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00:02 Good day everyone, and welcome to American Outdoor Brands Inc. Second Quarter Fiscal twenty twenty two Financial Results Conference Call. This call is being recorded. 00:12 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..

00:22 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.

01:05 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. 01:28 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.

01:43 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 other costs 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.

02:30 Joining us on today's call is Brian Murphy, President and CEO; and Andy Fulmer, CFO. 02:37 And with that, I will turn it over to Brian..

02:40 Thanks, Liz and thanks everyone for joining us. I'm very pleased with our performance for the first half of fiscal twenty twenty two. We are in the midst of a growing outdoor market that has welcome new participants to the outdoors.

We have a collection of authentic brands that continue to resonate with our core consumers, we own a unique Dock & Unlock process that has organically created innovative brands and products and we have built an operations team that has successfully navigated recent supply challenges to keep our products moving.

03:08 In addition, we have achieved key milestones in establishing our post spin off standalone infrastructure. Together, these elements form a strong operation that will allow us to continue servicing our customers and delivering growth for the balance of fiscal twenty twenty two and for the long term.

With that, let me share some details of our recent performance. 03:29 During our second fiscal quarter, our ecommerce net sales grew nearly five percent year over year and over two twenty eight percent on a two year basis, including a meaningful increase in our direct to consumer business.

While our total net sales declined in the quarter, we believe this primarily reflects the timing of orders from our traditional channel customers. In our second quarter last year, certain customers increased their orders to address depleted inventories as they reopened from COVID related closures.

03:58 This year, many of our largest customers indicated that they accelerated their orders into our first quarter to mitigate supply chain concerns. These fluctuations in timing are the reason we view our six month performance as a more meaningful comparison than a shorter term quarterly comparison.

04:15 For the first half of fiscal twenty twenty two, we delivered net sales growth of one point five percent versus the year ago period and net sales growth of over sixty two percent versus the first half of fiscal twenty twenty.

These results reflect our dedication to building authentic lifestyle brands, that help consumers make the most out of the moment that matter.

04:35 In the markets we serve, fishing, camping, hunting, shooting sports, and the rugged outdoor lifestyle 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 participants.

04:53 Now to mention our increased reach into adjacent markets with wholly new consumers, such as land management, meat processing and home security. We continue to identify opportunities within this expanded consumer base, utilizing our brand lane structure and our Dock & Unlock strategy.

Our brand lanes, Defender, marksman, Harvester, and Adventurer organize our brands by consumer activity and provide us with an ideal competitive advantage for developing innovative new products year after year that turn consumers into long term advocates as we take our brands from niche to known.

05:31 Once a brand is docked into its appropriate brand lane, we begin to unlock its potential by leveraging the lanes resources. Which include brand marketing, creative, product development, sourcing, and ecommerce.

05:45 Dock & Unlock continues to fuel innovation, drive future growth and support our objective to deliver a compound annual organic growth rate of eight percent to ten percent over the next four to five years.

05:57 During the second quarter, we benefited from a strong consumer preference for our brand across our portfolio, especially the hunting related brands in our Harvest brand lane in anticipation of the fall hunting season. This includes MEAT! Your Maker, our internally developed direct to consumer brand of meat processing equipment.

MEAT! provides an outstanding case study of our Dock & Unlock process and action. Launched in March of twenty twenty and sold exclusively in the direct to consumer channel, MEAT! products are winning over consumers at a very exciting pace.

06:29 In October, MEAT! achieved its first million dollars mark, a record it surpassed again in the month of November. And by the end of November, including orders through Black Friday and Cyber Monday, MEAT! achieved trailing twelve month net sales of just over six million dollars. From a starting point of zero, less than two years ago.

To sum it up, we identified a consumer opportunity in the growing field to table movement, a gap in our offering and a lack of appealing acquisition targets.

07:02 From there, Dock & Unlock led us to design, build, launch and take market share with an organically developed brand that has delivered growth of four fourteen percent in the past year alone. In addition, we have identified additional new products under the MEAT! brand that we're launching as we speak. More on that next quarter.

07:24 MEAT! is an outstanding example of the strength that lies in investing our capital into organic growth opportunities made possible by Dock & Unlock. This ability to invest in ourselves is a key driver for our future growth.

I see no reason that our MEAT! brand cannot become a meaningful percentage of our revenue in the future, and I see every reason for us to create exciting new brands in the future that have the same potential. 07:50 We had other new product developments in the quarter as well, resulting from our Dock & Unlock strategy.

