UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended October 31, 2024

Commission File No. 001-39366

American Outdoor Brands, Inc.

(Exact name of registrant as specified in its charter)

Delaware	84-4630928
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

1800 North Route Z Columbia, Missouri	65202
(Address of principal executive offices)	(Zip Code)

(800) 338-9585

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each Class	Trading Symbol	Name of exchange on which registered
Common Stock, par value $0.001 per share	AOUT	Nasdaq Global Select Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The registrant had 12,763,907 shares of common stock, par value $0.001, outstanding as of November 29, 2024.

AMERICAN OUTDOOR BRANDS, INC.

Quarterly Report on Form 10-Q

For the Three and Six Months Ended October 31, 2024 and 2023

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION
	Item 1. Financial Statements (Unaudited)	5
	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
	Item 3. Quantitative and Qualitative Disclosures About Market Risk	26
	Item 4. Controls and Procedures	26
PART II - OTHER INFORMATION
	Item 1. Legal Proceedings	28
	Item 1A. Risk Factors	28
	Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	28
	Item 5. Other Information	28
	Item 6. Exhibits	29
Signatures		30

Accumax®, BOG®, BUBBA®, Caldwell®, Deadshot®, Deathgrip®, Delta Series®, Don’t Be Outdoorsy – Be Outdoors®, E-MAX®, Engineered for the Unknown®, F.A.T. Wrench®, Fieldpod®, Frankford Arsenal®, Golden Rod®, Hooyman®, Imperial®, Intellidropper®, Lead Sled®, Lockdown®, Lockdown Puck®, Mag Charger®, MEAT! Your Maker®, Old Timer®, Schrade®, Sharpfinger®, Tipton®, Grilla®, Grilla Grills®, Uncle Henry®, Unmatched Accuracy at the Bench and in the Field®, ust®, Wheeler®, XLA Bipod®, Your Land. Your Legacy®, Crimson Trace®, Lasergrips®, Laserguard®, LaserLyte®, Lasersaddle®, Lightguard®, and Rail Master® are some of the registered U.S. trademarks of our company or one of our subsidiaries. AOB Products Company™, Dock and Unlock ™, From Niche to Known™, MEAT!™, Secure Your Lifestyle™, The Ultimate Lifestyle™, and Water to Plate™ are some of the unregistered trademarks of our company or one of our subsidiaries. Trademarks licensed to us by Smith & Wesson Brands, Inc. in connection with the manufacture, distribution, marketing, advertising, promotion, merchandising, shipping, and sale of certain licensed accessory product categories include M&P®, Performance Center®, Smith & Wesson®, and T/C®, among others. This report also may contain trademarks and trade names of other companies.

Statement Regarding Forward-Looking Information

The statements contained in this Quarterly Report on Form 10-Q that are not historical are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. All statements other than statements of historical facts contained or incorporated herein by reference in this Quarterly Report on Form 10-Q, including statements regarding our future operating results, future financial position, business strategy, objectives, goals, plans, prospects, markets, and plans and objectives for future operations, are forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “anticipates,” “believes,” “estimates,” “expects,” “intends,” “suggests,” “targets,” “contemplates,” “projects,” “predicts,” “may,” “might,” “plan,” “would,” “should,” “could,” “may,” “can,” “potential,” “continue,” “objective,” or the negative of those terms, or similar expressions intended to identify forward-looking statements. However, not all forward-looking statements contain these identifying words. Specific forward-looking statements in this Quarterly Report on Form 10-Q include statements regarding the following:

•our expectation that the unrecognized compensation expense related to unvested restricted stock units, or RSUs, and performance-based restricted stock units, or PSUs, will be recognized over a weighted average remaining contractual term of 1.5 years;

•the condensed consolidated financial statements may not be indicative of our future performance;

•our belief that our future ability to fund our operating needs will depend on our future ability to generate positive cash flow from operations and obtain financing on acceptable terms; our belief that we will meet known or reasonably likely future cash requirements through the combination of cash flows from operating activities, available cash balances, and available borrowings through our existing $75 million credit facility;

