainties. Risk factors and other considerations that could cause our actual results to be materially different are described in our securities filings. You can find those documents as well as a replay of this call on our website at aob.com. Today's call contains time-sensitive information that is accurate only as of this time, and we assume no obligation to update any forward-looking statements. Our actual results could differ materially from our statements today. I have a few important items to note about our comments today. First, we reference certain non-GAAP financial measures. Our non-GAAP results exclude amortization of acquired intangible assets, stock compensation, transition costs, COVID-19 expenses, related-party interest income and the tax effect related to all of those adjustments. The reconciliations of GAAP financial measures to non-GAAP financial measures, whether or not they are discussed on today's call, can be found in our filings as well as today's earnings press release, which are posted on our website. Also, when we reference EPS, we are always referencing fully diluted EPS. Joining us on today's call is Brian Murphy, President and CEO; and Andy Fulmer, Chief Financial Officer. And with that, I'll turn it over to Brian.

Brian Murphy, President and CEO

Thanks, Liz. I'm excited to join you on today's call and share what we believe are our exceptional results for our second quarter. We believe our financial performance demonstrates the diversity and innovation of our brand portfolio as it continues to capture the attention of consumers. As a result, we delivered net sales growth of over 65% and our gross margins expanded by 690 basis points to nearly 47%. Based on our performance this quarter and our outlook for the second half, today, we are raising our guidance for fiscal 2021. I want to especially thank our employees who helped us deliver outstanding results this quarter, while positioning us for an exciting, groundbreaking first year as a public company. Their hard work and commitment to the health of their coworkers, combined with our award-winning products, made it possible for consumers to continue exploring their connection with the outdoors during these challenging times. To kick things off, I think it would be helpful to share with you some of the trends that we're seeing across markets impacting our business. In general, we believe we're witnessing a new higher foundational level of consumer participation in outdoor activities, responsible firearms ownership and adjacent home-based hobbies that surround outdoor adventure. So what do I mean by that? Put simply, because of restrictions surrounding COVID-19, more people have been going outside. Data suggests that there's been a meaningful shift in the number of people engaging in outdoor activities, which we believe has driven a new, higher baseline, adding to a larger installed base of long-term participants when compared to 2019. We believe American Outdoor Brands, in particular, is uniquely positioned to benefit from this shift. Let me share some market information with you to further illustrate my point. First, camping participation has been on the rise in recent years and saw further acceleration in 2020. According to a KOA study released in October, nearly 50% of campers surveyed said they went camping for the first time ever in 2020, or for the first time in recent years. In addition, a separate study by the Outdoor Industry Association in 2019 estimated that there were 42 million campers in the U.S. This, combined with the KOA survey outlining new camper trends in 2020, suggest that overall participation this year has been extraordinary compared to prior years. Further, KOA estimates that 82% of first-time campers have children in their household, which data suggests increases the likelihood that these new young entrants will be in the market for some time to come. Second, there is strong participation in firearms ownership in shooting sports with a record number of new entrants this year. Background check data gathered by the FBI indicates that a record number of firearms have been purchased in calendar 2020, with background checks through November 30, numbering 19 million. The National Shooting Sports Foundation estimates that 40% of those checks represent individuals who purchased a firearm for the first time, suggesting about 8 million new consumers entered the market this year. This new and larger installed base of owners suggests strong future participation in shooting sports and the need for accessories. Third, hunting has also been on the rise this year and many states across the U.S. have seen meaningful increases in the number of new hunters. A review of two recent Wall Street Journal articles indicates that hunting license sales are up more than 12% nationwide from last year, according to the National Shooting Sports Foundation. If the trend continues through the end of the year, they say those license sales translate to 1 million more hunters this year than last. Michigan alone has seen a 67% year-over-year increase in new hunters through the end of November, with hunters under the age of 17 increasing nearly 100% during the same period. The introduction of new hunters is critical to the long-term growth and participation of hunting. Lastly, fishing has seen similar trends. According to the same Wall Street Journal article, the Recreational Boating & Fishing Foundation stated that there were 3 million more licenses sold nationwide this year than last, a 14% increase. In Louisiana alone, between March and July of this year, the Louisiana Department of Wildlife and Fisheries sold approximately 60% more basic fishing and saltwater licenses than for the same period in the prior year. In addition to creating a larger market for many of our brands, growth in hunting and fishing also has the benefit of generating more money for fish and wildlife agencies in support of wildlife management and sustainability. This, in turn, creates a more sustainable future for hunting and fishing as participants return to these activities year after year. Weather measured by the record number of new firearm owners or by the extraordinary number of consumers who have taken their first camping trip this year, the data indicates to us that an outdoor renaissance is underway and that its effects may be long-lasting. Our four brand lanes, Defender, Marksman, Harvester and Adventurer, position us well to capitalize on this increased participation in shooting sports, hunting, fishing and camping as well as address personal protection and home security needs. The sales momentum that began during our first quarter continued and remained steady throughout the second quarter. Net sales of over $79 million represented exceptional growth, as we benefited from the activities I just outlined, combined with the normal seasonality, namely the fall hunting and holiday seasons, which occur in our second quarter each year. We believe that sales growth across both our traditional and e-commerce channels