BUBBA, our fishing lifestyle brand known for its high quality angling equipment and apparel, which is situated in the Adventurer brand lane entered an entirely new product category by launching its newest product line, the Kitchen Series, a collection of high end culinary knives designed to complement the water to plate lifestyle.

08:15 BOG, our very popular line of hunting gear engineered for the unknown, resides in our Harvester brand lane. BOG products often incorporate our proprietary technology. And in September, BOG expanded its Tripod family to include two new camel design patterns.

BOG also announced an expansion of its family of ground blinds to include a [indiscernible] designed for open hunting and a larger hub line designed for rifle, cross bow or compound bow hunters and spacious enough to accommodate multiple hunters at the same time.

08:50 Two exciting developments in our Defender brand lane included our Crimson Trace brand, which introduced the [CP Rad] (ph) series, a comprehensive family of ten new rapid aiming sites in both red and green illuminated options, as well as micro, compact and full size platforms.

09:09 And lastly, our Lockdown brand, which offers connected solutions designed to protect high consequence valuables rolled out the new Lockdown logic app developed by our in house R& D team, which includes app development resources.

The new app enhances the consumer experience, unlocks new functionality and features and lays the foundation for future product launches in the Lockdown brand family. 09:35 Our customers tell us regularly that we are without a doubt the innovation leader within our product categories.

And in the second quarter, new products comprised over twenty five percent of our revenue. This innovation is the direct result of our Dock & Unlock strategy and new products resulting from this process drive our long term organic growth and generate healthy accretive and sustainable margins.

In fact, the strong margins we demonstrated in the second quarter are a direct reflection of this power in action. 10:08 In fiscal twenty twenty two, we will launch over three fifty new products surpassing our annual average.

New product launches will occur across all four of our brands lanes with the highest new product growth rate coming from the Hunting related brands in our Harvester brand lane and the camping and fishing related brands in our Adventurer brand lane. 10:30 Turning to brand performance.

We believe that brand growth in the quarter reflects the same timing fluctuations we discussed earlier. For that reason, we believe that here as well the six month comparison is a more accurate assessment of performance.

For the six months of fiscal twenty twenty two, over half of our brands delivered growth over the same period in fiscal twenty twenty one.

Our top selling products within the six month period came from each of our four brand lanes, demonstrating the range of our brand portfolio, as well as our diversity across multiple consumer activity driven markets.

We believe this diversity will serve us well as we continue to expand into larger addressable markets that have the ability to transcend near term secular trends. 11:15 In addition to providing diversity, a number of our brands are highly complementary to one another.

Our brand lane structure, combined with our ecommerce platform allows us to identify and implement a number of cross marketing opportunities among those brands to drive growth. For example, the consumers that purchased our BOG products are typically hunters.

It stands the reason that they will likely be interested in processing the meat they harvest on their hunts.

11:41 So we saw cross marketing opportunity and during the second quarter, we utilized our ecommerce platform to reach out to our BOG audience, introducing them perhaps for the first time to MEAT! Your Maker meat processing equipment, enabling us to complete that field to table concept for our consumer, while we expanded our customer base.

12:01 We see a number of opportunities across our portfolio, where our highly complementary brands can work together in this fashion. As you know, our ecommerce platform is a key element in our strategy to place our brands wherever consumers decide to shop for them, whether online or in a physical retail store.

This approach is particularly important in our current environment when the impacts of COVID our dynamic and consumers alternate between in-store shopping and online options. Our second quarter ecommerce growth demonstrates the positive impact of this strategy. Clearly, the investment we made long ago in our websites continues to pay off.

12:40 Now turning to logistics, our teams here and in Asia again continue to successfully navigate supply chain constraints and core congestion issues.

Their work helped us achieve the strategic inventory build we have discussed on prior calls, inventory that is important to ensuring that our retailers in our own online storefront are stocked for the hunting and holiday shopping seasons. Particularly with our most popular products.

That inventory also supports the new product launches that I mentioned earlier. 13:14 With a robust new product pipeline in place, a portfolio of authentic brands in hand and an energized outdoor consumer market, we are excited about the future and we look forward to sharing our progress as we take our brands from niche to known.

13:28 With that, I'll turn it over to Andy to discuss our financial results..

