Thank you for standing by, and welcome to the American Outdoor Brands First Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. As a reminder, today's program may be recorded.

I would now like to introduce your host for today's program, Elizabeth Sharp, Vice President, Investor Relations. Please go ahead..

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 on today's call. 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, technology implementation, 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, CFO. And with that, I will turn the call over to Brian..

Thanks, Liz, and thanks, everyone, for joining us. I am extremely pleased with our strong start to the new fiscal year. We delivered first quarter growth and net sales and profitability, results that reflect our dedication to building authentic lifestyle brands that help consumers make the most out of the moments that matter.

Our first quarter net sales grew more than 20% over Q1 of fiscal 2021 and 83% over Q1 of fiscal 2020. We believe our results demonstrate the alignment of our brands with strong consumer trends in personal protection and popular outdoor lifestyles as well as the ability of our Dock & Unlock process to fuel innovation and drive organic growth.

The markets we serve, personal protection, shooting sports, camping, hunting and fishing, have all benefited from a new higher level of participation that began in our last fiscal year and continues to provide us with an expanded consumer base containing millions of new firearm owners, campers and fishing license holders.

Not to mention our increased reach into adjacent markets with totally new consumers such as land management, meat processing, and home security. As a reminder, our brands are organized into four distinct brand lines; Defender, marksman, Harvester, and Adventurer, each focused on a particular consumer type.

In the first quarter, 16 of our 20 brands delivered growth over the same period in fiscal 2021 and 19 of our 20 brands delivered growth over the same period in fiscal 2020.

Our top selling products this quarter came from each of our four brand lines demonstrating the diversity of our brand portfolio as well as our diversity across multiple consumer activity driven markets.

We believe the diversity will serve us well as we continue to expand into larger addressable markets to have the ability to transcend near-term secular trends. Our growth reflects our ability to deliver consumers a steady stream of innovative new products driven by our Dock and Unlock process.

Our sales and marketing teams were very busy in Q1 safely traveling and attending physical shows for the first time in over a year, unveiling a wide range of exciting new products and rolling out ramped up advertising and social media campaigns to connect with our consumers.

During the first quarter we attended ICAST, the fishing industry's premier tradeshow, where we unveiled a wide variety of new products from BUBBA, our lifestyle brand, known for its high-quality fishing equipment designed for Water to Plate anglers. These included kitchen cutlery and expanded apparel line and premium storage packs and bags.

While at the show we also proudly received a best in category award for Best Cutlery, Hand Pliers and Tools for our new BUBBA Pro series cordless electric fillet knife, designed to meet the demands of the hardcore angler by delivering industry-leading power and performance technology for unparalleled cutting efficiency.

Lastly and perhaps most exciting of all, at ICAST we announced BUBBA's entry into the $700 million retail market for saltwater fishing rods, reels and components and unveiled our first rods featuring the iconic BUBBA red with rod blanks designed entirely in-house which we anticipate will be available to consumers this coming February.

Our entry into fishing rods is the direct result and just one example of employing our Dock and Unlock strategy to drive innovation and provide entry into new markets. Our other brands were busy in the quarter as well. Our Old Timer brand is a historic everyday carry brand known for its premium quality knives.

During Q1, in time for Father's Day we launched the brand's first-ever electric fillet knifes, which can be purchased in lithium-ion and 110 volt versions. This expansion of the Old Timer brand delivers the benefits of our award-winning Bubba fillet knifes to freshwater fishermen and women under a brand they trusted for generations.

And just after the close of Q1, we attended the outdoor retailer show, where we unveiled some exciting new products from UST, our survival camping and outdoor gear brand.

New products included are double wide Fillmatic sleeping mats an expansion of our popular Fillmatic mats at double the width and our UST 1 and 2 personal blankets made of eco friendly materials and featuring our unique UST color and design. This was just a sampling.

Our new product pipeline remains robust and we have a number of new products launching over the next few months from several of our brands, including Crimson Trace, MEAT! Your Maker and Hooyman. Some will expand our offerings and some will take us into completely new categories.