•our expectation that our overall cost of debt funding may increase and decrease the overall debt capacity and commercial credit available to us;

•our future capital requirements depend on many factors, including net sales, the timing and extent of spending to support product development efforts, the expansion of sales and marketing activities, the timing of introductions of new products and enhancements to existing products, and any acquisitions or strategic investments that we may determine to make;

•the possibility that our ability to take advantage of unexpected business opportunities or to respond to competitive pressures could be limited or severely constrained if sufficient funds are not available or are not available on acceptable terms;

•our expectation to continue to utilize our cash flows to invest in our business, including research and development for new product initiatives; hire additional employees; fund growth strategies, including any potential acquisitions; repay any indebtedness we may incur over time; and repurchase our common stock if we have authorization to do so; and

•the possibility that increased demand for sourced products in various industries and other transportation disturbances could cause delays at various U.S. ports, which could delay the timing of receipt of our products.

A number of factors could cause our actual results to differ materially from those indicated by the forward-looking statements. Such factors include, among others, the following:

•potential disruptions in our suppliers’ ability to source the raw materials necessary for the production of our products, disruptions and delays in the manufacture of our products, and difficulties encountered by retailers and other components of the distribution channel for our products;

•lower levels of consumer spending in general and specific to our products or product categories;

•our ability to introduce new products that are successful in the marketplace;

•interruptions of our arrangements with third-party contract manufacturers and freight carriers that disrupt our ability to fill our customers’ orders;

•increases in costs or decreases in availability of finished products, components, and raw materials;

•the potential for increased tariffs on our products, including tariffs that may be imposed by the new presidential administration;

•our ability to maintain or strengthen our brand recognition and reputation;

•our ability to forecast demand for our products accurately;

•our ability to continue to expand our e-commerce business;

•our ability to compete in a highly competitive market;

•our dependence on large customers;

•our ability to attract and retain talent;

•pricing pressures by our customers;

•our ability to collect our accounts receivable;

•the potential for product recalls, product liability, and other claims or lawsuits against us;

•our ability to protect our intellectual property;

•inventory levels, both internally and in the distribution channel, in excess of demand;

•our ability to identify acquisition candidates, to complete acquisitions of potential acquisition candidates, to integrate acquired businesses with our business, to achieve success with acquired companies, and to realize the benefits of acquisitions in a manner consistent with our expectations;

•the performance and security of our information systems;

•our ability to comply with any applicable foreign laws or regulations;

•economic, social, political, legislative, and regulatory factors;

•the potential for increased regulation of firearms and firearms- related products;

•future investments for capital expenditures, liquidity, and anticipated cash needs and availability;

•the potential for impairment charges;

•estimated amortization expense of intangible assets for future periods;

•actions of social or economic activists that could, directly or indirectly, have an adverse effect on our business;

•disruptions caused by social unrest, including related protests or disturbances;

•our assessment of factors relating to the valuation of assets acquired and liabilities assumed in acquisitions, the timing for such evaluations, and the potential adjustment in such evaluations; and

•other factors detailed from time to time in our reports filed with the Securities and Exchange Commission, or the SEC, including information contained herein.

All forward-looking statements included herein, or in our Annual Report on Form 10-K, are based on information available to us as of their respective dates and speak only as of such dates. Except as required by law, we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements. The forward-looking statements contained in or incorporated by reference into this Quarterly Report on Form 10-Q, or in our Annual Report on Form 10-K, reflect our views as of the date of these reports about future events and are subject to risks, uncertainties, assumptions, and changes in circumstances that may cause our actual results, performance, or achievements to differ significantly from those expressed or implied in any forward-looking statement. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future events, results, performance, or achievements.