13:33 Thanks, Brian. Our performance year to date combined with our outlook for the second half of fiscal twenty twenty two continues to support our long term strategy. 13:43 Net sales for Q2 were seventy point eight million dollars compared to seventy nine point one million dollars in the prior year, a decrease of ten point five percent.

We believe the decrease was primarily driven by the timing of orders from our traditional brick and mortar channels as certain customers accelerated their inventory purchases into our first fiscal quarter to mitigate their own supply chain risk.

14:08 In addition, we believe our second quarter last year reflected heightened demand driven by increased foot traffic at retailers in our traditional channel as they reopened from pandemic restrictions.

Despite the decline in our traditional channel sales during Q2 of this year, our ecommerce net sales grew nearly five percent over second quarter of last year, as Brian mentioned earlier.

14:32 Net sales for the first six months of fiscal twenty twenty two were one hundred and thirty one point five million dollars, which represents a one point five percent increase over fiscal twenty twenty one and an increase of more than sixty two percent over fiscal twenty twenty. 14:48 Now turning to gross margins.

Gross margins in the second quarter came in above our expectations at forty six point seven percent, a reduction of just twenty basis points from last year. Our operations team did a great job staying on top of various transportation options and costs, helping us to minimize the impact wherever possible.

15:11 GAAP operating expenses for the quarter were twenty seven point seven million dollars which is roughly flat compared to last year.

Within that number were decreases in our variable selling costs resulting from reduced sales, combined with lower website costs as we completed the launch of new websites for each of our key brands in the year ago period. 15:32 Expenses also included a reduction in intangible asset amortization.

These decreases were offset by our planned increases relating to standalone G&A costs, such as IT infrastructure and insurance, as well as increases in freight costs and advertising expense.

15:52 Non GAAP operating expenses in the quarter were twenty two point seven million dollars compared to twenty two point five million dollars in Q2 of last year. Non GAAP operating expenses exclude intangible amortization, stock compensation and certain nonrecurring expenses as they occur.

16:11 GAAP EPS for Q2 was zero point three two dollars as compared with zero point five two dollars last year and Non-GAAP EPS for Q2 was zero point five eight dollars compared to zero point seven seven dollars last year.

Our fiscal twenty twenty two figures are based on our fully diluted share count of approximately fourteen point three million shares. 16:31 Adjusted EBITDAS for the quarter was eleven point seven million dollars at a margin of sixteen point five percent.

This compares to adjusted EBITDAS of fifteen point eight million dollars or a margin of nineteen point nine percent in the prior year.

Adjusted EBITDAS for the first half of fiscal twenty twenty two was twenty one point three million dollars or sixteen point two percent which is in line with our expectations and in fact, is above the high end of our guidance range for the full fiscal year. 17:03 Turning to the balance sheet and cash flow.

We ended the quarter with thirty two point six million dollars of cash and no borrowings on our line of credit.

The sequential decrease in our cash balance was driven largely by two items; the first is a typical seasonal build in receivables we see at this time of year; the second is our planned strategic investment in inventory we've talked about in the past to mitigate supply chain risk.

17:30 Specifically, we've been working to build inventory in Q1 and Q2 of our high volume products as well as inventory to support a number of upcoming new product launches and our efforts here have been very successful.

The current challenges we face from port congestion and container shortages are in line with what we expected, and our team has done a great job as usual, closely managing these issues on a daily basis.

17:59 In addition, we believe our planned pull forward of inventory purchases in Q1 and Q2 positions us well to continue servicing our customers through the second half of fiscal twenty twenty two. Going forward, we would expect inventory levels to decrease in the second half of the year as we fulfill demand for our products.

18:20 Our spending for CapEx and patent cost of one point eight million dollars in Q2 included about one million dollars for IT infrastructure and was consistent with our expectations. We are still planning total capital expenditures for the full fiscal year of between seven point five million dollars and eight point five million dollars.

We've discussed previously that our spin off last year included a transition services 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 of twenty twenty two.

18:57 In November, we completed a major milestone in the project with our successful migration to our own independent IT infrastructure. This was an important and complex step in the project, so I applaud our IT team for leading it successfully and our employees for supporting the transition.

With that important accomplishment behind us, we're preparing for the implementation of our ERP platform, Microsoft D365 which is on track for go live next summer.

19:28 Our cost estimates for the IT infrastructure project remain unchanged, and we expect the total will be about eight million dollars over the course of fiscal twenty twenty two and twenty twenty three.