Our teams are putting the finishing touches on their launch plans and working hard to ensure we have the inventory on hand to support these exciting new products and I look forward to sharing their successes with you on our next call.

An important part of our strategy is to place our brands wherever consumers decide to shop for them, whether online or the physical retail store. This approach is particularly important in our current environment, when the impacts of COVID are dynamic and consumers alternate between in-store shopping and online options.

In our first quarter our strategy delivered results. We believe strength in our traditional channel in Q1 was driven primarily by store reopening. Net sales in the channel grew 70% over the prior year and 96% over the first quarter two years ago.

We believe store re-openings positively impacted our international business as well, where recent investments to expand the size of our team and enhance our ability to source new customers are paying off. Our international sales grew from 4% of Q1 net sales last year to 7% of Q1 net sales this year.

On a two-year basis, international net sales delivered remarkable growth of nearly 239%. As we have said before, we believe the international market holds tremendous growth potential for many of our brands and we continue to aggressively explore those opportunities.

Sales into our e-com channel declined in Q1 versus the year ago quarter, largely the result of an anomaly that occurred in the prior year. You'll recall that Q1 of last year included the strong replenishment of inventory for one of our largest customers, a major online retailer, who hadn’t placed orders for a full month in the preceding period.

Instead, choosing to purchase only items they deemed essential during that time. So our e-com results for Q1 of last year reflected our ability to quickly replenish that retailer's inventory.

We believe a more accurate comparison for our e-com growth in the current period is the two-year comparison which removed that anomaly and reflects growth of 55% over our first quarter of fiscal 2020.

It's also important to note that our direct-to-consumer platform, which is included in our e-com numbers exceeded our expectations in the quarter, delivering solid growth over the prior year and demonstrating that the investment we made long ago in our websites continues to drive results.

Now turning to logistics, our teams here and in Asia again did a great job continuing to navigate supply chain constraints and port congestion issues.

We incurred increased freight costs in Q1 which is nearly impossible to avoid in this environment, but that's -- the team effectively employed a variety of freight alternatives ensuring we invested appropriately to get the products we needed. Their work helped us to build up inventories, an initiative we've been working on for the past few quarters.

That effort will continue in Q2 as we further invest in inventory of our highest volume products, support product launches I referenced, prepare for seasonality in our business and further mitigate supply chain risk.

With an outdoor industry that has experienced unprecedented levels of consumer participation over the past year, our unique Dock and Unlock strategy in place, and a strong first quarter under our belts, we are excited about the opportunities that lie ahead. We look forward to sharing our progress as we take our brands from niche to norm.

With that, I'll turn it over to Andy..

Thanks Brian. I'm happy to share the results from our first quarter which showed growth in net sales and adjusted EBITDAS. Our performance for the quarter, combined with our outlook for the balance of fiscal '22 and beyond continued to support our long-term growth and profit expectations.

Net sales for Q1 were $60.8 million compared to $50.5 million in the prior year. This represents an increase of 20% over last year and 83% over the first quarter of fiscal 2020. This increase was driven by higher demand in the outdoor products market combined with the consumer preference for the 20 brands across our portfolio.

Turning to gross margins, Q1 gross margins were 47.7%, a 70 basis point increase over the prior year. This performance was driven by improved manufacturing efficiencies, favorable excess and obsolete inventory adjustments and lower spending, offset by customer mix and increased freight costs.

In addition, the absence of promotions we experienced throughout fiscal '21 continued in the first quarter of fiscal '22, helping drive higher gross margins. Looking ahead, we expect to return to more normal promotional levels in fiscal '22 and that expectation is incorporated into our guidance.

Lastly, our gross margin you'll recall in the second half of fiscal '21 we worked to clear out some slow-moving inventory at little to no margin. We largely completed that effort in Q4 of fiscal '21 and you will see that impact reflected in the sequential increase in our gross margin from Q4 to Q1.

GAAP operating expenses for the quarter were $24.8 million compared to $21.3 million last year.

This increase was driven primarily by higher variable selling and distribution costs from the increase in net sales, new employees hired over the course of fiscal '21 to support our growth and increases in stock compensation and standalone G&A costs, offset by a reduction in intangible asset amortization.

