American Outdoor Brands (AOUT) has announced that they will acquire Grilla Grills
Category: American Outdoor Brands (AOUT)
Date: 14 March 2022 Stock price of American Outdoor Brands: $14.31 Market Capital of American Outdoor Brands :$202 million We take a look at the press announcement from American Outdoor Brands (AOUT) in which they announce the acquisition of Grilla Grills for $27 million in cash. This adds Grilla Grills to a long list of other brands owned by American Outdoor Brands such as Caldwell and Old Timer.
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Dave Shidler, President of Grilla - We founded Grilla Grills over seven years ago out of a desire to provide consumers with high-quality, innovative grills and exceptional customer service, allowing them to be stars in their own backyards. Once we met the team at American Outdoors Brands, it quickly became clear that they share our passion for innovation, the customer experience, and the outdoors. We are excited to join forces and take Grilla into its next phase of growth as part of the American Outdoor Brands family."
More About American Outdoor Brands (AOUT)
American Outdoor Brands, Inc. (NASDAQ Global Select: AOUT) is an industry leading provider of outdoor products and accessories, including hunting, fishing, camping, shooting, and personal security and defense products, for rugged outdoor enthusiasts. The company produces innovative, top quality products under the brands Caldwell®; Crimson Trace®; Wheeler®; Tipton®; Frankford Arsenal®; Lockdown®; BOG®; Hooyman®; Smith & Wesson® Accessories; M&P® Accessories; Thompson/Center Arms™ Accessories; Performance Center® Accessories; Schrade®; Old Timer®; Uncle Henry®; Imperial®; BUBBA®; UST®; LaserLyte®; and MEAT!
American Outdoor Brands (AOUT) press release announcing the acquisition of Grilla Grills
COLUMBIA, Mo., March 10, 2022 /PRNewswire/ -- American Outdoor Brands, Inc. (NASDAQ Global Select: AOUT), an industry leading provider of products and accessories for rugged outdoor enthusiasts, today announced that it has entered into an agreement to acquire privately owned Grilla Grills ("Grilla"), a provider of high-quality, barbecue grills, Wi-Fi-enabled wood pellet grills, smokers, accessories, and modular outdoor kitchens for $27 million in cash, or approximately $24 million after factoring in the future tax benefit resulting from the asset purchase. The acquisition of Grilla will allow American Outdoor Brands to enter the estimated $7 billion, U.S. barbecue grill market with an authentic, direct-to-consumer brand that can benefit from the company's Dock & Unlock™ strategy and drive growth in the company's outdoor lifestyle product category.
American Outdoor Brands management commentary on their 3rd quarter 2022 earnings
The grill market has been growing, with an estimated 9 million grills sold in the U.S. each year, driven by recent trends toward outdoor cooking. Grilla, founded in 2015 by Dave Shidler, Owner & President, and Mark Graham, Engineering & Sales Manager, has generated net sales growth of over 161% in the past two years, with a compound annual growth rate of approximately 50% over the last five years, and calendar 2021 net sales of totaling over $15 million. The company has amassed a loyal consumer following, and its products are sold 100% direct-to-consumer on the company's website, and through two retail locations in Holland, Michigan and Dallas, Texas.
Brian Murphy, President and CEO of American Outdoor Brands, said, "Expanding our outdoor lifestyle category is an important component of our long-term strategic plan, and today, we are excited to welcome Grilla Grills into the American Outdoor family of brands. We have carefully searched for acquisitions that are a fit for our brand lane structure, have plenty of runway for future growth, and allow us to leverage the investments we have made in our e-commerce platform by bringing complementary products and consumers into our brand portfolio. Through its commitment to quality, innovation, and its customers, Grilla has developed a highly respected and authentic brand that aligns well with our core values, and is a perfect fit within our outdoor lifestyle brand offering. We look forward to leveraging our Dock & Unlock™ strategy to take Grilla to the next level by further expanding its innovative and high-quality product line, broadening its loyal consumer base, and delivering sustainable future growth.
Dave Shidler, President of Grilla, said, "We founded Grilla Grills over seven years ago out of a desire to provide consumers with high-quality, innovative grills and exceptional customer service, allowing them to be stars in their own backyards. Once we met the team at American Outdoors Brands, it quickly became clear that they share our passion for innovation, the customer experience, and the outdoors. We are excited to join forces and take Grilla into its next phase of growth as part of the American Outdoor Brands family."