in the quarter demonstrates that the investments we've made over time are paying off. And we continue to achieve our objectives to place our brands wherever the consumer expects to find us, whether in a store or online. This strength is especially important in times like this, where consumer spending patterns are continually changing. In the second quarter, sales in our e-commerce channels grew over 213% compared to the prior year and included a notable increase in our direct-to-consumer sales. Net sales in our traditional channels grew as well, increasing by over 34% year-over-year. Turning to profitability. Our adjusted EBITDAS performance for the quarter was also extremely strong. In addition to higher gross margins year-over-year, we delivered a greater percentage of profitability that fell to the bottom line, demonstrating, we believe, just how leverageable our business is, thanks to the unique structure of our brand lanes. I'm happy to report that during the quarter, we experienced growth across nearly all of our 20 brands and within each of the major activities we serve. In fact, nearly half of our brands experienced triple-digit sales growth in the quarter. Furthermore, of our top four selling products in the quarter, each came from one of our four brand lanes, demonstrating the diversity that we have built across our business. Our brand lanes provide us with what we believe is an ideal competitive advantage for developing exciting, on-trend and highly innovative new products year after year that turn new consumers into lasting advocates as we take our brands from niche to known. In fact, it's not uncommon for us to launch over 300 new products annually. And as I've shared before, that process is rooted in our dock-and-unlock strategy. Once a brand is docked into one of four brand lanes, we can then begin to unlock a brand's true potential by leveraging the respective lanes' resources, including brand marketing, product development, sourcing and e-commerce. Our dock-and-unlock process is proprietary, was developed internally, and we believe provides a meaningful moat for our brands as they grow. Our continued entry into new, larger addressable markets utilizing this strategy continues to bear fruit as our brands progress along their transformation. Today, I want to provide you with some examples, starting with the home-grown favorite, one where we believe that best growth is yet to come. In March of this year, we launched our newest brand, MEAT! Your Maker. This is a bold, fun and contemporary brand that offers an innovative and affordable line of meat processing equipment, such as grinders, slicers and dehydrators, sold direct to consumer at meatyourmaker.com. While the entire product line was conceived within our Harvester brand lane to address the meat processing needs of hunters, we are excited to share that these products are finding their way into home kitchens as well. Following the field-to-table trend and the desire of consumers to control every aspect of processing the food they harvest, developed organically, completely in-house and launched just nine months ago, MEAT! Your Maker has gone from literally nonexistent to self-sufficient, quickly becoming a multimillion-dollar brand in our portfolio, and it's just getting started. We believe we have several brands in-house that harbor the same exciting potential. In fact, based on our research and consumer studies, we believe that most of our brands remain in their infancy and have yet to be fully explored. Specifically, this translates into three distinct priorities: first, expanding our brands by growing into new product categories; second, entering new customer channels of distribution; and third, entering entirely new and larger addressable markets. We believe this strategy provides our brands with significant runway for long-term growth, and the dock-and-unlock strategy is designed to unleash that growth. Situated within our Harvester brand lane is BOG, a brand with its origins in the shooting sticks and rests used in hunting. That is well on its way to becoming a broader lifestyle hunting brand with versatile products that are engineered for the unknown. One of our newest product launches, which also enters us into the large game camera product category, demonstrates this evolution perfectly. For those of you who are unfamiliar with game cameras, these devices allow the user to monitor wildlife activity in a hunting area, and they represent a significant dollar investment for most hunters. Introduced in 2020, our Blood Moon game camera recently received a top-rated ranking from trailcampro.com, which is considered by many to be one of the leading reviewers of game camera performance and testing. Here's what they like, and I quote 'Excellent photos and videos. 20-plus months of battery life and insanely fast detection capability.' And we didn't just create a game camera for the sake of it. We built ours from the ground up to include a patent-pending removable viewing screen that allows the user to quickly adjust camera settings and flip through pictures on the fly without logging into their computer. Next up is an example from our Defender brand lane. Our Lockdown brand began as a line of vault accessories, such as dehumidifying rods and vault organizers. Today, it is in the process of expanding beyond the vault with products that help consumers secure their lifestyle. Our new patent-pending Lockdown Puck recently received the Guns and Ammo Gun Tech of the Year Award for 2020. With built-in WiFi, the Puck pairs with a free Logic App that allows the user to remotely monitor the humidity, temperature and security status of any safe, cabinet or other storage area. The Puck allows the consumer to know that their firearms, jewelry or other valuables are safe and secure from anywhere in the world. Lastly, in our Adventurer lane, we are excited to include our UST brand, which provides another example of taking one of our brands from niche to known. UST has recently undergone a major brand relaunch. With its origins in camp accessories, such as lanterns and fire starters, we rebranded UST to expand into a broader offering that includes new, innovative and higher ASP items geared around the camp lifestyle, such as tents, sleeping bags and mattress pads. Let me highlight one of our especially exciting new products, the Monarch Sleeping Bag. The cocoon-like monarch lends itself to a wide variety of environmental conditions, with patent-pending wing sections that allow the user to transition from a 17-degree bag to a 37-degree bag. The wings can also be detached and used as a pillow. This fall, backpacker.com listed our UST Monarch Sleeping Bag as the #1 item on their list of the 27 best gifts for backpackers of 2020. These awards not only demonstrate the level of innovation that exists as a result of our brand lane structure but they punctuate the very exciting path that these brands travel as they evolve from niche to known. And with that, I'll ask Andy to cover the financial results. Andy?