In fiscal twenty twenty two we expect CapEx of about three point five million dollars and one time operating expenses of about one point six million dollars. We also expect to record one point two million dollars of duplicative expenses in fiscal twenty twenty two.

These are the costs of operating both our existing and new platforms in parallel during the system changeover period. 20:02 We will treat both the one point six million dollars and the one point two million dollars as technology implementation costs and G&A when calculating our non GAAP operating expenses and adjusted EBITDAS.

20:15 Back to the balance sheet, we ended Q2 with no outstanding bank debt and the full capacity available on our fifty million dollars line of credit. This facility provides an additional fifteen million dollars of availability under certain conditions. 20:31 Turning to our capital allocation strategy.

As we've stated since our spin off, organic growth remains our top priority. As Brian detailed earlier in the call, our ability to create brands internally, such as MEAT! that deliver purely organic growth and healthy gross margins is a unique benefit of our Dock & Unlock process and they mirror our primary focus.

20:56 At the same time, we also believe that locating and acquiring tuck-in brands that can benefit from Dock & Unlock can fuel our growth well beyond the eight percent to ten percent organic CAGR we've established for the next few years.

For that reason, we continue to actively seek out attractive acquisition targets that will complement our current brand portfolio, while remaining disciplined on our focus on only those that meet our criteria. 21:24 In fact, we've come close on a few opportunities recently that ultimately didn't meet that criteria.

We expect the acquisition landscape will remain active well into calendar twenty twenty two and we look forward to finding the right fit for our business. 21:41 We believe the strength of our balance sheet provides us with multiple options to effectively deploy our capital to help drive growth.

Our cash balance combined with a capacity on our line of credit provided us with almost one hundred million dollars of available capital as of October thirty one. Looking ahead, we expect our normal seasonal cash bill to occur in the second half of the year, further strengthening our balance sheet.

22:08 Our solid financial position enables us to execute on our capital allocation priorities, including investing in organic growth and potential acquisitions, as well as opportunistically returning capital to our shareholders.

As a result, we are pleased to announce that our Board has authorized a share repurchase program of up to fifteen million dollars of our common stock through December twenty twenty three. 22:35 Now turning to our guidance.

As we exited the second quarter, we were pleased to receive data from our retail partners indicating that POS trends for our products remain strong.

Based on our first half results, combined with what we believe is the consumers preference for our strong portfolio of brands and our current visibility into the second half of the year, we are narrowing our guidance range for fiscal year twenty twenty two, which represents growth over fiscal year twenty twenty one.

23:07 We estimate that net sales for fiscal twenty twenty two will be in the range of two eighty million dollars to two eighty five million dollars, which at the midpoint would represent growth of roughly two percent over the prior year, and growth of nearly sixty nine percent over fiscal twenty twenty.

With net sales in that range, we expect full year GAAP EPS in the range of one dollars to one point one nine dollars and non GAAP EPS in the range of two point zero two dollars to two point two one dollars. Our expectation for adjusted EBITDAS margins of between fifteen percent and sixteen percent for the full year remains unchanged.

23:46 Now for a bit more detail on the guidance. Our full year outlook for fiscal twenty twenty two puts net sales growth during our second half at about fifteen percent over the first half.

As we look out across Q3 and Q4, we would expect to see Q3 net sales slightly higher sequentially from Q2 followed by another slight sequential increase in Q4 as retailers restock after the holidays, and we commenced several new product launches.

24:15 With regard to gross margin, we would expect to see gross margin percentages in the second half of fiscal twenty two fairly similar to our percentages in the second half of last year. On the expense landscape, a reminder here that SHOT Show and the ATA Show will take place in Q3.

In addition, Q3 will reflect our ongoing infrastructure and R& D investments. 24:38 Finally, we expect our effective tax rate will be approximately twenty five percent for the balance of fiscal twenty twenty two and our fully diluted share count will be about fourteen point five million shares.

24:50 With that, operator, please open the call for questions from our analysts..

25:15 [Operator Instructions] Our first question comes from the line of Eric Wold of B. Riley Securities. Your line is open..

25:25 Thank you. Good afternoon everybody. A couple of questions. I guess one, can you help us bridge kind of your expectations and moving from two-ish percent growth rate this year to the eight percent to ten percent range over the next coming years against what look to be a pretty tough comparison on to your stack.

