POWW - Earnings call transcript Q1 2022

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Operator

Good day, ladies and gentlemen, thank you for standing by. Welcome to today's conference call to discuss AMMO, Inc.’s Financial Results for the First Fiscal Quarter of 2022. At this time all, participants are in a listen-only mode.

Following the formal remarks, we will conduct a question-and-answer session. Instructions will be provided at that time for you to queue up. will Anderson call ICR. conference today's be with Reed Hosting

Please recorded. conference I conference As Anderson. today's being over ahead, And Mr. the a reminder, turn is now sir. to would to go like

Reed Anderson

Good discuss for to you. conference of fiscal results afternoon AMMO, the to Thank Inc.’s welcome call quarter first XXXX. and

now and access Wiley, today Rob Goodmanson, Officer; the from call prepared Chief the which this Executive Officer. Inc. with went have time. remarks afternoon X:XX and Chief Rob everyone are earnings release, On at AMMO, Fred to PM Financial By Wagenhals, should Chairman out President; Eastern approximately

a If investor will the on website the relations received at be release, as the AMMO, company's well. of available and Inc.’s website on is you replay have portion call www.ammoinc.com. available it not This is webcast being

of current recently based and Please management risk These will we identified know AMMO section that Before would during the only we or should future made make contains to projections assumes placed today's date prepared and today's them. Inc.’s not that forward-looking call. when Inc.’s measures time uncertainties, statements of including everyone on expectations risks also operating XXXX. XX-K on non-GAAP maybe a remarks ongoing management of no that those in the transparency broadcast, from statements factors results live AMMO Inc.’s comparing upon today's not sensitive call the forward-looking with August basis. call, to obligation including into do forward-looking of any remind your financial statements involve our facilitate greater particularly a We've more to may filed of undue included statements is reliance XX, results in and measures, financial response and can therefore are and These This update additional begin, accurate believes forms contain inherent most be company's like underlying and information operations, that of reconciliation XX-Q. period-to-period. results an analysis these this in questions. performance discuss adjusted we Management these complete guarantee non-GAAP as measures release. AMMO release

the Now, Executive Chairman AMMO call Wagenhals, and turn to Chief will Inc. Officer over Fred of I

Fred Wagenhals

Reed. support employees, position quarter my appreciation first our like times. would Thanks, I continuing core reflecting personal for substantially all with pleased was results, to to I these which for to demands The during our ammunition our and showed extend significant company of strong shareholders with customers along great growth sales, product profitability. am exciting our market. sales key AMMO improved and Inc.’s in driver segment a leadership the in

Our from other The we results significant XX. for Inc. marketplace quarter which potential. realizing and AMMO of we segment acquisition true we GunBroker.com high the months GunBroker.com, first behind two April our just had early margin of as innings its factor revenue in a the on acquired was was strong event are big

like to next from perform broadened questions to of growth answer margin. most get bring this our increase marketplace the investors. we would significant up weekly to months with and and expect I I XX Over hit date you to leverage that dominant our

company a and directors of level. proud board strong as as to effort of I a Larson next is very team team our to feel the board Our put far Chris that myself this together take

of have expansion room job getting plant securing of Flynn President had in of My manager state-of- company. present Susan square the Manitowoc integrating demand date job with new Jim a be the-art the a John patient to manufacturing budget. square building our building. Lokey, land up DOD par totaling in XXX,XXX commercial and and until and XXXX. time diligently foot with under contracts. keep the CFO contract to their At room facility. the a is of into son of our to development to our operation CFO Tod has team Global the The and product remarkable up in new bring Jim our the clock with John government Executive production has enough the Rob move into growth foot in read our been and great did to for of Our city time, build we Wagenhals, team Wiley, future. Mark our we This of facility, and new the factory Manitowoc warehouse, on Vice Vice our on President brass President, Flynn to worked move on use our working is additional from Mann, due built summer government. has loading around GunBroker.com XX,XXX Marketing accounting have will Hanish, done the for charge

backorders box Anthony, Vice million. We of of Acord Nathan head and director keep includes Also distributors working our together of our over retailers. has throughout President new National the are a world current to This our primers Anthony factories putting dealers, over and gunpowder to firm, fortunate have to Matt, [indiscernible] past with Matt centre call and done purchasing with tremendous $XXX running. and found big accounting job Sales outstanding our an place. the X.XXin Nicholson, months, Tate, Accounts XX our