Andy Fulmer, Chief Financial Officer

Thanks, Brian. I'm excited to share insights into what we believe are exceptional results for our Q2. We showed significant top-line growth, exceeded our own expectations with gross margins, and we're able to leverage our fixed operating expenses to yield almost 20% adjusted EBITDAS margins. Net sales for the quarter were $79.1 million compared to $40.7 million in the prior year, an increase of approximately 66%. As Brian noted, almost half of our 20 brands experienced growth of over 100%, with nearly all brands showing some level of growth over last year. This performance was driven by the increased participation in outdoor activities as well as our continued discipline with certain retailers to take a more balanced approach to their ongoing replenishment orders, as we've discussed on earlier calls. We believe this approach allows our shipments to be better aligned to underlying consumer demand at retail. Net sales in our e-commerce channels increased 213.4% over the prior year to $26.2 million. As a reminder, our e-commerce channels include our direct-to-consumer sales. They also include sales to retailer customers that do not traditionally operate a physical brick-and-mortar store but instead, generate most of their sales from consumer purchases on their retail websites. Sales in our traditional channels were $52.9 million, an increase of 34.3% over the prior year quarter. As Brian mentioned, we have made significant investments over time to ensure our brands are located where the consumer expects to find us, whether that is in a physical store, our retailer's website or on our own branded online storefronts. We believe these results reflect our success in those efforts. Our Q2 gross margins were 46.9%, a 690 basis point increase from gross margins of 40% last year. We participated in some annual promotional programs in certain product categories as originally planned, and margins were unfavorably impacted by increased tariff costs and inventory reserves. All of that said, however, favorable product mix and the general lack of promotions on other products greatly offset these decreases and drove margins to levels that we haven't achieved since the introduction of tariffs. We have previously discussed our initiative to discount certain slower-moving inventory in order to convert that product to cash. We originally expected a portion of those sales to occur in our Q2, but due to shifts in timing, they'll now occur in the second half of the year. That initiative commenced in our current Q3, and so far, we have sold over $2 million of this slower-moving inventory with a goal of selling a total of $5 million to $6 million across Q3 and Q4. When they occur, we expect these sales will yield minimal gross margins. And of course, we have already included that impact in our updated guidance. In the quarter, GAAP operating expenses were $27.5 million compared to $20.6 million in Q2 last year. The $6.9 million increase included $3.1 million of variable selling and distribution costs, about $740,000 from product development initiatives, over $600,000 from the build-out of our brand websites and the creation and distribution of marketing content and $1.6 million from compensation-related expenses in G&A. Intangible asset amortization decreased approximately $700,000 from $4.7 million to $4 million. Consistent with Q1, our Q2 operating expenses were lower than planned, largely due to the impact of the pandemic, which obviously drove meaningful restrictions in travel and the elimination of most trade shows, including SHOT Show, where companies like ours launched the bulk of their new shooting sports and hunting-related products. In order to ensure that we keep our marketing momentum going, we plan to take those funds and redirect them into developing rich media content in support of our new product launches. Non-GAAP operating expenses in Q2 were $22.5 million compared to $15.3 million last year. Non-GAAP operating expenses exclude intangible amortization, stock compensation and certain nonrecurring expenses as they occur. For the second quarter, GAAP EPS was $0.52 as compared with an EPS loss of $0.03 last year. Our non-GAAP EPS was $0.77 as compared to $0.20 in the year-ago quarter. These figures are based on our fully diluted share count of approximately 14 million shares. Adjusted EBITDAS came in at $15.8 million for a 