Good day, ladies and gentlemen, and welcome to the American Outdoor Brands Third Quarter 2019 Earnings Conference Call. [Operator Instructions] As a reminder, today's conference is being recorded. I'd now like to introduce your host for today's conference, Ms. Liz Sharp, Vice President of Investor Relations. Ma'am, 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, believe and other similar expressions is intended to identify those forward-looking statements. Forward-looking statements also include statements regarding revenue; earnings per share; non-GAAP earnings per share; fully diluted share count and tax rate for future periods; our product development, focus, objectives, strategies and vision; our strategic evolution; our market share and market demand for our product; 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, including our Forms 8-K, 10-K and 10-Q. 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 with regard to our comments on today's call. First, we reference certain non-GAAP financial measures on this call. Our non-GAAP results and guidance exclude goodwill impairment charges, the effects of tax reform as well as acquisition-related costs, including amortization, onetime transition costs, changes in contingent consideration liability, fair value inventory step-up 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 today's Form 8-K filing as well as today's earnings press release, which is posted on our website. Also, when we reference EPS, we are always referencing fully diluted EPS. For detailed information on our results, please refer to our quarterly report on Form 10-Q for the period ending January, 31 2019, and our annual report on Form 10-K for the year ended April 30, 2018. I will now turn the call over to James Debney, President and CEO of American Outdoor Brands. P. Debney: Thank you, Liz. Good afternoon and thanks, everyone, for joining us. With me on today's call is Jeff Buchanan, our Chief Financial Officer. Later in the call, Jeff will provide a recap of our financial performance as well as our updated guidance. We are pleased with our third quarter operational and financial results, which reflect year-over-year increases in revenue and operating profit. In addition, we launched several new products and made great progress on our new Logistics & Customer Services facility, an important strategic initiative in driving our long-term growth. With that, let me provide you with some detail on the quarter. Sales on our Outdoor Products & Accessories segment in Q3 declined 6.3% year-over-year. Within the segment, our Outdoor Products & Accessories division delivered third quarter year-over-year sales growth of 4.3%. That organic growth, however, was more than offset by declines in our Electro-Optics division, which was driven by ongoing weakness in market conditions. That said, the Outdoor Products & Accessories segment overall generated gross margins of over 47% and generated more than 24% of our total revenue in the quarter. Sales growth occurred in both our Hunting & Shooting product categories as well as our Cutlery & Tool product categories and came from a variety of retailers, particularly our online retailers. Based upon reduced long-range forecast in our Electro-Optics division, we have decided to restructure and combine that business into our Outdoor Products & Accessories division. This restructuring will allow us to improve operating efficiencies while continuing to deliver the innovation and quality that our Crimson Trace brand has earned under the leadership of Lane Tobiassen. In connection with the restructuring, I'm pleased to announce today that Lane has been promoted to President of our Firearms division, a role that I have occupied on an interim basis. With 14 years of leadership experience in the firearms industry, Lane has earned tremendous respect within our company and with all of our customers, and I'm excited to add his leadership, energy and creative spirit to our firearms team. As required prior to such a restructuring, we conducted an analysis to assess the fair value of the Electro-Optics division in Q3. As a result, we have recorded a partial impairment of goodwill for that business, which Jeff will address later in more detail. While the impairment is relatively small, it is obviously a disappointment to us, and it is driven by market conditions over the past several quarters. We maintain our positive long-term view of the Electro-Optics business and the strategic role it will play in our future growth. In fact, during the third quarter, we expanded our Electro-Optics product offering by acquiring the assets of LaserLyte, a provider of laser training and sighting products for the consumer market. This business has already been fully integrated, and we look forward to growing both the Crimson Trace and LaserLyte brands. In our Firearms segment for the third quarter, year-over-year revenue growth of 5.1% and higher gross margins reflected an ongoing consumer preference for many of our products. We continue to bundle -- I'm sorry. We continue to benefit in the quarter from our successful bundle promotions that we booked in Q1 and shipped in both Q2 and Q3. As a reminder, these bundle promotions demonstrate our unique ability to create packages featuring our popular consumer brands and products from across our entire business. Turning now to adjusted NICS results. As you know, we transfer firearms only to law enforcement agencies and federally licensed distributors and retailers, not directly to end consumers. That said, adjusted NICS background checks are generally considered to be the best available proxy for consumer firearm demand. In Q3, background checks for handguns declined 8% year-over-year, while our units shipped to distributors and retailers increased 10%. For the same period, background checks for long guns declined 7% year-over-year while our units shipped to distributors and retailers increased nearly 12%. In a more recent NICS next update, February adjusted NICS results were issued on Tuesday of this week and they were down 12.8% year-over-year. That