POWW - Earnings call transcript Q2 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 Second 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. at for provided up. to be will that you time queue Instructions today’s Anderson Reed will ICR. Hosting be with conference

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

Reed Anderson

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

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

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

remind we not measures, comparing into measures these section including them. and undue in analysis our and not AMMO results in from note believes upon may XX-K These operations, financial a and make will to on transparency most that inherent we Before of additional Management of XX-Q. forward-looking an period-to-period. be facilitate results basis. results based operating financial current the involve reliance during Risk identified including particularly questions. Inc.’s statements we uncertainties, the of recently more Factors statements expectations remarks non-GAAP like when risks greater your statements discuss Please Inc.’s adjusted AMMO management filed statements those Forms everyone company’s and can on underlying begin, today’s placed ongoing therefore complete contain future call, to performance and These management and that forward-looking should would are prepared guarantee response do

no XXXX. as call. obligation measures this assumes XX, non-GAAP This broadcast, live have forward-looking any projections is only November also to made accurate information today’s that in these release. a of reconciliation or AMMO the call release of date contains maybe We time-sensitive with Inc. that included update of today’s

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

Fred Wagenhals

with Wagenhals, daily square increasing with have you delivered to on state-of-the-art assured and budget. the VP growth again new customers and will previously good our in Thanks, pleased the would appreciation entire in are support date our Based to to our we Reed increasing from joining $XXX great be Todd Executive all and XXXX most continued million to the for summer $XX that our personal to for million it our adjusted from like everyone. these us shareholders I of me XXXX. time XXX,XXX extend our outlook, is bring we across $XX has another get to for for like investors. Manitowoc, in revenue continuing foot my questions from exciting employees, of and and I today. you improve results, fiscal during date and company EBITDA forecast up times. our to million QX am QX revenue afternoon strong business, I that previously. which our and to quarter on would I $XXX results profitability. forecast momentum Wisconsin, of hit our million The raising under move-in building significant Thank answer

been operation, patient to Jim a done in basis. a on to one to team cost. of in which into you Jim and put Susan weekly have growth closed accounting our President I Manitowoc’s Mann, GunBroker.com facility. brass pictures team in Operations par place on eliminate that our product Marketing our contracts we Hanish, down our April his for of DoD Flynn, of up have automation website around Wiley, amazed and am loading diligently view with X contracts. also President, our integrating that Rob Lokey, Global and on time, the new John remarkable development Mark have team equipment At place. CFO in our new future the present working of the Vice begun and has VP CFO government due to company. of to clock have We the job their our any have bring our worked and

$XXX of are Sales Director our months, putting National done call firm tremendous outstanding PKF a backorders of Tate, Matt dealers, of running. Head our Purchasing together and distributors, and retailers. primers to daily. Vice our and in new Also, found have accounting to of keep and Accounts over the past We an fortunate box factories big have with numbers This Anthony place. Nicholson, change Those Nate throughout center, XX Anthony Acord, have million. job around our the current with gunpowder includes world President working Matt,

Bitcoin additional brass Anthony to securing team team We with Urvan At will Vista/Federal GunBroker.com, signed time, put growth allowed to has Steve put GunBroker.com. with credit together marketplace of and the primers. future Tate. Inc. turn of and we casings on and Director on have because President, we in to have numbers increase and [indiscernible], card acquisitions dramatically. into a place fit Beth Steve the new and company contract as day-to-day will supply a board they our industry. Goodmanson. this background, acquisitions of also looking credit with and in going of at AMMO, are to before programs run must GunBroker.com believe items Beth we Board month. We XX,XXX up is accretive the might wheelhouse in them the Rob at Purchasing, help have that, look a the and the that to Wall even basis. programs believe take be putting With Matt Cross, users also me active programs, is future to is this of them. signed letter has as our his call Rob us to ammo and Street we to program, GunBroker.com. and Goodmanson, monthly to growth fit President other supply future help to acquisition President, this of over company brought line these Rob with our dominant a that up well me And a loyalty X-year I on look Member. platform banking new financial Nicholson any and wheelhouse, leading for per very us any am our