We are subject to the informational requirements of the Exchange Act, and we file or furnish reports, proxy statements, and other information with the SEC. Such reports and other information we file with the SEC are available free of charge at https://ir.aob.com/financial-information/sec-filings as soon as practicable after such reports are available on the SEC’s website at sec.gov. The SEC’s website contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

AMERICAN OUTDOOR BRANDS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

	As of:
	October 31, 2024 (Unaudited)			April 30, 2024
	(In thousands, except par value and share data)
ASSETS
Current assets:
Cash and cash equivalents	$	14,223		$	29,698
Accounts receivable, net of allowance for credit losses of $159 on October 31, 2024    and $133 on April 30, 2024		43,259			25,728
Inventories		111,566			93,315
Prepaid expenses and other current assets		4,904			6,410
Income tax receivable		270			223
Total current assets		174,222			155,374
Property, plant, and equipment, net		10,963			11,038
Intangible assets, net		35,887			40,217
Right-of-use assets		32,748			33,564
Other assets		305			404
Total assets	$	254,125		$	240,597
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	25,376		$	14,198
Accrued expenses		12,718			9,687
Accrued payroll and incentives		3,194			4,167
Lease liabilities, current		1,353			1,331
Total current liabilities		42,641			29,383
Lease liabilities, net of current portion		32,630			33,289
Total liabilities		75,271			62,672
Commitments and contingencies (Note 11)
Equity:
Preferred stock, $0.001 par value, 20,000,000 shares authorized, no shares    issued or outstanding on October 31, 2024 and April 30, 2024		—			—
Common stock, $0.001 par value, 100,000,000 shares authorized, 14,889,594 shares    issued and 12,832,682 shares outstanding on October 31, 2024 and 14,701,280 shares    issued and 12,797,865 shares outstanding on April 30, 2024		15			15
Additional paid in capital		278,677			277,107
Retained deficit		(73,877	)		(74,623	)
Treasury stock, at cost (2,056,912 shares on October 31, 2024 and    1,903,415 shares on April 30, 2024)		(25,961	)		(24,574	)
Total equity		178,854			177,925
Total liabilities and equity	$	254,125		$	240,597

See accompanying notes to unaudited condensed consolidated financial statements.

5

AMERICAN OUTDOOR BRANDS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

		For the Three Months ended October 31,						For the Six Months ended October 31,
		2024			2023			2024		2023
	(In thousands, except per share data)
Net sales		$	60,232		$	57,931		$	101,875	$	101,376
Cost of sales			31,325			31,441			54,043		55,167
Gross profit			28,907			26,490			47,832		46,209
Operating expenses:
Research and development			1,866			1,675			3,540		3,274
Selling, marketing, and distribution			14,973			15,414			26,356		27,468
General and administrative			8,998			9,423			17,439		19,573
Total operating expenses			25,837			26,512			47,335		50,315
Operating income/(loss)			3,070			(22	)		497		(4,106	)
Other (expense)/income, net:
Other income, net			59			53			141		92
Interest income/(expense), net			(6	)		6			142		(7	)
Total other income, net			53			59			283		85
Income/(loss) from operations before income taxes			3,123			37			780		(4,021	)
Income tax expense/(benefit)			12			(40	)		34		15
Net income/(loss)		$	3,111		$	77		$	746	$	(4,036	)
Net income/(loss) per share:
Basic		$	0.24		$	0.01		$	0.06	$	(0.31	)
Diluted		$	0.24		$	0.01		$	0.06	$	(0.31	)
Weighted average number of common shares    outstanding:
Basic			12,860			13,010			12,862		13,100
Diluted			13,145			13,256			13,211		13,100

See accompanying notes to unaudited condensed consolidated financial statements.

6

AMERICAN OUTDOOR BRANDS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(Unaudited)

(In thousands)