19.9% EBITDAS margin compared to an 11.7% EBITDAS margin last year. The increase was driven by improvements in gross margin noted previously and what we believe is significant leverage of the fixed cost investments we have made in the business. Turning to the balance sheet and cash flow. On August 24, we completed the spin-off and were capitalized with $25 million from our former parent company. We generated approximately $3.9 million in cash from operations during the quarter, and we had cash outflows of $1.1 million for capital expenditures and patent costs. We ended the quarter with a cash position of $33.9 million. Accounts receivable increased by approximately $16 million in the quarter, driven by the sequential increase and quarterly net sales of roughly $29 million. At the end of Q2, we successfully completed two initiatives that will help reduce our overall DSOs and should provide meaningful improvements in cash flow going forward. Inventory increased by approximately $4 million, mainly due to our previously discussed investments to help mitigate potential pandemic-related supply chain risks, increased tariff costs that were capitalized as well as new products arriving for launch in calendar 2021. Here, I'd like to take a step back for a minute and talk about our long-term plans for inventory management and what you can expect to see. You'll recall Brian mentioned that we are focusing on higher ASP items in two of our brands. This initiative is actually taking place across many of our brands, and that higher ASP focus will increase our inventory value somewhat. In addition, as Brian noted, we launched a large number of new products each year, and our pipeline remains robust. Therefore, our inventory will reflect our preparation for those launches. We anticipate that new product timing and its velocity, along with our focus on higher ASP products, will combine to elevate our inventory values over time. While we anticipate this activity will be somewhat offset by sales of the slower-moving inventory I mentioned earlier, we believe it will still increase the inventory dollars on our balance sheet. That said, in total, we are actively managing our working capital turns, remaining focused on maximizing our cash flow. At the end of Q2, we had no borrowings on our $50 million asset-based line of credit. As a reminder, this facility also provides an additional $15 million of availability under certain conditions. The combination of revolver capacity and the roughly $34 million of cash on our balance sheet gives us nearly $100 million of capital. We believe this level of resource prepares us adequately to support both our organic and inorganic initiatives, as we remain actively involved in looking for potential complementary acquisitions. Finally, we continue to expect approximately $4 million in total CapEx spending for the fiscal year, with a portion of that being onetime in nature related to the spin-off. Now turning to our guidance. We are pleased to announce increases in our net sales, EPS and adjusted EBITDAS guidance. Based on financial performance through Q2, and our expectations for continued strength in the second half of the year, we are now estimating full-year net sales in the range of $235 million to $245 million, which would represent growth of roughly 40% to 46% year-over-year. With net sales in that range, we would expect full-year GAAP EPS in the range of $0.52 to $0.70 and non-GAAP EPS in the range of $1.49 to $1.67. We would also expect adjusted EBITDAS in the range of $34 million to $36 million, which would represent growth of approximately 176% to 193% year-over-year. While our non-GAAP EPS guidance at the midpoint implies an increase of $0.45 in the second half of the year, you'll notice that our GAAP EPS is expected to decline. This is attributable to approximately $8 million of acquisition-related intangible asset amortization as well as approximately $1.5 million in stock compensation that we anticipate we will record between Q3 and Q4. This effectively will take our GAAP EPS from its current $0.65 year-to-date to an estimated end-of-year midpoint of $0.61. Our Q2 tax rate of 24.7% includes discrete items related to the spin-off. And our guidance reflects a tax rate for the remainder of the year of approximately 27%. Lastly, all of our estimates are based on our forecasted fully diluted share count of approximately 14.2 million shares.

