Earnings call transcript Q1 2024

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Operator

Ladies and gentlemen, thank you for standing by. Good afternoon, and welcome to the AMMO Inc.

First Quarter 2024 Earnings Conference Call. [Operator Instructions] Participants of this call are advised that the audio of this conference call is being broadcast live over the Internet and is also being recorded for playback purposes.

I would now like to turn the call over to Matt Blazei of CORE IR, the company's Investor Relations firm. sir. ahead, go Please

Matt Blazei

thank participating and call. today's you afternoon, in for conference Good

Chief me are Executive Smith, Wiley, team Ami's Officer; Officer. Wagenhals, Rob Joining leadership Jared Fred from Executive Chairman; and Financial Chief

will During expectations AMMO's performance be this future call, making statements, that for including results. operational forward-looking or address statements management

factors Forward-looking those statements. other cause results that involve statements and to actual may risks differ from materially

Form factors XX-K risks, described about Form SEC For these they periodic refer reports the the filed more Form on AMMO’s in the risk and most XX-Q, with X-K recently information to filed today particularly in that useful and the company's AMMO conference press it. measures releases be that can evaluating accompanies its the this statements call call, believes financial performance. cautionary includes non-GAAP Today's in

additional substitute as this with isolation should accordance in not for prepared information a GAAP. consider or in results You

that reconciliation its loss, contains reconciliation earnings For this content X, to non-GAAP measure, this by XXXX, that or events after most located is circumstances of directly this any obligation any information Except press today, in a measure saithe publicly revise to GAAP or August the of AMMO disclaims information company's required to law, financial The statement financial net of occur as reflect release. only time-sensitive call. comparable as accurate call update

the now over is Fred to to turn my Wagenhals. call It pleasure Amal's Executive Chairman,

Fred Wagenhals

I joining energized to new phase our build growth vision he ammunition first management working will moto value. industry of look for the and greater believe successes. will call. him like Officer Inc. appreciate quarter us forward confident for Smith in future guide would be call success our begin with this combined Board, and Thank and to are the AMMO everyone his and background with We -- you, to by shareholder instrumental I that executive strategic of next Jared's Executive good and earnings I welcoming team, Chief afternoon. The as XXXX Jared

will closely I in as transition. founder, on Jared of very work engaged a will continue to and original daily the basis assist Chairman with Executive Board the As company's be this the

of significantly recent As Amos been forward remaining this is CEO, believe our continue the undervalued vision nowhere his as X but since this Operating proud the Until I I'm appointment are until in we value Jarrett a has many stakeholders strong opportunities we've working stay sure up. aware, look is towards. founded of to and President job as plan of but you I the and January just in Officer. to execution I built markets in optimistic our the voice to our with exactly am on company Chief finished. make are understand what I XXXX are will call strategic we'll has what and ago, of since front AMMO the us. what go years of

Our management happen. making to completely Board, executive team that committed and are I

we believe At detail, this to turn has our operations current AMMO, its and call in for team the review discuss time, Executive store Amo's future He the state Smith, its what quarter first will Jared shareholders. Chief the new over to I more Officer. of like and in would

Jared Smith

inside here. Thank in earnings and more sleeves first lift creating X X my we've CEO, everyone. I and the rolling you, good The as our to outside couldn't This and making up and real Fred, walls. call excited strides operational afternoon, be months, be is been last tremendous

major categories. to my business through XX, out As driving shareholders are I laid we in X on July the letter

to our Gunnbroker.com's community. platform through we're centralized products category, the and carding payment expanding to and complement the reach processing, addition services First of relevant

importantly, oil enhancing shareholder of manufacturing. improvement measures we're and continuous margins most ammunition goals, and integration focusing aligning we're our The rifle the second project and with division team and incentives vertical is management of the lines, the on brass interest. to expansion through And compensation finally, category

as begun pay work are to starting have we the directions already quarter. first strategic to and effects see our Our off here the in positive

to adjusted from XX.X% $X.X prior EBITDA was were in quarter in margins million, XX.X% last from QX. quarter up an $XX up $X.X with from compared of the million generated same Cash million, the $X.X gross million Our operations in year.