number is the lowest adjusted NICS result for any February since 2011 and certainly appears to validate the ongoing challenging market conditions that we have recently referenced. Turning now to inventories. Distributor inventories of our firearms decreased to a total of 141,000 units at the end of Q3 versus 175,000 units in Q3 of last year. Sequentially, distributor inventory increased very slightly from 135,000 units at the end of Q2. We have heard from our distributors and retailers that they are comfortable with our overall inventory levels and that our promotions are unmatched with the current weaker market conditions. The lower level of channel inventory in the current environment combined with our strong brands and promotional programs helped benefit our performance in the quarter. Since the end of Q3, distributor inventories have declined and our current weeks of sales at distribution are near our 8-week threshold. We are currently in the later stages of our industry spring show season with distributors, buying groups and strategic retailers, and we are pleased with the positive results. Our promotions featured several new bundles. Most popular among these have been the M&P15 Sport II combined with a rifle case and a mag charger, and our T/CR22 combined with a rifle sling and a Crimson Trace optic. These 2 bundles generated revenue beginning in Q3, and we believe pulled a small amount of revenue from Q4 into Q3. Turning now to new products. Innovation to support our organic growth strategy remains the highest priority across our entire business. Within each division, creative new product development teams are focused on innovation, guided by consumer trends to ensure that our products lead both the competitive marketplace and each relevant consumer segment that we target. We attended SHOT Show in January where we displayed and launched a number of these exciting new products. Let me take you through some of them. Our Electro-Optics division showcased several new products that were introduced into market in Q2 just prior to SHOT Show. These included 5 new innovative red-dot sights for pistols and long guns as well as the new Crimson Trace line of rifle scopes for hunting and target shooting. These scopes represent our first entry into the rifle scope market, reflecting our progress towards expanding the addressable market that the Crimson Trace brand can serve. Our Outdoor Products & Accessories division displayed many new products, including the Caldwell Hydro sled, Frankford Arsenal M-Press, and a brand-new hunting tripod, the BOG DeathGrip. All these new products include patent-pending features. The Caldwell Hydro sled is the most advanced recoil-reducing shooting rest on the market, delivering up to 95% felt recoil reduction. The Frankford Arsenal M-Press marks Frankford's entry into the popular reloading press market. It was designed from the ground-up to achieve accurate ammunition loads and provide years of heavy-duty service. The BOG DeathGrip hunting tripod is engineered to be the most stable shooting platform on the market. Its carbon fiber legs have unmatched durability for lifetime of hunts, and its clamping system secures any firearm. In our Firearms division, we introduced the Performance Center ported M&P Shield M2.0, featuring a ported barrel for increased muzzle control and incorporating the popular M&P M2.0 feature set. This is an ideal choice for concealed carry. The Performance Center M4 42 revolver designed with the hallmark Performance Center enhancements, including a 2-tone finish, high-polished features, Crimson Trace laser grips and a Performance Center tuned trigger action. And in our Thompson/Center brand, we introduced the Impact SB Muzzleloader, featuring a speed breach for rapid removal and easy cleaning. Now turning to a discussion of our new Logistics & Customer Services facility in Missouri. As a reminder, this is an important strategic initiative that will centralize the logistics, warehousing and distribution operations for all of our businesses, enabling growth and enhancing efficiencies and allowing us to better serve customers across our entire organization. To date, we have successfully completed a series of interface, system, process and software testing phases, and we are now running live orders through the system. And as a reminder, we have long utilized SAP in our company, so these activities are an extension of that system into the new facility not a first-time SAP implementation. A very methodical ramp-up of volume and shipments is underway, and after the close of Q3, we successfully shipped our first firearms at the new facility to selected distributors and buying groups. Our Springfield distribution location and our existing Missouri distribution location are both running in parallel and will continue to do so over the remainder of the testing phases until the full transition is complete later in the calendar year. Because of the steps, we believe our execution risk is relatively low, and that level is reducing rapidly each day as we move towards completion. After Springfield, we will transfer the logistics operations of our UST business, currently located in Jacksonville, Florida, followed by the Accessories business located in the original Columbia, Missouri location, and then finally, the Crimson Trace logistics operations located in Wilsonville, Oregon. Our move into the new facility is on schedule and its completion will allow us to completely eliminate 3 office and warehouse locations, 2 in Missouri and 1 in Florida. It will also allow us to cease using a third-party logistics provider. Our new Logistics & Customer Services facility will allow us to deliver best-in-class levels of service to all of our customers. This facility, combined with our growing family of popular brands and products, will position us well for organic and inorganic growth as we address an ever-increasing portion of the overall shooting, hunting and rugged outdoor enthusiast market. With that, I'll ask Jeff to provide more detail on our financial results and our updated guidance. Jeff?