	Common Stock				Additional						Treasury Stock
For the three months ended October 31, 2024 and 2023	Shares		Amount		Paid-In Capital			Retained (Deficit)/Earnings			Shares		Amount			Total Equity
Balance at July 31, 2023		14,543	$	15	$	273,415		$	(66,488	)		1,482	$	(20,827	)	$	186,115
Net income		—		—		—			77			—		—			77
Stock-based compensation		—		—		1,005			—			—		—			1,005
Shares issued under employee stock    purchase plan		47		—		339			—					—			339
Issuance of common stock under    restricted stock unit awards, net of    tax		16		—		(51	)		—			—		—			(51	)
Repurchase of treasury stock		—		—		—			—			158		(1,494	)		(1,494	)
Balance at October 31, 2023		14,606	$	15	$	274,708		$	(66,411	)		1,640	$	(22,321	)	$	185,991
Balance at July 31, 2024		14,820	$	15	$	277,642		$	(76,988	)		1,945	$	(24,955	)	$	175,714
Net income		—		—		—			3,111			—		—			3,111
Stock-based compensation		—		—		866			—			—		—			866
Shares issued under employee stock    purchase plan		39		—		286			—			—		—			286
Issuance of common stock under    restricted stock unit awards, net of    tax		31		—		(117	)		—			—		—			(117	)
Repurchase of treasury stock		—		—		—			—			112		(1,006	)		(1,006	)
Balance at October 31, 2024		14,890	$	15	$	278,677		$	(73,877	)		2,057	$	(25,961	)	$	178,854
	Common Stock				Additional						Treasury Stock
For the six months ended October 31, 2024 and 2023	Shares		Amount		Paid-In Capital			Retained Deficit			Shares		Amount			Total Equity
Balance at April 30, 2023		14,447	$	14	$	272,784		$	(62,375	)		1,214	$	(18,559	)	$	191,864
Net loss		—		—		—			(4,036	)		—		—			(4,036	)
Stock-based compensation		—		—		1,938			—			—		—			1,938
Shares issued under employee stock    purchase plan		47		—		339			—			—		—			339
Issuance of common stock under    restricted stock unit awards, net of    tax		112		1		(353	)		—			—		—			(352	)
Repurchase of treasury stock		—		—		—			—			426		(3,762	)		(3,762	)
Balance at October 31, 2023		14,606	$	15	$	274,708		$	(66,411	)		1,640	$	(22,321	)	$	185,991
Balance at April 30, 2024		14,701	$	15	$	277,107		$	(74,623	)		1,903	$	(24,574	)	$	177,925
Net income		—		—		—			746			—		—			746
Stock-based compensation		—		—		1,798			—			—		—			1,798
Shares issued under employee stock    purchase plan		39		—		286			—			—		—			286
Issuance of common stock under    restricted stock unit awards, net of    tax		150		—		(514	)		—			—		—			(514	)
Repurchase of treasury stock		—		—		—			—			154		(1,387	)		(1,387	)
Balance at October 31, 2024		14,890	$	15	$	278,677		$	(73,877	)		2,057	$	(25,961	)	$	178,854

See accompanying notes to unaudited condensed consolidated financial statements.

7

AMERICAN OUTDOOR BRANDS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	For the Six Months Ended October 31,
	2024			2023
	(In thousands)
Cash flows from operating activities:
Net income/(loss)	$	746		$	(4,036	)
Adjustments to reconcile net income/(loss) to net cash used in    operating activities:
Depreciation and amortization		6,626			7,927
Loss on sale/disposition of assets		—			7
Provision for credit losses on accounts receivable		25			6
Stock-based compensation expense		1,798			1,938
Changes in operating assets and liabilities:
Accounts receivable		(17,556	)		(13,607	)
Inventories		(18,251	)		(9,389	)
Prepaid expenses and other current assets		1,506			1,823
Income tax receivable		(47	)		950
Accounts payable		10,578			6,331
Accrued payroll and incentives		(973	)		1,119
Right of use assets		816			592
Accrued expenses		3,031			3,530
Other assets		51			75
Lease liabilities		(637	)		(465	)
Other non-current liabilities		—			(16	)
Net cash used in operating activities		(12,287	)		(3,215	)
Cash flows from investing activities:
Payments to acquire patents and software		(665	)		(761	)
Proceeds from sale of property and equipment		—			131
Payments to acquire property and equipment		(908	)		(951	)
Net cash used in investing activities		(1,573	)		(1,581	)
Cash flows from financing activities:
Payments on notes and loans payable		—			(5,000	)
Payments to acquire treasury stock		(1,387	)		(3,762	)
Proceeds from exercise of options to acquire common stock,    including employee stock purchase plan		286			339
Payment of employee withholding tax related to restricted    stock units		(514	)		(352	)
Net cash used in financing activities		(1,615	)		(8,775	)
Net decrease in cash and cash equivalents		(15,475	)		(13,571	)
Cash and cash equivalents, beginning of period		29,698			21,950
Cash and cash equivalents, end of period	$	14,223		$	8,379
Supplemental disclosure of cash flow information
Cash paid for:
Interest	$	105		$	196
Income taxes (net of refunds)	$	72		$	(936	)