Non-GAAP operating expenses in Q1 were $20.3 million compared to $16.6 million in Q1 of last year. non-GAAP operating expenses exclude intangible amortization, stock compensation, and certain nonrecurring expenses as they occur. GAAP EPS for Q1 was $0.24 as compared with $0.13 last year and non-GAAP EPS for Q1 was $0.48 compared to $0.36 last year.

Our fiscal '22 figures are based on our fully diluted share count of approximately $14.3 million shares. Adjusted EBITDAS for the quarter was $9.6 million at a margin of 15.7% and was consistent with our expectations. This compares to adjusted EBITDAS of $8.7 million or a margin of 17.3% for the prior year.

Please note, prior to the August 2020 spinoff, the lease of our Columbia facility was treated as a finance lease, whereas now it is treated as an operating lease. Excluding this change, adjusted EBITDAS margin would have been 15.8% last year or roughly flat year-over-year.

Turning to the balance sheet and cash flow, we ended the quarter with $56.3 million of cash and no borrowings on our line of credit, compared to $60.8 million in cash at the end of fiscal '21. We're very pleased with this result considering that were able to strategically invest in inventory of high volume products by $17.7 million in Q1.

Recall last quarter, we discussed our plan to build inventory in fiscal '22 in support of new product launches and to mitigate the numerous risks in the supply chain from port congestion and container shortages. This is an important investment designed to protect our business as we foresee a likely continuation of these challenges in fiscal '22.

Accordingly, in Q2 we will continue to work toward building up our inventory of high volume products along with our typical seasonal build. Our spending for CapEx and patent costs of $1 million in Q1 was in line with our expectations and we still expect total capital expenditures for the full fiscal year of between $7.5 million and $8.5 million.

Now a brief update on our IT infrastructure and ERP build out. You'll recall that our spin-off last year included an agreement with our former parent company that provides us with two years of IT support while we stand up our own independent platform by August 2022.

I'm happy to report that our IT infrastructure and ERP implementations projects are both on time and on budget. As a reminder, we expect the total cost of this project to be about $8 million over the course of fiscal '22 and '23. In fiscal '22 we expect CapEx of about $3.5 million and one-time operating expenses of about $1.6 million.

We also expect to record $1.2 million of duplicative expenses in fiscal '22 as we operate both our existing and our new platforms in parallel during the system changeover period. We will treat both the $1.6 million and the $1.2 million as technology implementation costs in G&A when calculating our non-GAAP operating expenses and adjusted EBITDAS.

We ended the quarter with no outstanding bank debt and the full capacity available on our $50 million line of credit. This facility provides an additional $15 million of availability under certain conditions. Our cash balance combined with our line of credit capacity provided us with over $120 million of available capital as of July 31.

Our strong balance sheet positions us well for future opportunities. Brian and I continue to seek out acquisition targets that have the ability to supplement our organic growth with brands that operate in large addressable markets, have runway for growth and can benefit from being plugged into our Dock and Unlock process.

While we continue to see a large number of targets coming to market, we remain disciplined in our approach as we assess those opportunities and we look forward to identifying opportunities that match our criteria.

Now turning to our guidance, we believe that our strong balance sheet combined with the consumer preference for our brands positions us well for future growth. Today we are reaffirming our fiscal '22 guidance.

We estimate that net sales for fiscal '22 will be in the range of $280 to $295 million, which at the midpoint would represent growth of roughly 4% over the prior year and growth of nearly 72% over our fiscal '20 results.

With net sales in that range, we expect full-year GAAP EPS in the range of $1 to $1.24 and non-GAAP EPS in the range of $2.02 to $2.26. We also expect adjusted EBITDAS of between 15% and 16% for the full year. Now just a few additional details on that outlook.

Historically our quarterly net sales amounts reflect the seasonality in our business with Q2 typically delivering the highest net sales, and Q3 the second highest net sales. However, in fiscal '21 Q3 net sales was higher than Q2 by almost 5%.

