Who is Gemtech?

Summary

• Gemtech is ''the world's leading silencer company.''
• ''Silencer'' is a misnomer: suppressors do a lot more than make a gun more quiet.
• This acquisition is in line with AOBC's goal of becoming ''the leading provider of high-quality products for the shooting. enthusiast''.

This morning American Outdoor Brands Co. (AOBC) announced their intent to acquire Gemini Technologies, a designer/manufacturer of suppressors for a full range of firearms. Suppressors, more commonly referred to as ''silencers'', are a firearm extension that reduces the level of sound generated by the muzzle blast when a round is fired. The media and entertainment industry has made many assume that suppressors are only used by James Bond or Delta Force types in clandestine situations. It is also common for people to think that silencers are illegal for everyday folks. This article is to show that neither of the above are true and that the market for suppressors is actually quite large within the shooting community, making this acquisition a smart, albeit small addition to AOBC's growing family of brands.

Suppressors are legal for purchase by private individuals in 42 states. The market for suppressors is growing at double digit rates and becoming mainstream for a variety of compelling reasons:

1) Suppressors reduce the level of noise from muzzle blast by an average of 30dB, which is similar to the reduction achieved by using standard ear protection. For anyone who shoots on a regular basis this advantage is considerable as it protects the hearing health of everyone nearby. It is important to understand that ''silencers'' do not at all make a gun silent. That is why it is a misnomer. But the noise level is reduced significantly which makes the sport safer and more enjoyable. Hearing protection is still advised however even when using a suppressor, especially when firing a supersonic round since silencers don't stop the sonic boom from when a bullet breaks the sound barrier. In short, suppressors protect your ears and for shooting enthusiasts that is a big deal.

2) Suppressors reduce the level of felt-recoil and muzzle rise, which aids in target re-acquisition and more accurate follow up shots. If your weapon doesn't rattle you as much with the firing of each round, it is naturally easier to fire more rounds in a tight shot group. The advantages here are self explanatory for hobbyists, competitors, law enforcement, and military. On this point it is important to note that Gemtech has among their customers all branches of the U.S. Military and "Gemtech silencers are also in use by many Special Operations Forces, military and police of friendly foreign countries around the world."

3) Suppressors reduce muzzle flash, or the incendiary light from burning powder, as well as other concussive effects. This advantage makes shooting less disorienting for the shooter and keeps the shooter better concealed from animals or enemies, especially at night.

This acquisition also brings with it a light exposure to ammunition markets. Gemtech produces and sells subsonic ammunition, which is designed to stay within the sound barrier and thereby eliminate loud sonic booms.

After reading several gun blogs about suppressors it isn't uncommon for the writer to talk about how once they started using suppressors they never went back. They also talk about how about half of competition shooters are using suppressors now in contests where it is allowed. The growing popularity of suppressors has caught the attention of AOBC and I think they are wise to add this product to their offerings. This matches their strategic vision to be the go to brand for shooting and outdoor enthusiasts. AOBC is fitting some of their weapons to be suppressor ready and I see that trend continuing. Suppressors aren't cheap, some going for several thousand dollars, and I imagine the margins are high on this accessory. While this acquisition probably won't move the needle (AOBC stock down ~2% as of this writing, the day the acquisition was announced against market averages up ~.15%), it fits well into their corporate strategy and will add to their depth moving forward. The intent of this article was to help make sense of this acquisition and help investors understand the company better in line with the 'buy what you know' philosophy. Hopefully you know more now and are better suited to make an investment decision on AOBC. Thank you for reading.

Analyst’s Disclosure: I am/we are long AOBC. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.