See accompanying notes to unaudited condensed consolidated financial statements.

8

AMERICAN OUTDOORS BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

For the Three and Six Months Ended October 31, 2024 and 2023

(1) Organization:

American Outdoor Brands, Inc. and its wholly owned Subsidiaries (our “company,” “we,” “us,” or “our”) is an innovation company that provides product solutions for outdoor enthusiasts, including hunting, fishing, camping, shooting, outdoor cooking, and personal security and personal defense products. We conceive, design, source, and sell our outdoor lifestyle products, including premium sportsman knives and tools for fishing and hunting; land management tools for hunting preparedness; harvesting products for post-hunt or post-fishing activities; outdoor cooking products; and camping, survival, and emergency preparedness products. We conceive, design, produce or source, and sell our shooting sports accessories, such as rests, vaults, and other related accessories; electro-optical devices, including hunting optics, firearm aiming devices, flashlights, and laser grips; and reloading, gunsmithing, and firearm cleaning supplies. We develop and market all our products as well as assemble some of our electro-optics products at our facility in Columbia, Missouri. We also contract for the manufacture and assembly of most of our products with third parties located in Asia.

We focus on our brands and the establishment of product categories in which we believe our brands will resonate strongly with the activities and passions of consumers and enable us to capture an increasing share of our overall addressable markets. Our owned brands include BOG, BUBBA, Caldwell, Crimson Trace, Frankford Arsenal, Grilla Grills, or Grilla, Hooyman, Imperial, LaserLyte, Lockdown, MEAT! Your Maker, Old Timer, Schrade, Tipton, Uncle Henry, ust, and Wheeler, and we license additional brands for use in association with certain products we sell, including M&P, Smith & Wesson, Performance Center by Smith & Wesson, and Thompson/Center. In focusing on the growth of our brands, our marketing, product development, and e-commerce teams focus on supporting our four brand lanes, each of which focuses on one of four distinct consumer verticals – Adventurer, Harvester, Marksman, and Defender – with each of our brands included in one of the brand lanes.

•Our Adventurer brands include products that help enhance consumers’ fishing, outdoor cooking, and camping experiences.

•Our Harvester brands focus on the activities hunters typically engage in, including the activities to prepare for the hunt, the hunt itself, and the activities that follow a hunt, such as meat processing.

•Our Marksman brands address product needs arising from consumer activities that take place primarily at the shooting range and where firearms are cleaned, maintained, and worked on.

•Our Defender brands focus on protection and include products that are used by consumers in situations that require self-defense for training and for securing high value or high consequence possessions.

(2) Basis of Presentation:

Interim Financial Information

Our unaudited condensed consolidated financial statements have been prepared in accordance with the requirements of the SEC for interim reporting. As permitted under those rules, certain disclosures and other financial information that normally are required by accounting principles generally accepted in the United States ("GAAP") have been condensed or omitted. Our accounting policies are described in the Notes to the Consolidated Financial Statements in our Annual Report on Form 10-K for our fiscal year ended April 30, 2024. We are responsible for the condensed consolidated financial statements included in this report, which are unaudited but, in our opinion, include all adjustments necessary for a fair presentation of our condensed consolidated balance sheet as of October 31, 2024, our condensed consolidated statement of operations for the three and six months ended October 31, 2024 and 2023, and our condensed consolidated statement of cash flows for the six months ended October 31, 2024 and 2023. The consolidated balance sheet as of April 30, 2024 was derived from audited financial statements.