Brian Murphy, President and CEO

Thank you, Andy. Calendar 2020 has delivered us a set of unprecedented circumstances. Among them is what we believe to be a new foundational level of participation in outdoor activities and firearms ownership. This healthy market has provided us with an opportunity to demonstrate how our unique brand lane structure, combined with our dock-and-unlock strategy, allows us to expand our reach by maintaining a connection with the consumer and using that dialogue to fuel our innovative process. We believe our approach provides a truly unique and leverageable platform that will allow us to continue harnessing the power of our growing brand portfolio to drive our future growth and profitability. With that, operator, please open the call for questions from our analysts.

Operator, Operator

First question comes from Mark Smith with Lake Street Capital Markets.

Mark Smith, Analyst

A couple of questions for me here. Any categories or brands that were supply-constrained or overly supply-constrained during the quarter?

Brian Murphy, President and CEO

Mark, this is Brian. So no, that's the short answer. Our supply chain was in good order this quarter, and we had no disruptions.

Mark Smith, Analyst

Okay. And then one thing that we've heard from some retailers in the space is strong out-of-season demand for certain products, for example, this late fall, early winter fishing products doing really well. Can you talk about if you're seeing these same trends in any categories like BUBBA or camping, as we kind of move into colder months?

Brian Murphy, President and CEO

Yes, that's a great question. I'm glad you asked that. We are seeing positive trends across our entire portfolio. In our review before this call, I mentioned that all four of our brand lanes were represented among our top four selling products, and the distribution was quite even. So, BUBBA fits into that same trend. Camping products, sleeping bags, mattress pads, and tents, as well as BUBBA items and brands like Schrade, which usually perform better in summer, have continued to do well even into the fall.

Mark Smith, Analyst

Excellent. And then as we look at e-commerce and the growth that you've had there, can you guys walk through, at all, any of the impact that had on gross profit margin or even on an EBITDAS margin basis?

Andy Fulmer, Chief Financial Officer

Mark, it's Andy. We can't really get into too much detail there. As Brian said in the prepared remarks, our direct-to-consumer was up. That was again, a great result. And obviously, those have higher margins. Outside of that, I can't really get into too much detail.

Mark Smith, Analyst

Okay. And the last one for me. You guys talked a little bit about some new places, new addressable markets that you're really looking at. Can you give us any more insight into what you're looking at, what are these hot new categories you think maybe are?

Brian Murphy, President and CEO

Sure. So are you asking specifically about markets or some of the new product categories because we viewed it a little bit differently.

Mark Smith, Analyst

Why don't we talk about both of them then?

Brian Murphy, President and CEO

On the product side, BOG, one of our hunting brands, has evolved by focusing on the lifestyle aspects of hunting. We started with specific products like shooting sticks and rests, and we've now expanded into areas such as game cameras, which are a significant part of hunting purchases beyond firearms. BOG has also ventured into ground blinds, a market we were not in a year ago. These categories represent substantial portions of hunters' spending. We are progressing where our brands can operate, and I can provide more examples, but BOG is a prime illustration of our entry into new product categories. We also discussed the Lockdown Puck, which embodies our rethinking of the vault concept. We began with vault accessories tailored for a specific purpose where we were a market leader, and now we're enhancing Lockdown's appeal with advanced technology, making it relevant for consumers beyond traditional firearm owners—such as those wanting to secure items like wine or humidors. Another noteworthy example is MEAT! The meat processing sector, valued at approximately $10 billion, includes a diverse range of products and opens doors to sectors like commercial and restaurant markets. There's a local restaurant in Columbia using our commercial-grade meat processing equipment, and they rave about it. Our brands are increasingly being drawn into these markets, aligning with our strategy of expanding access and opportunities.