We expect to see net sales in fiscal '22 follow that same general path with Q3 net sales slightly higher than Q2. With regard to gross margin, as I mentioned before, our guidance also takes into consideration an expected resumption of more normalized promotional activity in the market during the remainder of our fiscal year.

As we've discussed before, we plan to invest in sales and marketing initiatives in fiscal '22 including business travel and trade shows at more normalized levels than we did in fiscal '21 when pandemic related restrictions eliminated those valuable opportunities to connect with our customers.

We expect those investments to continue throughout fiscal '22. Accordingly, we expect Q2 and Q3 operating expenses to increase from Q1 levels due to increased travel, advertising and brand initiatives, and trade shows, including SHOT Show in January 2022. In conclusion, virtually all of our international sales are made in U.S. dollars.

We expect our fiscal '22 effective tax rate will be approximately 25% and our fully diluted share count will be about 14.5 million shares. With that operator, please open the call for questions from our analysts..

Certainly. Our first question comes from the line of John Kernan from Cowen.

Your question please?.

Yes, excellent. Thanks for taking my questions. Congrats on the nice top line results on an obviously a difficult compare from Q1 last year, and congrats on the entry into saltwater fishing rods in relative terms like obviously a natural extension for BUBBA..

Thank you..

So maybe can you talk to the top line guidance embedded for the rest year? Obviously very difficult comparisons from last year, maybe both for traditional channels and e-commerce that’s embedded in the guidance and any -- you talked about a more normalized promotional environment in the industry, are there any specific categories where you're seeing promotions pick up a bit now?.

Yes. Hey John this is Brian. So, what I would tell you is, if you do the implied math for Q2 through Q4 over the two-year period that's really how we're looking at it.

You can probably pick up on that just based on how we -- with our opening remarks and a lot of other companies are doing something very similar implies nearly 70% growth for that period of time over the two-year period which is still remarkable. We’re seeing yes about mix kind of e-commerce is traditional. A big part of that too is international.

So international like we said in our Q1 remarks is opening up pretty dramatically, and then if you look at the tier compared to we've also seen increased distribution. So we're seeing a mix of international take place there. Obviously that's mostly traditional how we classify that, plus e-com has been in a little bit of a flux.

Right? We had this last quarter a little bit of an online retailer that last year kind of bulked up coming out of our Q4 of FY '20. And then also that online retailer has also been, with Delta variant rising has been prioritizing or reprioritizing some of that PPE.

So, it's kind of a mix of things, but our direct-to-consumer business continues to thrive and do incredibly well exceeding our expectations, offsetting some of that, but it's going to be a quarter-to-quarter. at the end of the day our goal is to be what the consumer expects to find us..

Understood. Then maybe Andy, just on gross margin. Obviously, supply chain costs are ticking up, we’re hearing it from all the different consumer facing companies.

Tell us what the incremental headwind from supply chain is for the remainder of the year and how you think this is going to normalize as we exit '22 and enter ’23?.

Yes, that's a great question John. As we talked about, we're definitely experiencing increased freight cost. We have an internal team dedicated. They meet numerous times a week really looking at freight costs, what the different options are to maximize the profitability.

We look at airfreight when we need to, when we may need to make sure we're getting good turns on customers -- with customers on certain products. Obviously again trying to maximize our profitability there.

With respect to, you talked before about promotions, I'm not sure we would really break out what specific product promotions, but it wouldn't really be anything out of the ordinary than what we've done in the past when you go back to fiscal '20, certain promotions during the holiday seasons, those types of things..

Okay, so maybe just to get maybe a little bit more detail on the gross margin adjusted SG&A. You did mention in the prepared remarks adjusted SG&A will rise as we go into Q2, Q3, Q4 which it seasonally always does.

I guess, is there the flow of gross margin? Can you provide us any more color to gross margin comparisons pretty tough the next couple of quarters? Is there going to some year over year pressure going into where you were in '21 that we should expect in the coming quarters?.

Yes, another great question. So, when you look back at Q2 last year that was almost 47%. I would expect the year-over-year comp in Q2 will be lower than 47% and then Q3, Q4 was kind of 44% or 45%. I think you could probably model somewhere near that.