And how dependent is that growth rate on M&A?.

25:53 Hey, Eric, this is Brian. So, I would tell you that it's not dependent upon M&A at all. That's just purely based on our organic growth rate. And what drives that is really comes down to new products and new distribution.

So, if you recall, new products represents for us anywhere between twenty five percent and I think it been as high as thirty five percent of our total net sales. We have an incredibly robust new product pipeline. If you look at this year alone, most of those new products are coming out in Q4.

So part of that Q3, but the majority are coming out in Q4 and kind of giving us a nice tailwind headed into next year. 26:32 And we've got some big plans for our brands that we'll be excited to share.

And honestly at those higher ASPs that we've talked about, so innovative new products higher ASPs, so we feel very comfortable with the range set out there..

26:50 Got it.

And then given kind of what you saw from the retailers in terms of ordering earlier in the year, where are you right now with retail shelf and your own congress in terms of inventories versus where you'd like them to be? Are they perfectly in line with inventory levels they you expect and want or is it still a little bit less that you're be sure on that?.

27:19 Sure. This is Brian again. So the kind of the first part of your question, when we say that our customers accelerated purchases, that is like from conversations we've done top to top and we do those every quarter to make sure we know how we can best support our biggest customers.

So, we heard that across the board that they were looking to mitigate supply chain challenges. 27:42 And then in terms of kind of restocking some of those, we feel like there's in certain areas continued sort of hand out depending on what that is. Harvester – and our Harvester lane is good example.

In Q2 we saw that there was an elevated hunting season and participation over last year, which kept our replenishment just tugging along to make sure that we could keep up with those service levels. So to me, that was more hand to mouth.

But overall, I think mostly those retailers that pulled forward those purchases were also gearing up for the holidays. And I want to make sure they have sufficient inventory. So, it's a mix between the two..

28:25 Got it. Thanks very much.

28:27 Yep..

28:29 Thank you. Our next question comes from Scott Stember of CL King. Your question, please..

28:35 Good evening. Thanks for taking my call guys. You talked about in the release -- in your prepared remarks about how -- POS is looking pretty good right now.

Are we talking up on a year over year basis at least as we stand right now in the third quarter?.

28:57 Yes. I mean coming out of Q2 POS was strong. It was positive over last year. So we are seeing the positive trends in POS..

29:08 Okay.

And can you talk about, is there any promotional activity going on? I imagine probably not, but just wanted to see as we get into a little bit more of a normalized atmosphere, what you're seeing?.

29:23 Yes, Scott, this is Andy. Great question. So, in my comments I talked about gross margins in the second half of the year, part of that is compared to last year. Part of that is planned, holiday promotions, not a significant amount, but part of it is..

29:41 But nothing out of line from historical, this is all sort of -- this happens every year..

29:49 Got it. Okay. That's all I have for now. Thank you..

29:53 Yes. Thanks Scott..

29:55 Thank you. Our next question comes from John Kernan of Cowen. Your line is open..

30:02 Yes. This is John [indiscernible] on for John Kernan. Building off of Eric's earlier question, can you parse out expectations or how you're thinking traditional versus ecom will contribute to your organic eight percent to ten percent growth target going forward? Thank you..

30:19 Sure. Yes, that's great question. This is Brian. Very, very high level, I would expect our ecommerce business continues to grow relative to our overall company, overall business.

Embedded in than that ecommerce number, if you recall, is direct to consumer, and we just gave you a snapshot, a small snapshot of what one of the brands, the one that's exclusively direct to consumer MEAT! how that's performing. So you can begin to see at least one brand, how that's impacting our numbers.

30:49 So we do see direct to consumer continuing to rise. I still believe it's in its infancy. But over time that is what has ranged depending on the quarter and coming out of COVID and going back into COVID and etcetera, has ranged from, call it, twenty percent, twenty five percent up to as much as fifty percent.

Fifty percent feels a little high in the near term, but I could see us continuing to drift up to something around that range longer term as direct to consumer continues to become a larger share of our revenues..

31:25 Great. Thank you.

Just touching a little bit more on the product pipeline, just going forward, I know you touched on a couple product areas already, but are there any in particular you are pretty excited about going forward as we think about the back half of the year that we should keep our eyes on?.