Thanks, James. Revenue for the quarter was $162 million, an increase of 2.9% over the prior year. Revenue from our Firearms segment was $123.6 million, an increase of 5.1%, and revenue from our Outdoor Products & Accessories segment was $41.9 million, a decrease of 6.3% from the prior year. It should be noted that although the Electro-Optics division was down from the prior year, the Outdoor Products & Accessories division was up 4.3%. Total company gross margin for the quarter was 33.4% compared to 29.8% in the prior year. The Firearms gross margin was 29%, and the Outdoor products gross margin was 47.1%. I would note that the Outdoor Products & Accessories segment contributed 1/3 of the total gross margin of dollars, while the Firearms segment contributed 2/3. The total company gross margin increase was driven mainly by the Firearms segment, which had higher production volumes, favorable spending and lower promotional costs versus the prior year. Before I discuss operating expenses and net income, there are 2 things I want to note. First, as James mentioned, we had a partial impairment writeoff in Q3 associated with the restructuring of the Electro-Optics business. Specifically, we conducted a required goodwill impairment analysis in that business as a result of the revised revenue forecast and wrote off $10.4 million of the $54 million of total goodwill related to that business. Second, as I have noted before, the ramp-up of the new logistics facility is generating some duplicate expense in the short term as planned. However, in the long run, the new facility will improve our long-term operating costs, bringing all of our brands together under one roof and allow us to present one face to the customer, making it easier for them to do business with us. So taking that into account, GAAP operating expenses in the quarter were $56.1 million, including the impairment charge, compared to $41.1 million in the prior year. On a non-GAAP basis, which excludes acquisition-related amortization and the impairment charge, operating expenses were $39.9 million as compared to $35.6 million in the prior year. There are many gives and takes, including the higher costs associated with the logistics facility, but a large portion of the operating expense increase in Q3 was because of the accrued incentive compensation and profit sharing which had been greatly reduced in the prior year. So now, turning to net income. GAAP EPS for Q3 came in at a loss of $0.10 as compared with income of $0.21 in the prior year. GAAP EPS in Q3 includes the $10.4 million impairment expense, and that impairment has no related tax benefit because the original purchase of Crimson Trace occurred as a stock transaction. And in last year's GAAP EPS, there was a $9.4 million tax benefit resulting from tax reform. Thus, excluding the $0.17 positive impact of tax reform in the prior year and the $0.19 negative impact of the goodwill impairment in the current year, our GAAP EPS would have been $0.09 in the current quarter and $0.04 in the prior comparable quarter. Our non-GAAP EPS, which excludes acquisition-related cost, impairments and the onetime tax reform benefit, was $0.16 in the current quarter and $0.09 in the prior comparable quarter. That result was above the high end of our guidance primarily due to the increased gross margin previously discussed. Adjusted EBITDA in Q3 increased to $24.4 million for a 15% EBITDA margin as compared to $20 million, a 12.7% margin in the prior year. So turning to the balance sheet. Operating cash flow in the quarter was $11.7 million, and capital spending was $8.3 million, most of which was related to the new Logistics & Customer Services facility and the LaserLyte asset acquisition. For the year-to-date, operating cash flow was $20.7 million versus operating cash outflow in the prior year of $4.5 million. We have lowered our expectations for capital spending this fiscal year to approximately $18 million to $20 million, excluding the logistics facility and any acquisitions. Most of that CapEx is related to IT and new product development. Overall, our expected capital spending in this fiscal year will be $43 million to $45 million, including IT and the equipment for the logistics facility. Separately, you will recall that we entered into a $47 million capital lease this year to finance the construction of the logistics facility itself, which was noncash. Third quarter inventory levels increased 1 bp year-over-year and decreased sequentially from Q2. As I have noted before, as we transition to our new logistics facility, we are maintaining extra inventory as safety and buffer stock. In addition, our Outdoor Products & Accessories division accelerated the purchase of some inventory relating to high-volume SKUs to help mitigate any potential China tariff impacts. At the end of Q3, our balance sheet remained strong with approximately $37.5 million of cash and $145.5 million of total net borrowings compared to last year's net -- Q3 net borrowings of just over $200 million. So now turning to our outlook. We are maintaining our yearly non-GAAP guidance. Thus, for our full year fiscal '19, we estimate revenue to be in a range of $625 million to $635 million, and full year non-GAAP EPS of between $0.69 and $0.73. Full year GAAP EPS includes the Q3 impairment and associated negative tax benefit and is now estimated at $0.19 to $0.23. Excluding the impairment, our full year GAAP EPS estimate remains at $0.38 to $0.42. For the fourth quarter, we expect revenue of between $162 million and $172 million. We expect GAAP EPS of between $0.03 and $0.07, and non-GAAP EPS of between $0.11 and $0.15. In both our fourth quarter and full fiscal year numbers, our non-GAAP EPS excludes amortization and costs related to our acquisition. Our estimates are based on our current fully diluted share count of 55 million shares and a tax rate for Q4 of approximately 28%. So back to James. P. Debney: Thanks, Jeff. With that, operator, please open up the call for questions from our analysts.