And like you said, the OpEx we do expect in Q2 and Q3 to rise a little bit because of those trade shows, those types of things and then level off a little bit in Q4..

All right great. Well, congrats on the progress and look forward to seeing what the rest of the year has in store. Thank you..

All right, thanks John..

Thanks John..

Thank you. Our next question comes from the line of Eric Wold from B. Riley Securities.

Your question please?.

Thank you. Good afternoon, guys. So, couple questions.

I guess one on the entry into the $700 million market for fishing equipment rods and reels, what is your expectation for regional market share over the next three to five years in terms of your kind of decision to enter that market in the first place, where would you want to see that versus be disappointed?.

Yes Eric, this is Brian. As much as possible we want to take as much market.

So, this is actually something that we've had on the list since we acquired the business Andy actually can -- he remembers, I had a slide in there that had about the grip on a rod and we had talked about the market potential for that business, but we wanted to follow that kind of niche to norm progression.

We felt it was going to be too disruptive to the consumer if we just came out with rods, so we took our time, we worked on it. We developed all the rod blanks in-house. Did it the right way, came out the FK’s, expansion of the nuts and gas to create that logical next step for the consumer.

So, I think we're as well positioned as we can be right now versus if we had done this three years ago, but for us it is a big market. I think that we have a very distinctive looking product versus others in the market. I think people automatically recognize that red handled rod.

So we're very optimistic when it comes to how much market share we can take. I'd be reaching too far if I give you a percentage of what we're going after, but we wouldn't enter a market like this unless we plan to disrupt it, so we've got some big plans..

Makes sense. And then on past calls you talked about kind of an expectation for your share gains as kind of early participants in some of these activities over the past 12 to 18 months kind of, you know stick with it, become more avid and kind of maybe move up the chain.

Can you talk about what evidence you may be seeing from your retail partners and on your own e-commerce sites in terms of that happening ASPs getting larger, quite moving up in the price points within categories?.

Yes. Yes, I can speak to that, so this is Brian again.

So, we are absolutely seeing some of the higher ASP products, that's been part of our plan too as we obviously at Dock and Unlock, but as part of that moving up into these higher ASP items which is part of our longer-term growth plan and so we are seeing that consumer at least in our direct-to-consumer business are taking on the higher ASP products that we're introducing which is great.

And then also we were in a good spot last year, I think some of our competitors were struggling with inventory. We have, like Andy talked about break pipeline with our inventory management and analytics team to have that inventory.

Well, some of the lower priced products and this is feedback from our customers more primarily our brick and mortar customers is, some of the lower price point products just weren’t on shelves and so we were able to take some share with some higher price point products that we've been able to retain.

So, I think there's also just we have more share when it comes to customer’s options. When they are walking into that store and they see one of our products versus if you rewind 18 months ago it might look a little bit different. So we are hearing that anecdotally from our customers. We're seeing it in our numbers.

So it -- you know a few data points to get you there, but we are seeing it..

Got it and then just final question from me. On international obviously is our big growth area, we are there over the two-year stack. Talk about how you are able to do that now efficiently given just the high level of demand you're seeing here in the U.S.

being able to allocate products over there, that may be a demand here, are there meaningful differences in product category demand between the two markets? And can you get to similar if not better margins overseas and you can here to make that decision makes sense now versus possibly delaying a little bit?.

Sure, yes great question. It’s Brian again. So, our international strategy really began three to four years ago and our goal was to ramp up that team, make sure that we have adequate resources. Working internationally also comes with some additional challenges.

Right? Distribution, whether you have boots on the ground or you're going through distributors, each country has different requirements even when it comes to things like voltage stuff, we sell a BUBBA electric fillet knife, here it's going to be a different configuration overseas most likely. So those plans have been in place for several years.

So to be able to get what we saw in the first quarter, that was really in motion over the last couple years. That wasn’t a, hey let's figure out allocate inventory international versus domestic. It was -- that was already in the pipeline and we're servicing the growth that we expected internationally.

Did that answer your question?.