Operator, Operator

Our next question comes from John Kernan with Cowen.

John Kernan, Analyst

Congratulations on the positive momentum and success for the quarter and the year. Could you explain which specific categories and brands contributed to this significant increase in your guidance compared to three months ago, in terms of both sales and EBITDAS?

Brian Murphy, President and CEO

Yes. John, this is Brian. I would say there hasn't been a meaningful shift in our brand portfolios. If you look at the four brand lanes, Marksman, Defender, Harvester, and Adventurer, we haven't seen a significant shift outside of any seasonal changes. So obviously, in the fall, we tend to sell more hunting products. In the spring, we tend to sell more BUBBA, and UST going into the summer camping season. So outside of some of those seasonal trends, we really haven't seen a shift in our portfolio. Does that answer your question?

John Kernan, Analyst

A bit. I mean, it sounds like it was pretty broad-based. There wasn't any one brand or category. What was seasonally strong was strong and now as we look into spring, you expect that to kind of continue in the more seasonal spring and summer stuff?

Brian Murphy, President and CEO

Yes. Yes, that's correct.

Andy Fulmer, Chief Financial Officer

And John, this is Andy. I can answer the EBITDAS question. When you compare the previous guidance to the current guidance, it suggests a nearly 38% contribution to EBITDAS. As we discussed in the prepared remarks, this reflects the leverageability of our platform. Since our fixed costs remain constant, as revenues increase, we are able to significantly enhance our EBITDAS.

Brian Murphy, President and CEO

Yes, John. I was considering your question, and I believe I have something that might be more useful. If we look at the rise in personal protection and the estimated 8 million new firearm owners entering the market, that trend certainly affects brands like Crimson Trace, which focuses on aiming solutions and assists new buyers as they start in the market. As they visit the range to practice with their new firearms, brands like Caldwell, which specialize in range equipment, help them eliminate the variables that can lead to missed shots. Additionally, brands like Tipton, Wheeler, and Frankford provide gunsmithing tools and cleaning supplies, which are essential in the subsequent phase after the initial firearm purchase. We have also noted trends in fishing, camping, and hunting. This fall, there has been a significant increase in hunting participation, benefiting brands like BOG and others. I hope this adds more context to my earlier response.

John Kernan, Analyst

Yes, that is helpful. It sounds like your firearms hunting, fishing, really strong, and that really plays across your whole portfolio. Andy, maybe can you walk us through the puts and takes to gross margin and SG&A for the quarter, but also embedded in the guidance, you talked about the leverageability and the fixed cost leverage that you're generating now on this tremendous sales growth. So maybe just a little more detail and color as much as you can give us on expectations for gross margin, SG&A in the back half?

Andy Fulmer, Chief Financial Officer

Yes, that's a great question, John. On the gross margin front during the quarter, we were pleased to participate in our usual annual promotional programs in certain product categories. However, some other promotions weren't really needed, which is a continuation from Q1. We definitely saw favorable margins in Q2 because of that. Looking at the rest of the year, I would estimate that we expect margins to be in the mid-40s percentage range. This is mainly due to the anticipated $5 million to $6 million in revenue from slower-moving inventory, which we expect to have little to no margin, impacting our gross margin percentage. Regarding operating expenses, I would say we anticipate that Q2 will represent a peak level of OpEx, especially considering the variable selling and distribution costs tied to the $79 million in revenue. Additionally, we incurred several website costs from launches during the quarter, but we expect those expenses to decrease moving forward. With that said, you can estimate the implications based on our EPS and EBITDAS guidance.

John Kernan, Analyst

Got it. That's helpful. Maybe one final question from me. What are you most excited about as we enter spring of next year, specifically regarding brand and channel?

Brian Murphy, President and CEO

Yes, this is Brian. The Adventurer segment is really gaining momentum as we transition from winter to spring. We have some exciting new product launches planned for our brands that I believe will be well-received. As I mentioned earlier, we released over 300 new products last year. From January through April and May, expect to see many new items launched across all our brands, generating considerable excitement. I'm particularly enthusiastic about UST, where we underwent a rebranding and shifted from lower-priced items to higher-end products. Our new tents, sleeping bags, and mattress pads have been very well received by customers and attracted interest from several large clients, which we will update you on in the future. Additionally, brands like MEAT! Your Maker are tapping into a trend that extends beyond just the hunting season, focusing on the field-to-table movement. People are increasingly interested in controlling the entire process of preparing their own meat and grilling it, making the experience more personal. I would say it's an exciting time, and our brands are positioned well for this.