[Operator Instructions] Our first question comes from the line of Cai Von Rumohr with Cowen and Company.

So you took an impairment on the Electro-Optics, and yet -- I mean, I don't sense that your Firearm sales were a disappointment. And given that Electro-Optics is related to Firearms, how come the sales missed or you brought the estimate down?

It's based -- so the impairment is based on a couple of model methods. One is discounted cash flow. And it's more than just what's happening in quarter 4. It's what -- it's the long-range forecast. And it's also judged about how the forecast looks against how the forecast was when you originally did the acquisition. Q3, Crimson Trace did have quite a down quarter, which again, I think is entirely related -- it's industry related and not Crimson Trace related. So taking into account the long-range forecast as compared to our original forecast when we acquired it and doing the impairment analysis in conjunction with the restructuring, we ended up taking an impairment of about 20% of the goodwill associated with the acquisition.

Right. I mean, so therefore, we should assume, since the time of the acquisition your longer-term sales forecast for Firearms also is somewhat softer?

Well, since the acquisition, I mean, I think we -- the acquisition, that was back in 2015, and I think that, indeed, our Firearms sales have gotten softer over that period of time. And yes, we've -- so we took down the year 2018, 2019. P. Debney: Yes, it's a very different market environment, Cai, to what we were experiencing there.

Right, right. I forgot it was that far back. What -- so you'd mentioned the duplicative costs of the new facility. How much were they in the third quarter approximately? And where should they be in the fourth quarter? When do they peak? When do they kind of go away? Give us some color on that if you could.

