With firearms sales down significantly, the parent company of Smith & Wesson is looking to continue growing sales of other outdoor gear, including products from a Jacksonville company it acquired in 2016.
However, that business, Ultimate Survival Technologies, or UST, has been underperforming, according to American Outdoor Brands Corp.’s latest earnings report.
American Outdoor agreed to buy Jacksonville-based UST for $32.3 million, plus up to $2 million more based on UST’s performance over two years.
However, in its quarterly report filed with the Securities and Exchange Commission, American Outdoor said based on revenue trends, “we do not expect that the acquired business will achieve the performance metrics.”
American Outdoor had established a $1.7 million contingent liability for that payment, but it reduced the value to $400,000 as of Jan. 31.
The company did not give sales figures for UST, which produces survival and camping equipment.
Although UST is not achieving its targets, American Outdoor said total sales in its outdoor products and accessories business rose 10.9 percent in the third quarter ended Jan. 31 to $40.5 million.
However, firearms sales, its major business, dropped 40.7 percent to $116.9 million.
In a news release, CEO James Debney said the company is assuming “flattish revenues” will continue in the firearms business for 12 to 18 months.
“Should market conditions change, our flexible manufacturing model would allow us to quickly ramp production. In the meantime, we will continue to focus on organic growth in our outdoor products and accessories business and on companywide cost reduction efforts,” he said.