Operator, Operator

Our next question comes from Scott Stember with CL King.

Scott Stember, Analyst

Congrats on a great start to being a publicly traded company. You guys earlier talked about some new initiatives that you're really focusing on. One of them was new distribution areas. Can you maybe go a little bit more into that?

Brian Murphy, President and CEO

Sure. Scott, this is Brian. When I discuss new customer channels of distribution, we have brands like Hooyman, which initially focused on selling tree saws for clearing shooting lanes for hunters. The brand originated from helping hunters ensure their shooting lanes were free of branches. However, through our dock-and-unlock process, we recognized Hooyman as a land management brand that could grow beyond just tree saws. Over the past year, we've introduced rakes, shovels, mallets, machetes, and similar products featuring a distinctive grip known as the H grip, which has gained popularity. Traditionally, these products could be found in specialty sporting goods stores, but now they're being introduced into new distribution channels, such as home and hardware stores, where they weren't previously available. Additionally, Wheeler, which was primarily recognized as a gunsmithing brand, is now being utilized by consumers for car repairs and home DIY projects. More of these requests are reaching our customers, leading to our brands emerging in those new areas.

Scott Stember, Analyst

Got it. Taking a broader perspective, you mentioned new foundational layers in the market that are likely to persist. With the vaccine now available, could you address concerns that people may abandon their recently adopted outdoor activities? Specifically, how persistent do you believe these trends will be in the coming years?

Brian Murphy, President and CEO

This is Brian. From my perspective, it's difficult to predict exactly what will happen. I've reviewed several surveys related to camping and fishing, and many industry associations have done well in trying to capture how much of this will continue long-term. It appears that most studies indicate people still plan to engage in these activities. Additionally, there has already been a shift in consumer spending. If you analyze macro data from before COVID, especially credit and debit card spending, there was a significant drop in March and April, followed by a gradual return to pre-COVID spending levels. This suggests some consumers have changed how they allocate their money, possibly moving away from entertainment like movie theaters or sporting events. While some may return to those activities once a vaccine is widely available, it seems people intend to maintain their newfound interest in outdoor activities that they previously didn't have time for. According to KOA's survey, 50% of respondents reported camping for the first time or after many years. This has provided a strong boost to the industry, and other public companies have echoed the same sentiment, indicating positive long-term potential. Lastly, there's an interesting statistic about fishing: 91% of adults who fish began before the age of 12. This highlights the lasting appeal of such activities, and it makes us optimistic about sustained growth in this area.

Scott Stember, Analyst

Got it. And just a quick last question. In the back half of the year. Is there anything you can give us as far as cadence between the two quarters? Should we assume, I guess, essentially evenly split across the board, whether it's revenues and margins? Anything you can give us?

Andy Fulmer, Chief Financial Officer

Yes, Scott, this is Andy. Historically, our quarterly revenue trends are fairly predictable. Over the years, our peak always occurs in the second quarter, followed by a plateau in the third and fourth quarters. We anticipate that the third quarter may be slightly higher than the fourth, but you can refer to historical trends for more insight.

Operator, Operator

Our next question comes from the line of James Hardiman with Wedbush.

James Hardiman, Analyst

So a couple of follow-ups on the guidance. Obviously, you put up an unbelievable number here in the second quarter, $79 million in terms of revenues. The back half guidance assumes a pretty big step down from there. You touched on this a little bit. How much of that is seasonality versus just conservatism, hard to anticipate just how long this surge can last?

Andy Fulmer, Chief Financial Officer

Yes, James, this is Andy. It's a great question. When you take a look at Q1 and Q2 last year, those quarters were both down. Q1 was down almost 11%. Q2 was down almost 15%. So when you look at what we've done so far, and I don't want to take anything away from what we've done, but the comps were slightly easier. Probably the better comp is to actually go back to fiscal '19. And if you go back to fiscal '19, those numbers in Q1, our current year numbers, '21 to '19 go 35% and 41%. So it kind of starts to make sense. As you look at our implied growth in the second half of the year is almost 28%. So that kind of gives you a little more perspective when you take a look at fiscal '19.