year the through for Matt We've operations Gunbroker.com Rob put items the of to was margins. of Gunbroker million business. ammunition high member, as together his because the to day background them. Rob have growth them this a allowed acquisition wall put our have future other five federal put perform. contract a leading Ammo our me Inc. brass with team might Board a been company Bershka has is in basis, to supply Steve past at GunBroker.com the district of and his they on to of company. of Steve the Tate Gunbroker.com signed year President our that before also for items run help with we charge We that secure or the dominant marketplace brought that is running growth our [ph] This me Cross also Matt to in Anthony team daily any on day with look $XX man is us Nicholson, to and supply is creative board Goodmanson up Gunbroker.com help any casings, of this acquisitions and to worth on wheelhouse was Director background XX and to is a Urvan financial future [indiscernible] acquisitions look Gunbroker.com. to years. Bershka, be of fit street with Steve and bankers with at in And active and must Purchasing, future even goal line

plan is being turn thing X.XX here over morning other coming to The at keeps want and conducting that, it Rob eight our up everyday I retiring. in I that With retirement. Goodmanson. to plan on the don't o'clock meetings. I on production my

Rob Goodmanson

months earnings that sales Thank be create Fred an work put and million. have way, outstanding to the forth will quarter XXX%, welcome includes Total and only more GunBroker.com. all has which everyone couldn't you, the Fred, has the together, By the call. our put hard rose incredible marketplace our of two successes moving We and $XX to almost team we proud of forward.

of in remain extremely XX.X%. no year to slowing. compared ammunition domestic XX.X% and last trends of margins strong show gross demand The signs markets of US the market Our international and

As idea company. AMMO, just industry take forefront. extremely an was to most and It you the bring technology to antiquated had of of that the was Fred it an when is not know, ideas and ammunition patented

even the marketplace integration GunBrokers of XX of The stages, been we've though early for the days. in business wildly it transformative. successful, has just acquisition been owned Our albeit AMMO, with over has

we leading AMMO sales marketplace the and the This is manufacturing beyond. business but not We've from our very show we're The earnings are enthusiast, in improving initiatives accelerating is of our a experience on new profits a about to just who sports the the and many in shooting that revenue. overall company. XXXX As should impact in marketplace. marketplace XX% implemented we're are, firearms and our XX% of this excited focused Street and

to service, speed it within the been up personnel process, adding come we've the or For sale, customer that light. example, be any issues to whether

we mentioned, new site You're adding products, the as to as Fred speak.

to average customers stronger. our with capture transactions, of programs easy potential increasing loyalty a share have to will ticket third-party along size, our and access with financing we options We making while broader provide relationships the

As this was for acquisition transformational Fred stated, GunBroker our of truly company.

businesses. First turn With is Quarter that, CFO, results marketplace give our will long of and Rob the significant you glimpse an Rob. leading term I early to to highly Wiley. complimentary our over this leverageable This potential. platform

Rob Wiley

Welcome, Rob. you, Thank everyone.

we reported factor $XX.X in net from walk the million detail. year Let revenue through period. me contributing XXX% earlier more in first to increase. up the XXXX of million largest for quarter financials ammunition $X.X that the fiscal year-over-year was our were Total the first quarter Growth in you

$XX.X the $X.X million to For million quarter. first the quarter, compared sales ammunition in last year's were

Our marketplace million of gunbroker.com earlier, of year at reflecting segment the a of revenue acquisition versus had XXXX. the nothing April end %XX.X

our marketplace significant GunBroker.com influence gross last Our than reflecting we note rapidly that months in growth two equally year versus the quarter to profit first in two-month period. sales was increase higher million in in The year. margin comparable the we're revenues. perspective the drove revenue were the first our Other seeing a $X.X the profit marketplace improvement gross in segment, significant growing on period million in the of the reported earlier quarter $XX.X impressive, of XX%

XX.X% gross XX.X% For had marketplace last an the quarter. quarter in inclusion year's gross revenues, XX.X% the first from margin to in margin the of quarter, to profit rose which due

higher $X.X ammunition fees Several compensation accounted of acquisition to million total including $X.X expenses our the the stemming from payments sales, GunBroker.com. million, our increase marketplace up and in stock-based from ago. the professional the ammunition a growth operating quarter of First related expense, addition year factors non-cash operations,

the in in shift to As in an operating quarter reflecting sales, loss XX% the of higher our XXXX Operating leverage, was income manufacturing and $X.X XX.X% quarter first earlier in period. a year favor year period, for of the earlier million and -- declined to in the the percentage first operating mix marketplace of operating revenues. $X.X scale, million net of fiscal compared margin expenses