Well, we haven't given any color on the actual dollar amount of the costs, but I can talk about the peaking. I think the peaking is more in Q4 and Q1 of next year. Where we're really going to see the benefit is as soon as we can integrate our Jacksonville facility, which will be -- it's a fully functional warehouse with all kinds of shipping, receiving, accounting, et cetera. And once that is brought in, which is scheduled for sort of toward -- mid- towards the later end of the calendar year, like summer-fall-type thing, then you're really going to see some -- the cost savings of that will offset any of the costs of the logistics center.

Okay. And my last one is, on your prior call, you'd mentioned that you were testing the IT system and testing the material handling system. Given that you started to run the product through, I assume those tests went smoothly. P. Debney: Yes, that's correct. Very smoothly. In fact, the team's done a wonderful job. I really do have to praise them, and I'm happy to do that very publicly. There's a large number of people in our business involved in executing this strategic initiative, and I have to say they're pretty much flawless right now in that execution.

Our next question comes from the line of James Hardiman with Wedbush.

So I thought the answer to the last question was helpful. You talked about how your Firearms assumptions are down certainly since 2015. That shouldn't be a surprise to anybody. I guess, my question would be have they come down since December? I guess, specifically in the context of full year guidance is unchanged, better-than-expected results in the third quarter, with the implication being 4Q is going to be modestly worse than you previously thought. So maybe help me connect those dots. And what, if anything, does that say sort of beyond the fourth quarter, which obviously ends pretty soon?

Right. Okay. So with respect to your first question, which was sort of relating the impairment and Firearms being down since December. There's not a lot of change. At the revenue level, we sort of barely beat like the midpoint, and we're just not changing the full year. So like you said, there's maybe modest change of Q4, but really, the changes between Q3 and Q4, on all the bottom line about -- so we had a beat in Q3 of about $0.05 against the midpoint. So that $0.05 is broken down as being $0.03 is really associated with movement between the quarter. So a little better in Q3 than we thought. The mix is getting to the lower end of the price point in Q4. You just saw the February NICS results, I think much worse than most people expected. There's just a lot of bargain hunting in the market, so the lower end on products, which typically have a lower gross margin. And so that's where the gross margin and the dollars are kind of moving between Q3 and Q4. The other $0.02 is associated with the bankruptcy of one of our distributors, Acusport, which keeps up with what we think are frivolous claims that we are willing to fight. But it does cost money to fight that, and we're willing to do that. And so there's a couple pennies of that in Q4. Other than that, I would say that the year is kind of proceeding mostly as expected, but again, I think the market is -- the firearms market is pretty soft.

Sure. And then, I guess my second question -- I guess, the million-dollar question here, I mean fiscal '19 has been a year, will continue to be a year where you're going to be able to grow both the top line and the bottom line despite a really weak end market, in large part because you're comping over weak gross margin numbers, weak ASP numbers. I guess, when does that tailwind run out? And ultimately, if things don't get meaningfully better in fiscal '20, where, if anywhere, would the growth come from?

Well, I think that we believe that we have excellent growth prospects in the Outdoor Products & Accessories market. There's just a lot of good things happening there that we've -- actually, James went through a lot of that last quarter and that is really unchanged. The firearms market, I think -- I agree with you that we've managed to weather a fairly weak market through, I think, a lot of innovative promotional activity that is desirable for consumers, yet not overly costly for us. These bundle programs that we started last summer, about 9 months ago and have continued, are really -- I think, one of the things that has helped us continue to sort of meet expectations in a weak market. P. Debney: Yes. And going back, just to emphasize what Jeff was saying, that the growth really is going to come from the Outdoor Products & Accessories division. We're closer on the DC now, so we're really ramping that facility. Consolidating everything under one roof is going to be extremely beneficial for us. And once we've completed that process, then we can start looking again at inorganic growth. And we will be able to rapidly integrate what we've always called tuck-in acquisitions. And being able to harvest those synergies so quickly will also make us competitive in any process we decide to enter and complete. So we're very excited about that dimension of our overall strategy when it comes to our facility in Missouri.

Great. And then if I could just sneak in one last question. The write-down that you had in the third quarter, sometimes companies have one write-down, and that's the beginning of sort of a waterfall from there. What degree of confidence do you have that this is it? And how close are we to sort of incremental write-downs as we move forward?