The results reported in these condensed consolidated financial statements should not necessarily be taken as indicative of results that may be expected for the entire fiscal year.

9

AMERICAN OUTDOORS BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

For the Three and Six Months Ended October 31, 2024 and 2023

Revenue Recognition

We recognize revenue for the sale of our products at the point in time when the control of ownership has transferred to the customer. The transfer of control typically occurs at a point in time based on consideration of when the customer has (i) a payment obligation, (ii) physical possession of goods has been received, (iii) legal title to goods has passed, (iv) risks and rewards of ownership of goods has passed to the customer, and (v) the customer has accepted the goods. The timing of revenue recognition occurs either on shipment or delivery of goods based on contractual terms with the customer, as this is when transfer of control occurs and the customer accepts the product, has title and significant risks and rewards of ownership of the product, and physical possession of the product has been transferred. Revenue recorded excludes sales tax charged to retail customers as we are considered a pass-through conduit for collecting and remitting sales taxes.

The duration of contractual arrangements with customers in our wholesale channels is typically less than one year. Payment terms with customers are typically between 20 and 90 days, with a discount available in certain cases for early payment. For contracts with discounted terms, we determine the transaction price upon establishment of the contract that contains the final terms of the sale, including the description, quantity, and price of each product purchased. We estimate variable consideration relative to the amount of cash discounts to which customers are likely to be entitled. In some instances, we provide longer payment terms, particularly as it relates to our hunting dating programs, which represent payment terms due in the fall for certain orders of hunting products received in the spring and summer. We do not consider these extended terms to be a significant financing component of the contract because the payment terms are less than one year.

We have elected to treat all shipping and handling activities as fulfillment costs and recognize the costs as distribution expenses at the time we recognize the related revenue. Shipping and handling costs billed to customers are included in net sales.

We sponsor direct-to-consumer customer loyalty programs. Customers earn rewards from qualifying purchases or activities. We defer revenue for a portion of the transaction price from product sales to customers that earn loyalty points.

The amount of revenue we recognize reflects the expected consideration to be received for providing the goods or services to customers, which includes estimates for variable consideration. Variable consideration includes allowances for trade term discounts, sales volume incentives, chargebacks, and product returns. Estimates of variable consideration are determined at contract inception and are constrained to the extent that inclusion of such variable consideration could result in a significant reversal of cumulative revenue in future periods. We apply the portfolio approach as a practical expedient and utilize the expected value method in determining estimates of variable consideration, based on evaluations of specific product and customer circumstances, historical and anticipated trends, and current economic conditions. We have co-op advertising program expense, which we record within advertising expense, in recognition of a distinct service that we receive from our customers at the retail level.

Disaggregation of Revenue

The following table sets forth certain information regarding trade channel net sales for the three months ended October 31, 2024 and 2023 (dollars in thousands):

	2024		2023		$ Change		% Change
e-commerce channels net sales	$	24,282	$	23,462	$	820		3.5	%
Traditional channels net sales		35,950		34,469		1,481		4.3	%
Total net sales	$	60,232	$	57,931	$	2,301		4.0	%

Our e-commerce channels include net sales from customers that do not traditionally operate a physical brick-and-mortar store, but generate the majority of their revenue from consumer purchases at their retail websites. Our e-commerce channels also include our direct-to-consumer sales. Our traditional channels include customers that operate primarily out of physical brick and mortar stores and generate the large majority of their revenue from consumer purchases at their brick-and-mortar locations.