million in of brass total prior the market gave we a and conditions. bottom due quarter million this profitability. overall quarter commodity for in the focused and to from repurchased $XX.X shares was on our the revenue this down transition from low-margin in we program. and sales through million last As cash quarter $X.X increase away the being business top This sales, line business had ammunition up our higher-margin We reflected to transition line XXX,XXX $XX.X in sales OEM buyback

to We purchases to of I'd credit we sheet focus our balance will strategic strengthening buybacks as capital allocation speak opportunity gunbroker.com. on continue like specifically with on and a in the ahead. through quarters now see

our the for product million down projections $XXX.X million follows We quarter. the only was moved on lower this in Gunbroker.com. slightly platform $XXX.X than internal in seasonality quarter, This prior from industry

revenues decreased, in to margins XX.X% our prior While quarter. compared remained the strong, XX%

carton. expect out also the we platform starting as on a in QX roll our centralized lift processing and payment We QX, multi-item

single currently products start and to believe final and we card, we sales time, higher-margin able increase X% are We compared X% fee the earn our over across the value today. accessory we services. to to digits the high multi-item achievable As increase be will

onboard testing through rolling to the are processing sellers continue payment QX. We and will beta out new

our are Cart we end year. online development, coming Our platform in capabilities anticipate and of that the by fiscal

a time in Ammunition of margins AMMO XXXX. transition $XX.X division. for of with first to margin, like gross reported since negative in I'd to million in X.X% We revenue from quarter. the positive June the created The the previous Ammunition up division Now X.X%

loaded a we is next for win, sales While strong anticipate quarters. for major the X this headwinds ammunition

our market result casings, in considering started to during casings, very refocus $X.X the million, the time. OEM in to continue profitable to up from great previous a most increased the tough continue company this that and quarter. This revenue monitor We we margins January. ammunition market, brass the $X.X million for economic of transition is we'll this the on segments The

I'd to the and continued forward like with as joining progresses. communication you thank everybody and robust call today, to year I for the look

like it would this I Rob over At to Wiley to us now turn financials. time, to the walk through

Rob Wiley

Jared. Thank everyone. you, Welcome,

XXXX segment on to the Let our higher increased sales. undress segment margins financials to review our on Marketplace as gross of leaner our strong, the on of Margins our begin operating model first me now the have quarter ammunition transition benefits more our year and focus detail. of we in a remained the see with fiscal

the date, to to face ammunition still as confident with progress we the We see headwinds in made have commercial markets. remain softening U.S. but continue we

increase $XX.X position with from generated million our in in to comparison have, We total operations however, revenues $XX quarter. in We the of with cash quarter cash million first approximately ended continued the the U.S. from in to continue year our decrease million as ammunition commercial to $XX.X ammunition primarily was segment to prior soften. in related in sales the revenue The quarter. markets activity the decrease

however, margins in $X.X sales, which million us from year to million, prior $X.X up increased casing Our the higher period. gross afford

million related year the the to related but Cost decrease sales for was margins in prior in revenue sold approximately Our segments. to comparable million the gross decrease volume, to quarter. compared quarter. goods sold our the reporting from cost The was in of higher $XX.X $XX.X Marketplace for was also was $XX.X of million X quarter goods

related we for have gross incurred the profit increase margin There for expenses million which in the shift quarter. quarter, gross or $XX.X $X.X expenses, XX.X% the prior million a in compared year we to profit an quarter Our nonrecurring The the is margin to add our in $XX XX.X% legal to approximately EBITDA. our of was the Without mix. in back sales or first included legal generated period. as have million fiscal adjusted nonrecurring would are