Well, it's hard to specify confidence or not in future actions, but I can -- I tell you this. Crimson Trace is being rolled into Outdoor Products & Accessories, where it used to be called Battenfeld. So it will no longer be judged on its own. It's now going to be judged along with the entire segment of Outdoor Products & Accessories. Before, because it was a standalone operation, it was judged on a standalone basis. So there won't be anymore -- if we have an impairment, if we happen to have an impairment, it won't be because of Crimson Trace. It will be, "Well, this is occurring in Outdoor Products." And there's -- when your goodwill is lumped together with lots of other things, including acquisitions that are performing very well like our cutlery acquisitions, including what was called the Taylor Knives and Bubba, then that means you just look at the overall impairment, you don't look at individual impairment.

[Operator Instructions] Our next question comes from the line of Scott Stember with CL King.

Just dovetailing on James' inquiry into 2020. I know you're not giving guidance, but just from a higher level, once again, you guys are incurring a significant amount of costs related to the DC and the shift and running duplicate facilities. How much -- or can you just frame out the benefit to the bottom line that you'll potentially get next year just from eliminating those costs, assuming, let's say, by the middle of the year and next year, a lot of that is gone?

Right. Well, I mean, right now, we have the facility -- the new facility. In the same town in Missouri, we have another facility that was in the original Battenfeld acquisition. They also have a couple of warehouse -- external warehouse facilities that are leased, external logistics provider. I mentioned Jacksonville as a completely standalone operation, which is basically UST. So I mean, there is -- we have another like logistics and warehouse -- actually, like 2 of them here in Massachusetts. I mean, all of that's going away. So there are -- there's a lot of cost savings. And then, of course, as I mentioned, a couple of years ago, the original -- or one of the paybacks on the logistics facility is a saving in state taxes because everything, for example, from Massachusetts is going to be shipped to Missouri, all the firearms, and then those will be shipped around the country. So the profit on that will mostly be contained to the Smith & Wesson organization and not in the logistics facility. Since the logistics facility is the one that will have the contact and the nexus with all the states, it'll will have a much lower profit. So where we expect to harvest synergies and cost savings in multiple areas, we also have a shared services organization now that allows us to have one accounting team, one HR team, et cetera. So it takes time. And then of course, the final synergy is not the current P&L. It's what James mentioned, it's the ability to do acquisitions and immediately integrate those acquisitions. And so you buy them on the EBITDA margin, but you earn them on the gross margin.

Got it, that was helpful. Just looking the fourth quarter in a vacuum. If I'm just looking at the 2 quarters, obviously, we're looking for, I guess, on the high end, flattish sales. But if you look at the pretax income line, I guess, basing on what you think the tax rate will be year-over-year when you're looking like a 50% decline -- I know you talked about some elevated costs. I guess, the peak is coming, right, as far as the warehouse stuff that we talked about, the duplicative costs, but is that really what's driving that? Or is there something else on the gross margin side from a pricing standpoint or something else that we could just pin it on?

I mean, if you're looking at the pretax non-GAAP like numbers, it's not a 50% decline, so I'm not sure what you're doing. Don't forget that on the GAAP numbers, because of the impairment didn't -- you couldn't -- you can't take a -- you can include that in as a deduction in taxable income. It artificially raises the rate -- tax rate in Q3. And that impairment hits the bottom line directly. If you just look on non-GAAP, it's certainly the -- what I've estimated. The pretax is -- it's in the same area.

Okay. And last, James, maybe just talk about the industry. Obviously, we had, I guess, a little bit of a head fake in January. In February, things have come back down. Maybe just from a little bit of a high level, what do you think it takes to get the industry, I guess, to be moving forward again? I assume that the underlying conditions within shooting sports and all those other things haven't changed. But maybe give us your view on what we could expect. Or is it really just wait and see at this point? P. Debney: Well, I think in the absence of any fear-based buying, you're going to see a very stable market. As I said in the prepared remarks, retailers, distributors are comfortable with our level of inventory now. I will add that most are very optimistic and are looking forward to the future, running their businesses well, managing their inventory and their cash well. So there's a lot of people, a lot of distributors and retailers who are in very, very strong position, so I think that's great for the industry overall. What will happen in the market, and we've all seen you look at history how volatile it can be, who knows in that respect. But I think the key takeaway right now is that it's stable, it's manageable, we can grow, we can make money.