We sell our products worldwide. The following table sets forth certain information regarding geographic makeup of net sales included in the above table for the three months ended October 31, 2024 and 2023 (dollars in thousands):

	2024		2023		$ Change		% Change
Domestic net sales	$	56,847	$	54,982	$	1,865		3.4	%
International net sales		3,385		2,949		436		14.8	%
Total net sales	$	60,232	$	57,931	$	2,301		4.0	%

10

AMERICAN OUTDOORS BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

For the Three and Six Months Ended October 31, 2024 and 2023

The following table sets forth certain information regarding net sales in our shooting sports and outdoor lifestyle categories for the three months ended October 31, 2024 and 2023 (dollars in thousands):

	2024		2023		$ Change		% Change
Shooting sports net sales	$	23,806	$	23,371	$	435		1.9	%
Outdoor lifestyle net sales		36,426		34,560		1,866		5.4	%
Total net sales	$	60,232	$	57,931	$	2,301		4.0	%

The following table sets forth certain information regarding trade channel net sales for the six months ended October 31, 2024 and 2023 (dollars in thousands):

	2024		2023		$ Change			% Change
e-commerce channels net sales	$	40,783	$	41,838	$	(1,055	)		-2.5	%
Traditional channels net sales		61,092		59,538		1,554			2.6	%
Total net sales	$	101,875	$	101,376	$	499			0.5	%

The following table sets forth certain information regarding geographic makeup of net sales included in the above table for the six months ended October 31, 2024 and 2023 (dollars in thousands):

	2024		2023		$ Change			% Change
Domestic net sales	$	94,060	$	94,771	$	(711	)		-0.8	%
International net sales		7,815		6,605		1,210			18.3	%
Total net sales	$	101,875	$	101,376	$	499			0.5	%

The following table sets forth certain information regarding net sales categories for the six months ended October 31, 2024 and 2023 (dollars in thousands):

	2024		2023		$ Change			% Change
Shooting sports net sales	$	42,484	$	43,446	$	(962	)		-2.2	%
Outdoor lifestyle net sales		59,391		57,930		1,461			2.5	%
Total net sales	$	101,875	$	101,376	$	499			0.5	%

Recently Issued Accounting Pronouncements

In November 2024, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses ("ASU 2024-03), which requires disaggregation disclosures on an annual or interim basis, in the notes to the financial statements, of certain categories of expenses that are included in expense line items on the face of the statement of operations. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027 and should be applied prospectively, with the option to apply the standard retrospectively. We are currently evaluating the impact of adopting this ASU 2024-03 on our consolidated financial statements and disclosures.

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures ("ASU 2023-09"), which improves the transparency of income tax disclosures by requiring companies to (1) disclose consistent categories and greater disaggregation of information in the effective rate reconciliation and (2) provide information on income taxes paid disaggregated by jurisdiction. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, although early adoption is permitted. The guidance should be applied on a prospective basis with the option to apply the standard retrospectively. We are currently evaluating the impact of adopting this ASU 2023-09 on our consolidated financial statements and disclosures.

In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures ("ASU 2023-07"), which improves financial reporting by requiring disclosure of incremental segment information. The

11

AMERICAN OUTDOORS BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

For the Three and Six Months Ended October 31, 2024 and 2023

new guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. We are currently evaluating the impact of adopting this ASU 2023-07 on our consolidated financial statements and disclosures.

(3) Leases:

We lease real estate, as well as other equipment, under non-cancelable operating lease agreements. We recognize expenses under our operating lease assets and liabilities at the commencement date based on the present value of lease payments over the lease terms. Our leases do not provide an implicit interest rate. We use our incremental borrowing rate consistent with our revolving line of credit based on the information available at the lease commencement date in determining the discount rate for the present value of lease payments. Our lease agreements do not require material variable lease payments, residual value guarantees, or restrictive covenants. For operating leases, we recognize expense on a straight-line basis over the lease term. We record tenant improvement allowances as an offsetting adjustment included in our calculation of the respective right-of-use asset.

Many of our leases include renewal options that can extend the lease term. These renewal options are at our sole discretion and are reflected in the lease term when they are reasonably certain to be exercised. The depreciable life of assets and leasehold improvements are limited by the expected lease term.

The amounts of assets and liabilities related to our operating leases as of October 31, 2024 and April 30, 2024 are as follows (in thousands):

	October 31, 2024		April 30, 2024
Operating Leases
Right-of-use assets	$	37,541	$