Rob Goodmanson

It’s Thanks, Fred everyone. a pleasure and speak welcome, today. with you to

inclusive has hard our the forward. all has outstanding quarter of over Fred forth team rose We together for work segment, and create an of and put success to we revenues our Total that from everyone are full expect $XX put GunBroker.com. grateful the quarter proud to first marketplace all incredible the XXX% million moving

XXXX, gross growing XX.X% Our quarter down. operations mix the the we domestic slowing the margins of of significantly Demand revenue. XX% from U.S. in margin robust ammunition of for quarter remains marketplace the international efficiencies markets were no sign reported as manufacturing in and second the shows of our scale high in reflecting up the markets well as and

company. before, AMMO, It it antiquated technology when As of and Fred ammunition not idea ideas the an and extremely just was the we that’s an had forefront. patented bring industry to was have to take said

that Our significant vision. toward results today illustrate the progress

quarter, the has of business. GunBroker.com the the least. transformative deeper share of on integration dynamics to you success we wanted to efforts. Last this to say early of the And additional provide updated acquisition powerful been details a Our I understanding of

In strong marketplace in in line single-digit has of auction accounted of for operation X the as the reflecting well sold program in we an XX% months fees our of Also revenue single-digit company’s operating in growth GunBroker.com, of helping increase revenue and revenue top from During since as increased as drive growth second number including average quarter, purchased the to revenue upper XX% a XX% sold. mid per was income. basis, as year-over-year factors, the an the revenue items our the the loyalty on the XX% well marketplace on increase approximately increase item several relisting.

no we a longer manufacturing clearly see, can company. you As simply are

marketplace Our as drive continue growth. with profitability leveragable as our we consumer. connections continue improving evolving the as this directly enables strong revenue end well we deeper much platform, And will

on touch of the the their the a and Defense of firing the U.S. to under on to both bullet’s announced of Irregular see in The day in gunner lethality some September, advanced additional to This machine firing Ammunition This position ammunition operations. the increase targets, was identification the reducing flight and of signature impact contracts award from position, formed to variety provide shooters’ we supporting their occurs developed an by for government ammunition. impact ability fired want ability the allows a the tracer increase which on military with operated and utilized currently will wider matter, more warfighters by target. by in SoT a Directorate Department exposing late I survivability see to the Warfare rounds Lastly, the rounds the weapon without capability Technical Support a system visible the night. place with

quarter our the that in Rob second Before over and I future. to remain for call very in the add proud the are well-positioned growth turning accomplishments significant we of Wiley, to want

unique demand, from aggressively strong to Our efforts expand proprietary industry capacity. continues our benefiting with coupled business ammunition the

With revenue early still dramatically Our factor growth it that marketplace our in reshaping profile. Rob? like to innings, business is Wiley. that, I CFO, Rob would amplifying remains our a transformational turn to over very profitability and the

Rob Wiley

Welcome everyone. Thank you, Rob.

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

were sales year’s quarter, $X.X For $XX.X of an quarter, in compared last second increase XXX%. the million to ammunition million

revenues end million the April had GunBroker of versus period, reflecting million profit of of $XX.X in at significant acquisition million a quarter growth revenue. earlier, compared in the $X.X Gross segment the to marketplace reflecting XXXX. the second Our year nothing earlier $XX.X in year of

from margin last manufacturing of XX% as segment. the we as from XX.X% For addition the second well gross efficiencies quarter, rose our margin and to marketplace year’s as revenue high quarter in profit from benefited scale-related

of expenses $X were related increase quarter to year addition amortization. expenses GunBroker.com, million non-cash Majority the in $X.X including depreciation $XX totaled from and operating Second operating million, of million ago. up of incremental the a

operating to $XX.X margin period. of expenses our and second in sales, related higher the XX% an of plus XX.X% the shift earlier net period, Operating efficiencies marketplace of was income revenues the to second of reflecting earlier loss in the operating $X.X in percentage the a quarter entry year in from operating compared year declined fiscal As ‘XX quarter scale. favor to in million million mix