Yes, makes sense, thank you..

Thank you, our next question comes from a line of Scott Stember from CL King.

Your question please?.

Congrats on the quarter guys and thanks for taking my questions..

Thanks. Yes, Scott..

Maybe when you're looking at the four brand lines, can you maybe just talk about what you're seeing from -- on the demand side, and maybe also from an inventory perspective? You did say that about four of those brands, you have 20 brands were down year-over-year.

So would that suggest that maybe some of them are getting closer to having the inventory that they need?.

Sure, this is Brain, I can start, may be feel free to chime in. So what I would tell you is that if you look at kind of Q1 versus last year, there was civil unrest that was apparent last year that has seemed to have died down a little bit. So we had 8 million to 10 million firearm owners that entered the market.

On top of that, obviously, all of the great trends we saw in camping, fishing, and hiking and things like that. But I'll tell you that on the firearm side, we're seeing less of the spikes that we saw last year, but we're seeing a nice mix towards some of the hunting and fishing and camping categories.

So I think just speaks to the diversity of our brand portfolio, the brand lanes really hitting their stride. To be able to again, I kind of mentioned kind of alluded to in my prepared remarks around some of the near term trends, that's kind of what I'm speaking to.

So still solid demand when it comes to firearm accessories, things like that, from those new firearm owners. But we are seeing a pretty balanced mix across our entire portfolio..

Got it and regards to inventories, I know that we've been playing catch up for quite some time.

Are you seeing any pockets where things are starting to get closer to where folks want them or are we still way off?.

Scott, this is Andy. I don't think we're way off. I think that the replenishment that we're seeing is very healthy. Like Brian said, kind of pretty balanced replenishment across the brand lanes.

And again, I know we said in the prepared remarks, once again, the top sellers that we had in the quarter represented all of our four brand lanes, so we're very happy with that..

Yes, and we talked about kind of the ramp up in inventory. This was a strategy of ours because of all of the uncertainty in the supply chain. And so, that's what you're seeing in the quarter is that ramp up strategically to be able to prepare us for what might come next is anyone's guess, but we at least want to have the product to ship.

So we are, but we're still seeing a pretty tight line between what we have and what our customers are selling through at POS..

Got it and last question on the international side, nice to see that starting to take a nice jump up, but which one, which of your product lanes are the biggest beneficiaries there? I imagine that shooting related stuff is probably the least, but just give us an indication of which brands are doing particularly well?.

Yes, it's, so it might surprise you a little bit, this is Brian. Shooting is actually performing incredibly well internationally right now, in particular in places like Canada, which you probably expect. But we're also seeing some really good penetration on our hunting and camping and fishing brands.

So I'd say it's across the board, it mirrors pretty closely with what we're seeing domestically. But I think what would be a surprise to you is that shooting is performing incredibly well internationally..

Got it. That that's all I have. Thank you..

Thanks, Scott..

Thanks Scott..

Thank you. Our next question comes from the line of Mark Smith from Lake Street Capital.

Your question please?.

Hi guys. I wanted to just dig a little bit deeper into new customers.

Can you talk about new customer trends? Are you still seeing new entrants into some of these markets or more so here in first quarter was a lot of this driven by strength from existing customers?.

Yes, so hey, Mark, this is Brian. So I'll tell you that we, getting new distribution is one of the four pillars that we've -- we outlined last call to really support that 8% to 10% growth over the next four to five years.

And so we are seeing customers continued interest I would say from home and hardware, where the consumer that's going in there is -- has an expectation that they are going to start to see more outdoor related products and brands, which is great for us.

And then also there's an interesting crossover, so we have land management under like our Hooyman brand that we've talked about in the past. Well, that same person is there's a good overlap there with hunter.

And so, we are being asked from certain customers to present and to offer them a solution essentially to help address that customers want and they go into some of those stores.

And I think in large part too, because you had some folks that have -- that exited the space a few years ago, that I think maybe are turning that a little bit, but exited the space. So home and hardware, farm and ranch stores, things like that, we're seeing great penetration and interest from and some nice customer wins.