approximately per year adjusted share of an year per For adjusted $X.X adjusted the in EBITDA compared $X.XX share million. a or or of per income $X.XX. period we $X.XX per loss to million of the $X.XX recorded net share the to quarter, of prior of of resulted income share adjusted net prior quarter income of net compared This $XX.X net EBITDA

on to gunbroker.com. We the continue push forward to improvements marketplace, our

for in end launch of expected rolling the begin testing the platform quarter. are by payment this with process to of former We out beta currently our

car approximately million under current the in in marketplace platform and pace feel and repurchased this under year. We stock the shares fiscal bringing $XXX.X liabilities. in plan for expected X million cash including of in million in end is our the gunbroker.com cash shares of over XXX,XXX us repurchased to repurchase reported common to quarter, comparison total plan. on financial the We by $XX.X Our position in equivalents assets, is $XX.X our have to of confident reported launch million current we as

We our continue impressive opportunities look for balance bolster sheet. to to

now for turn the opening the will over questions. our concludes That to call remarks. Thank I you. operator

Operator

Matt first from Eros question [ph]. [Operator comes Koranda Instructions] Our with

Unidentified Analyst

Mike talked Zebra XX% of casing Maybe it OEMs I business we at some -- nowadays. on of what just production Matt. start on in selling about percentage a point past, for the Cassons currently side to different to just guess business. obviously, are the the you XX%, being but

we to the scale business. And of that does time casingside go where as do need stand there? to So we just continue where the over

Jared Smith

our is to XX% turn the our positive Jared. be the going going forward. business is And of over to across quarters. I see the This There's very, nonvertically-integrated is. ammunition business for margin demand It a X to taking players. compresses economic a rest business certainly is XX% business. It's to this next of There's casings be decline time margins captured out the very sales growing for continued there, tough in there. the as and board the strong easily

Unidentified Analyst

that pricing Ken? industry, is given having at how Or is entire to demand on price we here relatively still should the press think cases? for relatively Shell stable compete soft And it. about Got MO OEMs? we across for Are loaded

Jared Smith

this a -- into market reentered Prices declining we market. in

foreseeable say I and now would price right for stable. very is the future, So

day. with continuing. -- huge are the mean, this I do any online see demand. a the capacities every comes Our us, related new back further online brought market I more see factory that erosion in see this August to this increasing casing And not I and for a is on capacity I win And price we

Unidentified Analyst

remaining just the Makes through? loaded bulk-loaded to that any AMMO see Got switching Good AMMO improved end? Or do of on loaded we AMMO sequentially clear Maybe sense. kind done kind to are I inventory to of side. margins have pretty meaningfully. wondering, we it.

Jared Smith

us. part, of will role but range be think sits AMMO in It's that to there, items, inventory to the amount healthy. have but For smaller manufacture There are a a our always we're past not market, going will concern much slow-moving has not of our forward for major some inventory is this going [ph] I play than out it's clearing factor. it terms inventory, relevant in in the much, a still some we most done, it

Unidentified Analyst

That Yes. Got me. it. makes one for sense. Last

should loaded thinking unforeseen if Do maybe and how how Aside progression the about can are gets of by you demand just margins XX% gross we worse, from there AMMO back scales Just over any how to we range? get we the discounting, the time? think timing think year-end? that getting environment about

Jared Smith

Yes.

I think for our business, improve. margins

value dollar much playing space, ammunition and We – make grass really can we X and can on both margins capacity again, domestically internationally. our once it the of where rifle kind and ahead. sir. have in coming a rifle in production more quarters role piece larger over is that And the of defer focus margin. non-vertically larger Thank rifle much, a our integrated you, We the increase. That’s clearly

Operator

Mark next comes question with Smith Lake from Street. The

Mark Smith

else, about me, continued for high updates can Jared, X-millimeter, that demand of talked inventory XXXXXX, Amo. there? that of you then in you're kind calibers, kind kind we're headwinds coming of any primarily pricing rifle. us you kind what seeing of in about within of question everything here. any First centerfire just demand as talk changes or Maybe And broadly seeing kind you're give channel