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

of remains strong, at with no equivalents backlog balance exceeded outstanding essentially of million and end $XXX debt. cash million. September Our sheet and Order cash $XX the

me let guidance. provide update Now, our an on

year again ‘XX forecast million the $XXX the year continued to fiscal are This prior we of full also million. Given EBITDA expanding increasing ‘XX $XXX from concludes of of our we revenue from full businesses to million for our Similarly, increasing million. strength $XX prepared our fiscal adjusted across capacity, demand guidance our forecast the guidance are $XX remarks. year prior

take questions. to We ready are now

So to back moderator. I you. pass our Thank will it

Operator

with [Operator Please first Matt Capital. Thank Koranda you. from question Instructions] proceed. Our is ROTH

Matt Koranda

Thanks the afternoon. taking questions. Good guys. Hey, for

I second a breakdown $XXX Just for of talk if half remaining terms could full core the follow-ups the got how the And in year? a AMMO year, just the as GunBroker about split? outlook, split million think so should of revenue the updated the fiscal then couple we And you marketplace well. in provide in the your wanted business between revenue and to quarters revenue the of maybe revenue just about between Inc.

Rob Wiley

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

increase maintaining portion well. the – our a demand ammunition from the are increased will sales ammunition in we steady the on and through our GunBroker the Any So, of increase from revenue. be as as GunBroker guidance guidance revenue platform as well production

are not a We guidance. our by update quarter giving quarter on

we moment, our if We to guidance are sticking guidance update shareholders annual update will quarterly to but to sure we for an give updates. the be decide

Matt Koranda

Okay. Yes, seasonality, of growing for been just the hard it’s to fast guess years. and hasn’t I determine couple the so last business

that fair So bit just seasonality, a larger seems a a you QX? we are than expect on Is I QX reason given just directionality be ramping little any any stand should assumption? – guys mean, production. It still to to

Rob Wiley

that quarter-over-quarter our continue fair heading consider, the into you I assumption will growth end think Yes. of that’s see do to a year.

Matt Koranda

And in helpful well. EBITDA split as be sense. would makes the just then Okay,

breaks So, had color million, on the split the kind how the terms would XX:XX any of be helpful? second that between percentage in but what would out, kind you breaking that sort down quarter, mirroring of $XX of in two you how of guys see additional assume I just

Rob Wiley

Matt. you confident the of to the EBITDA We heading have right I is but are No, year. main on margins ability we there, think we our are our on line on the given view into conservative, guidance end –

Matt Koranda

of moving I pieces just wondering north there I lot out quarter, enough. I could am think a different in first am had fair you mistaken quarter. of bridge But if And Okay, end called the And something backlog. of think out last backlog, guys $XXX not help like $XXX the called I million here. then at is if I you million us you guess the

talk cancellations backlog? the or about maybe could any how during of the are characterizing we are deliveries flow about changes you just just So wondering should thinking you if period, and way sort be

Fred Wagenhals

Yes, this is Fred Wagenhals.

we Our increasing are getting daily, many we shipping some days because backlog orders some changes as are as we more. and production are and in as days

it it So, see million. million and seen go to I have $XXX $XXX I be down then

a So, constant change it’s everyday. just

Matt Koranda

line. the… of off And I’ll about got the Okay, take as rest it. those then we think

Fred Wagenhals

Matt, your one we one orders. of customer major had cancel part of the any question, haven’t

Matt Koranda

it. Got

Okay.