And but also, I mean, continued growth, yes you've asked about kind of the core base of customers, we're seeing on the traditional side, especially just across the board, I mean, we were looking at kind of our customer base and what grew in the quarter across our traditional channels.

And it was, I mean, it was like a paintbrush, I mean it was across the board from a lot of our core customers. So it's strong there, and then we are getting some great new customer wins as well..

Okay, and as we look at, we've talked about within firearm and maybe within the Defender brand lane, these 8 million to 10 million new customers, are you seeing conversion from people who maybe just bought a firearm to people that are becoming kind of avid users, any idea kind of what that conversion looks like for these people and end up instead of just buying a firearm, but buying, safety products, storage solutions, cleaning, targets, et cetera?.

Yes, this is Brian, you hit it on the head. I mean, that's what we're seeing is folks moving up the chain, getting more interested in accessories, rewind a year ago, and they went into a store and bought whatever was available. And maybe it wasn't even, they weren't as loyal when it came to the brand of firearm.

But now they get home, they've learned more about it, they want to shoot it safely, they want to secure it safely. We offer all of those, the products for that consumer.

The other interesting thing that we're seeing is, they bought their first firearm again, sort of brand agnostic, they've done more research and now they may want to go back and get a specific brand. So they'll go in and now they're a little bit wiser too.

They say, okay, well, I'm not just going to go buy a firearm, I want to get something that comes equipped with a Red Dot or a Laser, because I'm going to need it I went to the range and I shot terribly. So we are seeing higher attachment rates when it comes to things like that as well.

So little bit of a shift that same consumer but coming back a second or third time with more knowledge than they had the first time, which I think we're definitely seeing the benefit from..

Okay, and the last question from me is, is and you've talked about it a little bit, but what gives you your confidence in your, as you guys say, permission to play in fishing rods and reels.

And then as you look at this kind of evolution within BUBBA, in fishing, what are the other places and categories where you feel like you have permission to play in kind of a broader assortment of products?.

Sure. So we -- I'll give you a tease and say, we referred BUBBA when we established its permission to play. We talked about; we talk about this water to play lifestyle. So whenever we do an acquisition or when we went through kind of this full document log process a few years ago, we're not kind of marching down that road.

But it's a good insight into how we look at acquisitions too, is we establish what that permission to play is. For BUBBA, it's water to play, this water to play lifestyle, just like there's a field to table movement.

Really, there's no brand, there has not been a brand that has addressed we feel this water to play lifestyle, which is very much a real lifestyle, whether it's freshwater or saltwater. And when we had this in mind, like I said a few years ago when we first acquired BUBBA, then Bubba Blade is we felt it.

We didn't have permission at that time to introduce that to the consumer. That's why, we came out with nuts and gas, which is basically, same grip, our consumers can have a preference for that. It seems like they do. It's very distinctive. You see it on the boat.

And that's really become the hallmark of a BUBBA product is seeing that red handle on a boat. You can't miss it when you walk by a boat. And for a lot of people it is like having a YETI cooler on your boat. It gives you some legitimacy.

And so we think that the BUBBA rods which came from, several years of development, doing it all in-house and these grips, if you once they add shelves in February is what we're expecting. You'll see the difference. You'll feel the difference. It is, it comes with the quality you'd expect from any BUBBA product. So that's why we feel confident.

Obviously we do a lot of consumer research as well and so we're very confident of this Mark. And we've gotten good reception from our customers too, our brick-and-mortar customers and e-com customers..

Excellent, thank you, guys..

Yep, thanks, Martin..

Thank you, Mark..

Thank you. And this does conclude the question-and-answer session of today's program. I'd like to hand the program back to Brian Murphy for any further remarks..

All right, thank you, Operator. Before we close please note that we'll be attending two conferences next week, the CL King Best Ideas Conference, September 14, and the Lake Street Best Ideas Growth Conference on September 15, both virtual events where we hope to meet some of you. Thank you, everyone for joining us today.

We look forward to speaking with you again next quarter..

Thank you, ladies and gentlemen for your participation in today's conference. This does conclude the program. You may now disconnect. Good day..