Jared Smith

Yes.

the and shifts out XXX. on stay this what's be fairly will purposes, currently that inventory things I happened, erosion I market think the and what's next see bottomed and shelf. the is have pop. in we been from X think to for we for for market waiting all Black is Friday. out So I there on will little further But price see and really quarters. some for lot specials coming There of any manufacturers don't a at to the Mark, stable holding X-millimeter I the out for ammunition intents

we Going that's can forward, where levels there's than fantastic in, still pockets play there that are and areas, inventory in still revolver, play. there that in those plan to is out pre-pandemic we lower inventory

Mark Smith

as much patent through on us loaded competitively, brass the sales as can then might of on versus And walk Okay. talk you but maybe or am. be margin tough kind

Jared Smith

somewhere to produce $X.XX. $X.XX a cost can't still the O We Yes. case, Whereas can I and per between is mean, just our can was X,XXX sell at ball and there. to I I today, margins. make retail brass price $X.XX XX% play

between casings help we the So brands anywhere space and out there. there's can can and to can bras help out help $XX,XXX up I And $XX,XXX domestic players, sell new space. this there's to we We international market. enter our out they're wanting demand and

the looked XX% So for going -- can to to X.XX% rifle margin. cost it's anywhere we're this much volume too where market at we brass and if X.XX% but going the against going factor for for right primer our XXX us is to into We is of XX% Balama. at and sell play to stay ammunition, were returns, of we XXX, we're like where in between year. now retail election the larger just an integrated year a play next going until and It's casing we're vertically players, a

quite [indiscernible] as cases. for we're rifle demand excited, a out there's lack and not of there So international

Mark Smith

you Okay. OEMs? you just how to heavily more broadly of can of think contract back Yes. guys it versus talk is kind And into sales this to buy bras maybe get then on from about we orders casing much at about open all as OEMs,

Jared Smith

Mark. question, Great Yes.

All XX% contracts signing within large are our of up now capacity last our new I We somewhere XX% between contractual that total plant. today. X to are the months. sales making say would contracts of

Mark Smith

Okay. buying for these speak products. weaker think demand to to of specific know into where see the from going So season. a hunting broadly -- me, broker, talk I gun for you these And some this to primarily for holiday take activity gun maybe what's But seasonally one we it's is broker and to move then spur here maybe where your last more kind it important consumer guys kind more I about the as quarter of consumers? consumer of this some and outlook

Jared Smith

credit broker And platform not we're Great of the gunbroker the new market. in used guns the sells question, locations, seeing platform is a for a new checkout cells because really what's to first reflection that back they're all. perfect But improve what of gun doing, on higher is a, guns of are guns. having of is retail and streamlining going items, just Gunbroker broker we're gun that we're XX are users go What marginality to mix are this drive the to providing those for the they or seeing our the that Block go actually cart Remington use to of broker and platform that define internalizing XXX. process, in be and really QX and ubiquitous to unique QX services and going and it's year delivering it's item, of we'll of or ease the card the that

Mark Smith

Excellent.

Jared Smith

Thank you, Mark.

Operator

in Jared closing call for Smith This our I session, to comments. will concludes the turn question-and-answer and over

Jared Smith

for just you today. for in tuning I want thank to everybody say

the heading Wisconsin. brass From for there factory this the really season. that us future. We've doing the a year Things now to are side, in on we're developments platform extremely for are starting We're broker bullish are Manitowoc, the about fall are click into cells We on. taking the exciting. as gun had

call the in to for from us stay and be hearing tuned, thank today. going joining you You're the future. more And

Operator

The today's for conference has attending now concluded. presentation. Thank you

You may disconnect. all

AMMO (POWW) 9 Aug 232024 Q1 Earnings call transcript