loss operating per percentage million, XXXX by to As of net common $X.XX for income segment. first the Net of quarter sales, a margin income available is marketplace was gross a reflecting or fiscal should margins, in EBITDA addition XX.X%, higher note driven XX.X% $X.X EBITDA or our $X.XX growth to was compared share a for in in significant marketplace reconciliation to was of the GAAP the to year shareholders non-GAAP million share fiscal our share $X.XX. net adjusted earlier Adjusted a per the $X.X per additional plus XXXX. ammunition segment, was diluted adjusted quarter details. first improvement diluted in net share to and the of an EBITDA period. $X.XX $X.XX per in was adjusted measure of of the and in the million to release million versus segment. income compared loss improved for Adjusted The due non-GAAP negative of adjusted loss EBITDA sales operating you margin $XX.X the increased press Please that results today's core refer

inventories, $XXX continue accounts to have assets million deliver from as increase to our We’ve increased in we Our to assets total $XXX the from million in increases goodwill assets and GunBroker.com million backlog customers. built $XXX increased which receivable, which of sales of million. acquisition as increased a acquisition and following include our our as $XX.X well intangible $XX.X significantly the million, even notable

provide me guidance. update you Now, on let an our

$XX Given our we to full be second includes on revenue first XX with results fiscal year third reiterating approximately million expected we're in the that strong expectation you our the fiscal July quarter latest from shared than our quarter, million. guidance increasing million demand XXXX million the revenues quarter. $XX $XXX and will of This $XXX in and that estimate underlying better

estimate EBITDA million, expectations million from is for prior for $XX forecast now adjusted XXXX reflecting the year mostly $XX revenue of fiscal full higher Our up growth.

million in expect This offset XXXX, generated portion tax ready As a liability end. our we our to remainder we our concludes fiscal We're net be year now our significant fiscal operating of of able losses remarks. to questions. the our take prior to $XX through with towards prepared look potential

you. So our I'll pass moderator. Thank it back to

Operator

you. Thank

will Capital. proceed with Matt session. question-and-answer Instructions] We first be questions. ROTH of your question conducting from come line [Operator Our now the Please Koranda a with has

Matt Koranda

Thanks. guys. Hi,

seem in GunBroker guess, and outlook in I million for ammunition with to $XXX that provided Just if plug and about quarter guidance the the a how drop business? does split wondering the I between sequential a third revenue, think year it core to imply quarter you full fourth your the the guide, second Then quarter.

could maybe just So outlook to if betting there? see or to the that and wanted speak if conservatism there's just you seasonality you're

Rob Wiley

Rob you Hey, the for Thank Wiley. Matt, this question. is

guidance million split look any the guidance we activity of way will up an And as the increasing So through that as seasonality we really at even generated $XXX view manufacturing million to operations. made from is ammunition our be well overall. GunBroker.com of the marketplace impacting sort $XXX that of total really don't our

Matt Koranda

guess a bit and your in EBITDA wanted from thoughts just year sort then it seem worth outlook, take looks put It contribution just the imply with and margin, Got worth other first get margins remaining year the of if ticked Okay. revenue. And the remaining I I of you. does of up like EBITDA, partial on, the down a to a of to piece little GunBroker. quarter the only we XX%

there for is of the any should year? remainder reason we margin expect the any degradation so, And

Rob Wiley

degradation. don't We No. expect margin

our In conservative to guidance. in And and our we've on months and with three expect we quarter, increase with platform, we'll Historically, activity, seem like feel fact, the and our adjusted we necessary. with updates XX% been comparison margins conservatively, in that Street EBITDA operations, of guidance. increasing our end update just next low potential mentioned, ammunition coupled you as to up on approximately full guidance the a we in GunBroker leveraging looking may feel our to

Matt Koranda

guess And on more fair. one a on, That's Okay. then couple I backlog.

quarter. in $XXX strong implies the the pretty million order So a first flow

drove what can flow the the or order in commercial out of entangle within just any could Is drove than release you that I that you of any the call commercial well? new that maybe to orders side you as guys backlog, speak military press is all first the it orders sort maybe quarter? on guys backlog the So there have and if customer that wondered,

Fred Wagenhals

Wagenhal. commercial. Fred It's is mostly this Hey,

Matt Koranda

I'll of, goal you products offline. as the sort any here. of I'll or there Got And it goods along the year? can is provide? of put detail $XX column And leave interesting can through tracking and platform you. you – achieved Is someone was of that Okay. goal million that of that the it of take more other ammunition Have kind and for the the to think I rest more one that for all Gunbroker.com, toward else then or here. any the new that million through for me, the we $XX But that yet, year? incremental

Rob Wiley

But become putting we're all That's other that all for the rest other of next not year. be it's to be the probably within days. on. you'll XX the ammunition. those items going items And And seeing

Matt Koranda

great. there. guys. leave Okay, it I'll Thanks,

Rob Wiley

Thank you.