We have a follow-up question from the line of Cai Von Rumohr with Cowen and Company.

Yes. In light of the state's tax savings, what sort of a tax rate should we think about for the fourth quarter and for next year? What range of tax rates?

Well, for the fourth quarter, it should be about 28%. In the long run, assuming a very profitable business, because obviously, you have to have like profits in order to earn a tax benefit, it will probably come down a point or 2. I mean, may be 25 or 26. But that's probably not going to be impacted until the second half of fiscal year 2020.

Got it. And then last one, CapEx, roughly -- I mean, it's a little lighter this year. Is it up, down, next year? Rough thoughts of the range, where it could be.

I think next year -- so our non cent -- sorry, our non-logistics facility CapEx was $18 million to like $20 million. I don't think it will be much higher than that next year.

We have a follow-up question from the line of James Hardiman of Wedbush.

Just a quick -- couple of quick follow-ups. So I just want to be clear, when you say in the absence of fear-based buying, it's likely to be a stable market. I guess, stable would feel like an improvement from here given what we saw in February, what we've really seen over the course of the last year. I guess, am I thinking about that the wrong way? And realistically, can we get back to flat pretty soon? I mean, obviously, February and March, you've got some really difficult comparisons. P. Debney: Yes. I was about to say, James. It's not an apples-with-apples comp, right now because very -- it was very different buying behavior by the consumer occurring last year versus this year. So people shouldn't have been surprised that we were double-digit down in terms of adjusted NICS checks at all. Still, there was a sequential improvement from January to February. So normal seasonalities in play, that sequential improvement you could say is obviously weaker than in prior years. But if you look back into other years, pretty standard. That's really what -- I would use as much data as possible to give my best opinion. That's where my comment about stability comes from. The comps, as you said, they will not get easier until we get into June, until we get into summer. And then quickly, we'll be approaching the fall season, and we all know what happens then. And that's the true judge, I think, of the health of the market in the absence of any fear-based buying, which I hope that's what happens. We want a stable market environment.

If I would add also that the distributor inventory, in terms of units, has now been pretty stable for the last 5 to 6 quarters. So we got out of that at a period of time in which we're trying to work down that inventory. Now it's really stable at a dollar amount, which I think helps with forecast and expectations other than the give and take at the consumer market. P. Debney: Yes. It gives us a much stronger connection to actually what's happening at the retail counter.

Got it. And then the last one from me. You kind of touched on this, but ASPs were down in handguns. You had, had some nice tailwinds there previously. I think what you said is that was less about promotions and more about mix, but how should we think about ASPs going forward? It sounds like you're basically guiding to continued sort of negative mix. But I guess, are we starting to see promotions tick back up? Or how do we think about the other components of ASP going forward? P. Debney: It really was -- as you think about handguns, it really was product mix, driven by promotional activity. So obviously, as we execute our promotional plans in the first part of the calendar year, first quarter of the calendar year, we're promoting across a broad section of our product portfolio. And there are some that resonated way more strongly with retailers than others, and that really drove the mix change somewhat low at those ASPs. And that's what we're seeing.

And how about going forward, do you think that trend will continue? P. Debney: Going forward, I mean, those -- as I said in the prepared remarks, we're in the latter stages now of that -- this promotional period, so it's going to end fairly soon. So as we get into the next fiscal year, that promotion has ended.

I'm showing no further questions in queue at this time. I'd like to turn the call back to James Debney for closing remarks. P. Debney: I want to thank everyone across the American Outdoor Brands team for their commitment and dedication to excellence. Thank you, everyone, for joining us today, and we look forward to speaking with you next quarter. Take care.

Ladies and gentlemen, thank you for your participation in today's conference. This concludes the program, and you may now disconnect. Everyone, have a great day.