James Hardiman, Analyst

Got it. That's helpful. And then I wanted to dig in a little bit. I think it was a comment from you, Brian. When you were talking about some of the brand lanes and the idea that certain purchases would be maybe concurrent with a new firearm for people that are new to the sport versus follow-on. Can you dig into that a little bit? I'm curious how much of a ripple effect that there might be from all of these new customers they got into not only firearms, but maybe some of the other products, right? As you had that surge in demand. Is there sort of a secondary effect from some of your brand lanes that we should be keeping in mind?

Brian Murphy, President and CEO

Sure. I will start by discussing the consumer's experience when they walk into the store, using Crimson Trace as an example. We sell Crimson Trace directly to OEM partners like Smith & Wesson, with whom we have a strong relationship, along with other OEMs. The demand for Crimson Trace Red Dots is increasing significantly in the market. When a customer enters the store, there’s a good chance that a Crimson Trace Red Dot is already on the firearm, such as a handgun. If it’s not, we are available at the counter. Typically, the dealer will gauge the customer's comfort level and preferences. In terms of aiming solutions, we believe Crimson Trace is the leading brand. Beyond that, consumers might also look for additional products, like gun cases, especially new buyers who are more tech-savvy and interested in products like the Puck. These consumers will need to store their firearms securely and ensure constant connectivity. We can provide them with that solution. As they continue their journey, when they visit a range, they will also seek out ammunition. However, ammunition is still in short supply at many retailers, which may lead them to consider reloading. For those unfamiliar, reloading involves creating your own ammunition using various components. Under our Frankford Arsenal brand, we offer products and accessories that help users safely make their own ammunition. This allows them to manufacture their ammunition and use our Caldwell products at the range. This process is part of how we engage with customers, and I hope that addresses your question. Your follow-up was regarding...

James Hardiman, Analyst

Let me quickly ask whether we are fully experiencing the impact of the follow-up brands you mentioned related to post-purchase, or if we are still waiting for that. Additionally, are there other brand categories that have reacted similarly, where there is more accessorizing rather than replacements that will take years?

Brian Murphy, President and CEO

Sure. I would say that for the brands in the Marksman and Defender categories, there is a clear path for consumers that starts at the point of purchase and continues with their use of the products. The Defender brand is more closely associated with that initial purchase. In contrast, the Marksman brand tends to have a bit of a time lag; typically, after buying a firearm, consumers will also get a gun case and a secure storage product. If they can spend some time at the range, which might take a month or two, they’ll notice other shooters using hearing and eye protection and realize they need those as well. This is usually when we see additional sales. At the range, they might also notice many people utilizing Caldwell shooting rests, prompting them to consider those products to enhance their aiming skills. To summarize, we observe this purchasing behavior occurring from one to six months after the initial firearm purchase. Regarding other brand lanes, such as BUBBA, people initially discover the brand through fillet knives. After fishing and returning to the dock to fillet their catch, they experience what I believe is our dominance in the fillet knife market. We've evolved BUBBA into a lifestyle fishing brand. The distinct texture on the BUBBA knife, which we call Bubba Rubba, becomes tackier when wet and is present on other BUBBA products. As consumers engage in activities like deep-sea fishing, they become interested in BUBBA gaffs or nets, illustrating how specific products can serve as gateways to a broader brand portfolio. Similarly, UST consumers often start with fire starters and lanterns. Once they have a positive experience with these high-quality items, they are more likely to explore other products, such as tents and sleeping bags. I noticed this firsthand when a neighbor had a UST tent during our backyard camping trips, prompting their curiosity about the brand's other offerings. This phenomenon spans various categories.

Operator, Operator

That concludes our question-and-answer session for today. I'd like to turn the call back to Mr. Murphy for closing remarks.

Brian Murphy, President and CEO

Thank you, operator, and thank you everyone for joining us today. On behalf of all of us at American Outdoor Brands, we wish you all a very safe and healthy holiday season and a prosperous New Year. We look forward to speaking with you again next quarter. Thanks.

Operator, Operator

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.