Operator

you. Thank

Street from Lake next of line your question the is Capital. come proceed Please Smith Our with questions. Mark with

Mark Smith

at commentary. about demand, point? this I for me you Hi, on in think ammunition bit guys. you demand, question little said, Rob and and change your have Quick might talked first, Goodmanson in any primarily But a it seen have

Rob Goodmanson

We have not seen any change.

more The That could of come as seeing. keeps we're completed rid backlog has manufacturing is our think shipped in. we growing. everything As a The is what orders backlog shift. you assembly get

seen We thing, and the some compression have of not but very and demand still the nothing seen seen only different significant. is rounds. But internationally little strong, a really is the And domestically. we've we've price

Mark Smith

mix demand meet to for we're demand rounds? going is other of ammunition, that that three some of at and back some or of some to in demand, change be those look Okay. kind as to production, And millimeter, different two it the month, ammunition, have you into different high calibers just starting nine still, assume started to high to rounds we to maybe a maybe your safe continues of the

Rob Goodmanson

virtually millimeter. nine in is all. always are two been been a specialized shift to nothing the margins three be A rounds. to the but compete But the prices, there. of millimeter demand more margin. there rather into Sure. doing has is going at at better. the nine a price than manufacturers for. we'd And compression higher no the There's the there Frankly, lots out compete to oftentimes rather convert And And lower of

Mark Smith

know quarter, your talk the the Okay. you can then, have changes increasing facility about current of got And I kind during any potential speak increases, capacity you're if you had kind lot at that to out of of, with as footprint even operating, the within maybe Manitowoc a of of if today, level kind on the you've can today? And, capacity? facility that you pleased of you're guys

Rob Goodmanson

And buildings up daily operation and there. toughing seem quickly. it's found We patient We're integrating this brass doing And job said what have new in a you went but ammunition for in they that's real give with running. in Flynn building. buildings John a out earlier, new two done out numbers. getting we're pleased problem world, we're better. making we and patient, solving the we shutdown country. day, put to Jim whole I But be very We Jim people a foot. rented basis. going and square we of And that our of facility In one XX,XXX problem. lot manufacturer. state-of-the-art up out into has has be as our two building. to a going every have that job foot a facility the us always tough great it a be done now, definitely today's those when or It's, right But I'm to XX,XXX on couldn't square a helped, great buildings

on o'clock, earlier, we morning we X focus numbers, get every As I and numbers. said call at on numbers, a

Mark Smith

seeing places other that where may commodities A, talked come in get? Fred, or inflationary quite and you Are some bit; a either; people guys maybe B, bit price seen just little be hard to a that about up and components are And maybe have are pressure there wages. some you or pressure inflationary

Fred Wagenhals

find Well, seem when them. brass easy, find I running kept We and think we increases. not we it's the we've past to to get factory seem need the been but primers the

As when But day we raising gunpowder United numbers. had great we had purchasing, had mix and you especially a of the can see outside we primers comfortable a in in a and go to. lot it's margins, prices from right think our when comfortable of right to the people team nothing's got we've job and product great done in of I we to, inventory we've finding today. But our feel and every product But of to mix we And coming got with we've whatever. States the feel of to buy these and customers. that supply easy

Mark Smith

Okay.

you, Thank great. guys. Sounds

Operator

line Thank you. Beylo the Ops. Instructions] from comes Our your Macro with proceed with [Operator of next question Brandon question. Please

Brandon Beylo

Hey, question much up and of not take I've great I'm going to quarter. your And one got time. shorter-term questions. long-term too guys, two

you the the UI/UX push, for of guys for just to -- guys sale? look at go kind the Is the it you hanging if low user? So are right experience ammo what you're buying shorter-term, Is I how your most I of to from how deal, listing first kind optimal others be question top think products, create in products? thinking a other going is the the it mentioned that it on the amongst to of fruit, now, million products think, for is site? when the you to and going was the number going and comes XX on GunBroker.com, that's to On to ammunition

Fred Wagenhals

are our not we're products to taken, additional amount fair But I the them are we've customers. believe going up additive additional adding started to beneficial with of we've separate or a we them have, products coincide be to that they really, will going to top. be do we -- now We there at that think put

the create loyalty short-term services, First And that be purchases. experience in and cards, we in services. In little of more funding we personnel kind out. called whether service we're which programs, is of robust easily promotional as the goes and our products do new past. clients. it activities little we're with as which maybe credit, all activities, being some for existing And promotion a the normally bit -- a changing cross-selling the very into just other platform, with that of and not well And leveraged is left in trying the if in words, financial to gift came surgical much area, work

