Andrew Fulmer: No.
Brian Murphy: Yeah. So I don’t see anything else there. I think we’ll continue to be vigilant on the shooting sports side, where there are opportunities. But at the same time, we’ve got great product, great brands, and we all know that will come back. So we just want to be judicious there.
Matthew Koranda: Okay, fair enough. And then just, I know you addressed the MEAT sell-in a little bit in the Q&A here. But maybe could you guys talk about the status of Grilla because I know that was also something that you guys had planned to bring into the omnichannel this year potentially and just wanted to see what the latest update is there on Grilla entering sort of retail partners?
Brian Murphy: Yeah, Brian again. So that is still our plan. We wanted to lead with MEAT. That was further along in the process. The other thing with Grilla is, as I alluded to in the prepared remarks, we do have a major new product launch coming in the next few months here, and then in the following quarters we have some additional ones that are truly innovative and fit with this evolve your backyard where people have made significant investments in their backyard and we believe that Grilla has every reason to be there. So we want to make sure that those product launches are done in a timely manner and if possible are done well with the cadence along with retail. We are really finding if we launch a new product direct-to-consumer, it depends on the product, but if it’s a higher priced product and it’s a little bit more innovative and we do a test run, we did it with like the Frankford Arsenal X-10 when we did that.
I think we may have also done it with the Caldwell Claymore is we got tremendous feedback. We’re able to get complete ownership with our communities. In this case, we’ve got 25,000, 30,000 Grilla users on Facebook, for example. And getting their support and buy-in is critical. So running these ahead of time just sets the groundwork. So once those pieces are all put together, you’re talking about a really powerful retail expansion strategy. And so we need to make sure those things line up instead of just trying to sell Grills into retail. I don’t think that’s going to be as successful.
Matthew Koranda: Okay. Fair enough. Just to clarify though that we should expect some form of retail sales for Grilla this year or we’re not ready to commit to that yet?
Brian Murphy: I think it’s fair to assume some retail placement, but it’s going to be more testing than anything else. It’s not anything that’s going to change the model for this year.
Matthew Koranda: Okay. All right. Got it. Maybe just last one you mentioned, the M&A environment may be kind of unfreezing a bit here as we move into the end of the year and into next year, calendar-wise. Maybe just wanted to hear your thoughts, Brian, in terms of what’s interesting. Where are valuation expectations resetting to? Have they come down out of the stratosphere? How should we be thinking about sort of categories that you’re interested in? And any just kind of early thoughts on sort of timing of any potential acquisitions that could happen over the next year or so?
Brian Murphy: Yeah. Things seem to be on fine and based on what we’re hearing from investment bankers is that the first half of next year, first half of ‘24, we’re going to see more activity. There’s already more pitch activity going on right now. Along with that, because of just the function of the investment banking fees, you tend to attract larger companies that can pay those fees. So some sizable brands should be coming to market, that’s at least what we expect. And we’re certainly aware of several of them that we expect to come to market. And then we also have our own proprietary pipeline in place and that’s very strong. So we’re seeing fewer, last time we spoke, we were seeing more distressed type deals, certainly they’re out there, but we’re beginning to see a return of companies that are able to establish some level of run rate that then they can take and defend as they go out into market.
With regard to valuation, I think it’s still a little too soon because there hasn’t been enough, just like real estate in a lower market, you don’t see as many, not many data points, right? So it’s hard to say exactly where things are shaking out, but I think that debt, the amount of debt a company can put on is a driving factor. I think you have financial buyers versus strategics. Financials are probably a little bit less ambitious when it comes to over-equitizing in a deal. And so that’s where I think the debt piece is going to be critical, especially for financial buyers and those that are raising funds. So my expectation is that valuations are coming down and in the first half of next year, I think we’ll see a closer alignment to seller and buyer expectations.
I think three months ago there was a – and six months ago there was a much bigger Delta, but I think those are beginning to converge.
Matthew Koranda: Okay. Very helpful. I’ll take the rest of my time, guys. Thank you.
Operator: Thank you. The next question is a follow-up from Mark Smith with Lake Street. Please go ahead.
Mark Smith: Hey, guys. I just wanted to follow up on Black Friday a little bit more in depth and kind of two-part here. First, if we just look at traditional, did you guys participate a little bit more in Black Friday promotions around traditional retail this year versus last year and maybe if you can break up any impact from that on sales and margin and how that would impact Q2 versus Q3?
Andrew Fulmer: Yeah, Mark. This is Andy. I think overall the promotional level at traditional was pretty consistent year-over-year. We worked with a number of retailers to — in those types of promotions usually our front end where we’ll discount product, sell that product to the retailer and then that retailer will run it in like a Black Friday ad or a mail or those types of things. But overall I think the level was, it might be a little bit above last year, but nothing real notable.
Mark Smith: Okay. And the other part is, as we look at Grilla and MEAT that you guys called out, some of the positive results there, can you quantify or call out maybe how much of that was driven by being fairly promotional or heavy discount versus just kind of natural growth in those brands?