Fred Wagenhals

Anything, they have orders. increased

Matt Koranda

Okay.

how provide maybe are if capacity the and Okay, if you fair enough. where helped And maybe Fred on you’ve of could reasonably currently, be you sort points then on of rounds, could production your year of the an in up a numbers it guess should And in we you just the ammo for versus are get and we contract in covered I capacity? think ammo to update Curious just years, then you end on terms a on the wanted we in terms just for up thoughts day Vista well ramp? number loaded that couple more about just covered mean, characterize do here chain? the with guys production just quarter we pain per ammo sounds supply loaded but in are how in before, I the should me. but like you where of primers? going third production loaded ramp where think

Fred Wagenhals

problem a have don’t everyday, it’s a don’t mean, all war the but we we hear constant getting have with I And We a primers. time. that problem primers.

Rob Goodmanson

on going, – you That machines have the are on we currently, And the building, capacity year. I in, – can’t but give other be of build mind added, will the something at say that give capacity and building. you new should in will your be, it’s rough daily, whether to mid-summer produce which of producing keep rounds regarding putting are through Matt, it automation be that I you your – just every out a is some when approximately start, $XXX a need million increasing we out, it billion over number the is we say questions building we that we

Matt Koranda

Thanks, flush little capital then year, so within build for a AR decent sheet how working if the the Rob we Very you pretty half sort like about just of could looked it inventory And could for wondering of and talk do a housekeeping more playing working the cash remainder for in collections the helpful. the as to year flush maybe inventory, you I we about balance dynamics, Maybe some of and second tighten bit on Wiley, you remainder just the it. Rob. use second one, well. it of some quarter and get capital. the see maybe the guess just then talk out Got for one the of

Just terms cash of about think to how remainder for trying the of the to flow get directionality in year?

Rob Wiley

Yes. up put us place assets secured receivable the may to credit that like revenue invest in for of to working be production other producing company and accounts continue cash inventory, a The company our assets we line for or in current would is future. example acquiring any of against that think of about that in free flow the would

Matt Koranda

it. Thank got guys. rest you. will Appreciate I offline here it. take Okay, the

Operator

is next Lake proceed. Our from question Please Smith Capital Mark with Markets. Street

Mark Smith

Hi, guys.

your at material as about wanted and to to ability ask just I especially through First, pass we raw look pricing? cost, brass

Rob Wiley

for Thanks Yes. question. Mark the

our it product as what price some inventory as experienced that is basically have materials of line. today a increases raw off the shipping raw majority soon makes are We the comes we material up as – the

experiencing our passing we are We customers. to are on those increases that

Fred Wagenhals

never As been price you we a are Mark, leader. know,

Federal to we leads follower. the but We with them. Winchester just are a way, step in definitely follow X% about will usually raised XX%,

being is it passed. So,

Mark Smith

look of, much in we at of Okay. this question prices these through prices? of growth volume kind growth, came really my if of kind additional how of passing out can ammunition kind of capacity revenue you And versus the break through some versus the as higher that hit business, next is, some

Fred Wagenhals

that’s Yes. Thanks volume through seeing scale increases, increase our but Really, efficiencies. There operation related have increases financial our through really been are efficiencies. to the production are really, volume. And feel our the achieve Mark. that we in price we to been have

Mark Smith

kind then your so next machinery how until And bit new you? new talked move how or additional much little how facility this as existing Okay. Fred? we nine the to much equipment, a into is Fred think at capacity in is plans, this, more there new equipment I And about helping expand facility, months this production? for is it the look was and we future of

Fred Wagenhals

thing which first area, at the was putting boxes. to Well, our we XX people, packaging in looked automating approximately had ammunition XX

We our have of we and automated now a one portion of SKUs. now, are that on all doing SKU,

So, probably all line, we the for we speak. saves And that And mentioned as will And set a penny automating as in place have we building. And warehouse our our in on Street approximately in plus also bullet, a effect finalized had before, years have now. never within three new a X.X oven into that have depending months. that I a put round. kneeling us are should that next we we been go that’s the

done So, most we it automated be on it AMMO or we when how get most the make country will are the – looking building plants And in it. streamline automation. we with the and

