Grilla Grills parent company, American Outdoor Brands (AOUT), released earnings for the fiscal Q2 2025, which ended in October. They saw positive results from their innovative new products. It was enough so that they raised guidance not just for this fiscal year, but also the next.
Continually releasing innovative new products and keeping the product pipeline full was the central theme of strategy. They believe it helps them in a number of different ways.
We believe our ability to innovate year after year has given us a unique and compelling advantage. Our goal is to leverage that innovation advantage to widen our distribution, expand our brand awareness, and increase our profitability, while staying agile and asset-light, allowing us to seize new opportunities while adapting to evolving market conditions. We successfully achieved our objectives in the second quarter.
Brian Murphy, President and CEO of AOUT
They have been talking about starting to sell Grilla Grills at select retail partners, and that’s ramping up. Grilla was traditionally an all direct-to-consumer (DTC) brand, so retail is a new channel for them.
Now, MEAT! Your Maker products are beginning to pop up several of the large retailers across the U.S. and Canada, and Grilla products are right behind them.
Brian Murphy, President and CEO of AOUT
Grilla is a new retail product for everyone, but the new product pipeline is driving retailers to want to stock Grilla and the rest of the AOUT brands. In this economy consumers aren’t buying discretionary products as much, with the exception being when there’s innovation.
From meaningful updates to existing lines, to revolutionary new products, we’re confident these launches will deliver significant value for our retail partners. In fact, we had the opportunity to preview many of these upcoming new products with our retailers during the second quarter, a time when many of them are planning their assortments for the coming year. The reception was overwhelmingly positive. And retailers provided us with strong early order indications and commitments for expanded shelf space. These indications give us a degree of visibility that extends beyond fiscal 2025. Because of that, we’re increasing our guidance of FY’25 and providing our initial net sales outlook for FY’26.
Brian Murphy, President and CEO of AOUT
M&A and Capital Strategy
Grilla Grills was a growth through acquisition play for AOUT, and acquisitions are still a major part of their growth strategy. They prioritize their capital deployment first through organic growth, then acquisitions, and finally share buybacks.
AOUT has noticed a little lull in the M&A pipeline in the past couple months. Beyond that though, they’ve noticed that companies for sale in the outdoor lifestyle space have started to have more separation between winners and losers.
On the outdoor lifestyle side, and there’s obviously a variety of activities there, we are seeing many more opportunities on that side. I would say it’s a little spotty, we’re seeing companies that are either doing really, really well or doing terribly. Whereas, rewind a few years ago, it seemed like everybody was doing pretty well and it was hard to see, much like retailers trying to pick the brands to sell.
Brian Murphy, President and CEO of AOUT
It was really difficult to see the winners and the losers. Now it’s very clear, and it’s very clear there are very few winners in this environment or have been able to honestly adequately protect themselves and really rally around a core competency of theirs. So, we’re seeing less there. I would say we’re probably exploring, just because of that, we’re exploring a few more businesses, and brands that are, I’ll call it, outdoor adjacent for us. Those could be areas like in the backyard.
Their observation about outdoor lifestyle companies for sale is indicative of the overall market. In the outdoor boom during the Pandemic, there was so much demand that even bad companies could be successful. Now that we went through the crash and the there is a selective consumer, a company that’s poorly run or has inferior product has a much harder time sustaining their business.
Tariffs
Tariffs have been a questions for every company this earnings cycle. We did an article specifically on how other companies in the outdoor space plan to deal with them if they’re implemented.
It was a similar response from AOUT on how they plan to adjust their business in the event of tariffs. They’ll do it with pricing and supply chain changes.
One wrinkle with AOUT is their planned innovation is an effective way to increase price. It’s more difficult to raise prices on existing products without hurting demand, but on new products there’s the opportunity to set the bar.
And that really comes down to, in the context of tariffs, two things. One is leveraging that innovation advantage, and the second is staying agile as much as possible. So, real quick on innovation advantage, depending on what happens with tariffs, if they do continue to increase, which we all know this, this isn’t the first rodeo, we have seen this before, but overall, innovation gives us several levers that I think others perhaps don’t have. For one, we do have some pricing power that we believe, largely through our IP protection.
Brian Murphy, President and CEO of AOUT
Their innovation strategy also plays into how they would change their supply chain to deal with tariffs. They quote the business for new products, so it gives them visibility into how they could alter their supply chain if need be.
With that said, though, we also, because we come out with so many new products, at the risk of being even more long-winded here, but perhaps can answer three questions or four questions in one, is the fact that we always quote our products not only with our existing suppliers in China, but also if they have a footprint outside of China, and with other partners as well. So, for the last, call it five or six years, we have built a tremendous rolodex of suppliers that we have started doing business with, or we have at least established contact.
Brian Murphy, President and CEO of AOUT