American Outdoor Brands negotiated directly with the seller on the transaction, which will be structured as an asset acquisition, and is expected to be immediately accretive to American Outdoor Brands net sales and non-GAAP net income. The transaction is expected to be completed in the coming days, following the satisfaction of customary closing conditions. American Outdoor Brands expects to fund the acquisition utilizing a combination of cash on hand and availability from the company's existing line of credit. In conjunction with the asset acquisition, TD Bank has approved an amendment to the company's current Loan and Security Agreement, increasing the capacity on the revolving line of credit from $50 million to $75 million, with no change to the existing $15 million accordion feature. The amendment is expected to close within the next two weeks.
Brian Murphy, President and CEO of American Outdoor Brands, said, "Expanding our outdoor lifestyle category is an important component of our long-term strategic plan, and today, we are excited to welcome Grilla Grills into the American Outdoor family of brands. We have carefully searched for acquisitions that are a fit for our brand lane structure, have plenty of runway for future growth, and allow us to leverage the investments we have made in our e-commerce platform by bringing complementary products and consumers into our brand portfolio. Through its commitment to quality, innovation, and its customers, Grilla has developed a highly respected and authentic brand that aligns well with our core values, and is a perfect fit within our outdoor lifestyle brand offering. We look forward to leveraging our Dock & Unlock™ strategy to take Grilla to the next level by further expanding its innovative and high-quality product line, broadening its loyal consumer base, and delivering sustainable future growth.
Dave Shidler, President of Grilla, said, "We founded Grilla Grills over seven years ago out of a desire to provide consumers with high-quality, innovative grills and exceptional customer service, allowing them to be stars in their own backyards. Once we met the team at American Outdoors Brands, it quickly became clear that they share our passion for innovation, the customer experience, and the outdoors. We are excited to join forces and take Grilla into its next phase of growth as part of the American Outdoor Brands family."
American Outdoor Brands negotiated directly with the seller on the transaction, which will be structured as an asset acquisition, and is expected to be immediately accretive to American Outdoor Brands net sales and non-GAAP net income. The transaction is expected to be completed in the coming days, following the satisfaction of customary closing conditions. American Outdoor Brands expects to fund the acquisition utilizing a combination of cash on hand and availability from the company's existing line of credit. In conjunction with the asset acquisition, TD Bank has approved an amendment to the company's current Loan and Security Agreement, increasing the capacity on the revolving line of credit from $50 million to $75 million, with no change to the existing $15 million accordion feature. The amendment is expected to close within the next two weeks.
American Outdoor Brands (AOUT) stock price chart since their listing
The image below shows the stock price history of American Outdoor Brands (AOUT) since its listing. And its been a good time for American Outdoor Brands (AOU) stockholders with the stock increasing sharply by-7.8% since its listing
The stock of American Outdoor Brands is trading at closer to its 52 week low than it is to its 52 week high which is a clear indication that the short term sentiment and momentum of American Outdoor Brands stock is negative at this point in time.
The stock of American Outdoor Brands is trading at closer to its 52 week low than it is to its 52 week high which is a clear indication that the short term sentiment and momentum of American Outdoor Brands stock is negative at this point in time.
Latest stock valuation of American Outdroor Brands
So what is American Outdoor Brands (AOUT) stock worth based on their 3rd quarter 2022 earnings report? Based on their earnings report our valuation model provides a target price (full value price) for American Outdoor Brands at $31.40 a stock
We therefore believe the stock of American Outdoor Brands is undervalued at its current price of $14.31
We usually recommend long term fundamental or value investors look to enter a stock at least 10% below our target price (full value price), which in this case is $31.40, thus a good entry point into American Outdoor Brands would be at $28.30 or below.
We expect the stock of American Outdoor Brands to kick up from current levels in coming weeks and months to levels closer to our target price (full value price), as their stock is price is undervalued
Based on all of the above we rate the stock of American Outdoor Brands as a buy
We therefore believe the stock of American Outdoor Brands is undervalued at its current price of $14.31
We usually recommend long term fundamental or value investors look to enter a stock at least 10% below our target price (full value price), which in this case is $31.40, thus a good entry point into American Outdoor Brands would be at $28.30 or below.
We expect the stock of American Outdoor Brands to kick up from current levels in coming weeks and months to levels closer to our target price (full value price), as their stock is price is undervalued
Based on all of the above we rate the stock of American Outdoor Brands as a buy
Next earnings release of American Outdoor Brands (AOUT)
It is expected that American Outdoor Brands will release their 4th quarter 2022 earnings report in late June 2022
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