Rob Goodmanson

would add a Yes. like just to from little bit Fred. Mark, I

the new we that’s is space. a Wollmer there. need added have of building pack that We add is on been streak We anything room now. now, we planned There is building. is separate in But got the is it in another you plus to not Street, order have equipment, for still add-ons in we and everything And designed have I to lot facility. And our really have up hold obviously, facilities that have currently think facility current that’s Manitowoc. more three significant where where

Mark Smith

And from and get further what concerns to labor Payson there to kind facility? But facility, able Manitowoc? up the is, when the people bit new last we Are at are any question of the – did we staff into me transition looking you learn moved to And that operations did enough have? are look this as you little for a you here. at new you

Fred Wagenhals

set done in question always analysts I I and getting biggest said have think always what’s great remarkable to job solve new just And way way it job. always up department your a people our has people. people streamlined, our problem. she problem will the from a Every I gotten and this But come it’s brokers to work. factory, it’s have with think HR done has finding or they the people, its

Rob Goodmanson

up be I resetting pretty will the done, will out. and of it. play. it where, itself much laid what It’s that’s planned be mean move all all goes take will the It’s out everything equipment the On plug and weeks.

truck. had Moving of from days just Payson number in to Manitowoc, obviously

much put of which those be than did down, machines Some street. facility, just have That literally new the the new move broken – to the is rebuilt, longer had into taken across back would up. take it

Mark Smith

Perfect. Thank guys. you,

Fred Wagenhals

Thanks Mark.

Operator

Dwyer with proceed. Please Our next question Raymond is Michael James. from

Michael Dwyer

Hi, Thanks guys. this for afternoon. taking my call

are Given or movement at trade been to out that products? environmental, conscientious wondering writing investing, the anything that biodegradable share had have with your might skunk around guys are concept you in any I magazines this of looking there the us? environmentally about recently. you if works want was Several you socially ammunition friendly

Fred Wagenhals

that happened today. a costs them deal the assemble shells. And they because with the that we And have here XX in for with a be them have have will a Spain we we they we U.S. their product to so in together our out patents of States product on And And to some company here all United that it morning biodegradable here are putting worldwide. just contract build on ammo with facility. shotgun new are probably, of Yes, going to have freight spent in

so them I for with us. a think supper very it day to was Going exciting out tonight,

Michael Dwyer

on like looks you to you year some you. give is think look can what marketplace SKUs quarter, around us color SKUs marketplace? next your gradually offered like your total Thank adding would offering, It the terms in next of

Rob Goodmanson

just number. SKUs in Hi the have I Mike, don’t set this a ammunition. got Rob. XXX It’s is

safe team. the are be the on near-term move looking a and will think just believe that in we up consequently. the It And very short credit, I between took the to that correlation pretty at I make build gun to and there through SKUs. would adding owners that a time putting And loyalty low-XXX us be seems into cards, to acquisition the programs, we Bitcoin, currently type now thing. high of alternative credit currencies. with lines the be of products tied there to And we

programs So, there be that are many studied. many, there different out to need

at We that are closer taking a as well. look

Michael Dwyer

Thanks, for Rob. me. No Thanks, more great quarter.

Operator

Our next question is from Brandon proceed. Beylo with Macro Ops. Please

Brandon Beylo

couple Hey, guys, just Again, allocation. great capital quarter. a questions on of quick

manufacturing marketplace? the And those online that up are getting internal this are and also a cash end X years, out you What X how where flow you all that have that allocated? did to see years of gets you you through facilities come have And are allocated? income up, Looking positive? set Now ramping you to guys starting How discussions? deciding dollars got done. lot these and cash net got are then it’s