Brandon Beylo

And questions. thanks. Yeah, cool. so the few Okay, then -- second last

years lines, terms Where the like this are $XXX reinvesting Jagemann back or double the in along you that million cash have any just than long-term there from your into in what are you're let's GunBroker What Stamping, plans quarter-over-quarter? million did guy’s cash? verticals with into allocating maybe other to in something trying you from AMMO with view, that XX thinking to or Are thinking pursue three, business, out? those you say, more bank, that marketplace? are about strap-on, investing You the the time $XXX in of five,

Fred Wagenhals

moving But vertical, they large I we if -- go we out up frankly there, cash. we that And something money our basis. there at part of more go think not regular a where money view would what it generates see we GunBroker, require, some do look accretive, shifting one capital. another spend There's you some beefing of would machines. into match that could on through there a are would be that opportunities our

Brandon Beylo

might of some this when than say then answer just too qualitative, not to and don't requirements, currently internal might on something, a of you that or of return there? more you sort you got -- better have it what much. that rate for, shooting a of verticals to it's And guys it. be ideas is is Got meet you your are be able But kind that strap not it’s

Fred Wagenhals

that things whether be call Piercing always technology black think Its of everything STREAK just it. has the it don't a I it to done, let's the or had to Armor a answer unique, white then part that. we've the there's or

as it could and it. not to could where it the unique a simple possibly the it the would So something market capital point know, they you again, be had Then project. accretive be be, behind if

Brandon Beylo

Yeah. it. Got

very I And have is to that you retiring, last you as question, shareholder. know, said of no plans hear which Fred, cool. a then long-term comforting Okay,

wake said it that to day, go work. every you X:XX into you're and You excited at up sounds like

So you the can given beach. and doing? give just your maybe what be about mean, excited you're could background, us I you reasons so some history why on and, just you're obviously, relaxing your

fascinating your to age someone So in see building? at type it engaging this business is of

Fred Wagenhals

I we lifestyle then think this. we I And like my years, Chris business, ammunition partner said, and out ago, start like years company work and nice when I guess three little profitable. five ago years I’ll I few can build a that's

here I build sit we think and very we profitable. that's company say, a big Now, ammunition

And so I it's of the I a deal. deal. doing. thrill like the I'm like what

think great staff of a people. I we've got

in this $XXX company, year two we years. think in with next can that I one I my old million I think a the did company, sales beat time

goal beating my record is So records. setting and

be here. to excited I'm So

Brandon Beylo

Awesome. a to that. excited hear And I'm as shareholder

the again, off Thanks now. going hop great and So quarter, again. listen guys, keep just good to up for work. I'm

Operator

I'd no time, the management turn at are comments. closing like questions this for to there to back you, over further call any Thank

Rob Goodmanson

Yeah. Yeah.

So thank that, end of like is in boring our excited the net A million coming and fact by this raising you, like to to make today. everybody, for operating year. leave guys we'd about fiscal guidance, utilize comment have year. with previous in we're these we $XX.X fiscal losses that, we And out our current to is expect very point fiscal we'd you year joining us over of

pass some much Rob thank for today. to on over again, us comments. additional it the joining very you call once for So We

Rob Wiley

then closing, and throw to in I'll it Fred. Just

ammunition invest the a They the registered that Those advantages straight and product want GunBroker transformed Just think short see of geopolitical business, investors linked the platform a manufacturer businesses, from most AMMO industries. structural to Over the the missed this you users and disrupt the the competitive to I from most acquisition commodity benefiting know demand. company of marketplace. focused one insight boring in to constraints, high commodity Fred. X opportunity of a supply America's million do to like reiterate miss term we point.

Fred Wagenhals

company I us it. participating GunBroker excitement you. call of we're to to marketplace not now for going firmly it Especially got everybody ammo And the going grow. I and and a want got and lot much. we just that see company here what puts selling Thank the with our sell ammo, the watching to in it hope to a put thank in believe on company a that and but you our everybody that thing, the several manufacturing to in to other happens that company. over just do the that just next we're items months we're Thank very I site. marketplace watch

Operator

This participation. your you. you for today's Thank conclude does teleconference. Thank

Have at this day. may You disconnect your lines time. a great

AMMO (POWW) 17 Aug 212022 Q1 Earnings call transcript