31:42 Yes. Great question. It's Brian again. So, we did talk about the new rods, BUBBA rods that we're coming out with and those will be shipping in our Q4. I would definitely keep a look out for those. We -- every piece of feedback we've heard from our retailers is, they are very excited about it.

It sounds like we're going to get great placement of those. And in many stores even like a store within a store concept, which is really a need for that brand as we're trying to tell that water to plate lifestyle.

And really, that's a good example too of, I think we had talked about in times past, partnering with retailers or customers who can help us tell those stories over a longer period of time.

That just gives us the benefit of when we come out with these new products to be able to tell that story and then you can begin to do what you're going to see in Q4, which is the store within a store concept across several retailers. 32:39 So, we're really excited about that one. We also have some new products planned for Hooyman, UST, Shade, Wheeler.

Honestly, most of that falls on what I referred to internally as the right side of the wheel, which would be our Harvester and Adventurer brands..

33:01 Great. Thank you for the color. We'll definitely keep an eye out for those. That's it from me. Thank you..

33:07 Yes, thank you..

33:08 Thank you. Our next question comes from Mark Smith of Lake Street Capital. Your line is open..

33:19 Hi, guys.

You talked a little bit about it, but can you just dig into inventory as we look at retailer distributors? How your comfort level with that inventory, have we seen it maybe build too much in any instances or are there any places maybe where there are holes and retail doesn't have what they need?.

33:40 Yeah, Mark, this is Brian. I think it's a little bit of a mixed bag. I think we saw the retailer’s stock up pretty heavily ahead of the holiday seasons. And for them, I think the open to buy is going to be limited for a little while, and that goes for all consumer products.

But I think as they begin to sell down, as they took that risk out of their pipeline we'll begin to see that coming back up. Like I mentioned earlier, the POS trends are very positive. So the product is selling through without a doubt.

34:12 So, I think as they continue to chip away through inventory levels, you begin to see a more normalized buying pattern from those retailers. But I think they're continuing to look at other things too.

You've got potentially this next summer a long shoremen strike that people have been talking about, you've got some other factors, obviously Chinese New Year. So we're keeping an eye on those as well.

But I would not be surprised if there's going to be some -- this type of behavior from these retailers for the next few quarters as they look to mitigate supply chain risk..

34:48 Okay.

And does that fit in with a little bit of a sequential kind of cadence of sales as you expect April sales to sequentially be a little stronger than January as some of that is just a flow through of that inventory?.

35:01 Yeah, Mark, this is Andy. That's exactly right. That's how we're seeing it..

35:06 Perfect. And then, what are you guys seen as we look at the M&A environment, anything that's changed out there? A - Brian Murphy 35:15 It's Brian. It continues to move along nicely. I mean, we -- Andy made a few comments about us getting close on a few deals and we were at the alter on a few different opportunities.

And to be honest with you, one of my old mentor said some of the best deals are the ones that you don't do and we want to be very careful that these are the right deals for us and our shareholders. But we do remain actively engaged with several other targets as we speak, and we're excited about those. So, it remains robust..

35:51 Okay. The last one for me, you called out hunting category kind of being strong here, as we look at the marksman lane and some of this falling into the Defender land as well.

How do you help a consumer evolve from, let's say, a new firearm owner to a marksman, if that makes sense?.

36:15 Yes. That's a great question. This is Brian again.

So, when I made mention too, the ways our brands are collaborating with each other and we called out BOG and MEAT!. So, Crimson Trace and Caldwell is a fantastic example that gets exactly what you're asking.

So you'll see collaborations between those two brands as we kind of migrate those eight million dollars to ten million dollars new firearm owners up through to shooting sports. And when you go to the range, what are the types of things that you're going to need, hearing and eye production and steel targets.

So, we certainly helped the consumer with that journey, no different than we did with BOG and MEAT! in sort of finalizing that field to table movement. It's really about that from the counter to the range movement with those two brands..

37:04 Excellent. Great. Thank you guys..

37:07 Yes, Mark. Thank you..

37:09 Thank you. At this time, I'd like to turn the call back over to Brian Murphy for closing remarks. Sir..

37:16 Thank you, operator. Before we close, please note that we'll be attending Shot Show in January. Excited to be exhibiting at this important event for the first time in two years. We hope to see some of you there. Thank you, everyone for joining us today.

We wish you a happy and healthy holiday season and we look forward to speaking with you again next quarter..

37:35 And this concludes today's conference call. Thank you for participating. You may now disconnect..