Fred Wagenhals

truth, definitely anything different that adding to are we are that be make things of additional And with The think on be there based more the GunBroker probably would it be number different I going will assured effective as into be product The earn-out. and little think play. And I come we a we lot future. prices, One in didn’t for the do of scenarios. space, how not immediately I And that structure isn’t telling wouldn’t allocation is. doesn’t transaction an the us. vertically into all too looking that – integrated. say not there is a I sense were accretive it’s fit doesn’t and not the if I to rest happen you a distant would site. see

Brandon Beylo

question seem before just correct? you that is it. lacking the chip general XX,XXX And customer you month, guys which guys adding away new another a bought you sounds And guys fruit to were was it that service, could of said just low-hanging like would be really that about some like I Got members GunBroker, think it to start so it. then seems you

Fred Wagenhals

I is that think to XX,XXX. number closer

Brandon Beylo

Okay, I am Yes. sorry.

the to So, what new on those manifesting making growth? that’s that a the platform, in then of board? of coming are you improvements What are of XX,XXX month? drivers some main are And guys this people kind

Fred Wagenhals

to out and we go if customer their GunBroker was were were. where in Well, at we biggest finding fault looking Their back when initially, faults service.

been spending a have time there. we of lot So,

doing trying the As adding and process serious you for make the to catch-up, training, doing end some mentioned, people significant we easier user. have whole been

used about this growing the people to is that our treated. So, the live back. They what people. just through miraculous think that’s them And be arena. actually in up, there doing emails, are customer catching keeps I And say, now, and service with job let’s users, that’s end all really coming about growing. like is how the all customers, they keep what are it’s And business talk

Brandon Beylo

the know of through that quick amount I the year Got it? question. had sales product through is the of don’t you number. just I million don’t you target for know of first marketplace. through specific AMMO early. seen or And know on $X a there the maybe like pushing How one just some maybe kind success it’s then been I if it’s your you you strong that easier have AMMO, AMMO, Inc., products you in But goal? it’s product, super know than fairly harder I than expected, own expected? are marketplace. guys

Fred Wagenhals

pipeline harder the while It expected. to in. to takes little create bring It a it hasn’t than been

straight I I where production go we of GunBroker. think least about talked see at some like of think we would our the to XX% to previously, numbers

fruit allow will affecting, consumers fulfilling be production and go being this capacity, increased the that hanging that’s probably new to big We won’t and box to more actually lowest game, that. stores drive the there the the are today and to that’s and large direct of like us our the growing we to their service the be still consumer, With there increasing then we more people does orders. customer products. hope out driven which and But

Brandon Beylo

Got it. And then one final question.

are if think envision be Pro you not and I over it really direct-to-consumer significant distributors the role something out of to of a you big most the revenue Bass sales respond. like final relying do to out revenue, see your stop it you stuff question. If box But be in full we retailers will roll on play big a kind still box these guys this or and and got one generation most retailers, have your Is where long-term? a what that GunBroker play works? of – I thing like

Fred Wagenhals

when, will your it’s not play significant I think mean I question. always business, there it’s role. to competitors, any they buy where is always ammunition. a a really going you In are

– it’s as the Farm would but not on from or pricing stores. is Bass – you to back giving like As where else big purchase somebody Fleet it’s price not King, Rural up competitor, be be our or box it, and to Gander plan cutting just do we anything the would Pro another long equitable,

Brandon Beylo

step Got it. away. enjoy tonight. Fred, will And I supper

You wine have red of whatever you fancy. Great drink glasses or quarter, earned a few whatever, guys. extra

Fred Wagenhals

Thank you.

Operator

gentlemen, to any Thank no would to there closing questions you. for the are further remarks. time. call hand and this back like Wagenhals Ladies at Fred I now

Fred Wagenhals

come out to quarters. for Good day. just the want couple over and things everybody are us to I the this to next you I And of some quarter. next see supporting thank forward amazing company going look think of

Operator

Thank you. today’s conference. conclude does This

very much You your lines great Thank time. at day. you your participation and a disconnect may this have for

AMMO (POWW) 16 Nov 212022 Q2 Earnings call transcript