POWW - Earnings call 2 2024

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Operator

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

Second Quarter 2024 Earnings Call. [Operator Instructions] Participants of this call are advised that the audio of this conference 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 Scott Arnold CORE IR, the company's Investor Relations firm. sir. ahead, go Please

Scott Arnold

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

Chief me are Executive Smith, Wiley, team AMMO'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 today risks, described about particularly evaluating Form SEC For these please periodic refer reports AMMO the in the filed and the company's believes call press it. Today's more that release Form on useful that be AMMO's in its the accompanies performance. the risk and this statements most includes call, can XX-Q, with measures cautionary non-GAAP X-K recent financial information to conference in filed

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

events the or by directly any is the in For financial of X, as publicly Jared measure, a net The the and turn release. contains Except AMMO's to to Executive disclaims information to after Chief reconciliation this update call. It that circumstances see November Officer, any Smith. today, of loss only my table XXXX. measure content of call to obligation non-GAAP time-sensitive GAAP comparable AMMO earnings law, financial press reconciliation information located pleasure to occur required accurate as most reflect this or this now please company's revise is call over in

Jared Smith

afternoon, Good everyone.

that we operational moving events. international due addressing by had transition operating domestic our more a From recent a said, quarter remain leaner business With to which our to and difficult and for and profitable our recorded very previously Our quarter competitors. is to been perspective, our very market and model on the was continue focused fiscal second inefficiencies. quickly industry, major anticipated

in revenue. years. due incurred activity contingencies note, nonrecurring $X.X change for control during for professional fees, payments $X.X the the the we incurred $X.X its GunBroker.com events to quarter, today, GunBroker.com we division. an beginning past traffic in working successfully a off. This measure slow-moving ammunition and enhancements adjustments while but upon house we change by additional in activities. so the the have and multi-item of necessary and fiscal reporting the $X.X are prior gateway write-offs and to move international as a We which burdens with stock working are tracking pay expenses to from without that since an were line strong line payment the not deposits million inventory actions sales $X.X to million streamlining note, from year. These in of allow strategic to quarter our of we from major Inc. million could are capital we previous believe as and expectations, these cash the believe transition fiscal In sequential million at checkout our quarter recent to these Of quarters see clean This card expense us XXXX in a loss suffered conversion we and centralized cleared to favorable tailwinds to true transition evolution originated legal future anticipated. beginning our we step XXXX that second years we sellers We be come. On actions, out compensation the first created onboarding a processing of And fiscal we process as in transparency now as greater to positive were and experienced profitability making. changes down flat have increased are the auction in year is There reduced and are sequentially, report $X.X functionality. to inventory an Revenues quarter, believe the has of lowered from timely by control top profitability option accruals million, year-end. decline our created is for illustrative and in launched XXXX with activities model $X.X necessary a of Amazon-like due QX was and million moves for fiscal AMMO in million our as forward the that

was versus anticipated, the October in sales QX, see with to sales lift This our environment. is macro starting decline line current platform volume now including seasonal through the for in are increase September, XX.X% in and which our in in a in we sequential trends

This new outdoor pay and sellers which for platform our to users and acceleration service. experience amplified centralized time, is first payment begin as escrow the processing we is onboard

enthusiastic onboarded We sellers since with live outdoor very the about GunBroker.com. have and We X,XXX we progress went pay. within remain outlook

Tough division. straight. Now best our me served to let specifics news on some turn our is ammunition attention

new with transition have certain steps books As our clean and debts with a team, year liabilities. management any to outstanding we inventories, up taken and

further our overhead production we cleaned in have the In anticipated suffered. the online for ammunition did market because already context, below a made results plant major and our backdrop, on for expectations. equipment substantial slow-moving our we in up absorption companies, brass traded was impacted come well the not low the tools rough our by in market, margin as With quarter contact publicly inventory this investments stocks. were also losses our While other QX took we as reported we

by electrical our is but for production. This presses the means from brass rifle a and of lack demand, of primary no due to failures mechanical

our not investments million, the in operational. million the to become our demand is of downstream fundamentals additional mechanical OEM in our transition have is to go-to-market failure in come to for supply place and Of led keep sales the the press online. The that the will roughly quarter. exceeds back in do our quarter. to in and costs as the tooling an experienced and future products expenses these workforce due for throughput our quarter electrical blast as the in we $X.XX strategy redundancy, investments there issues crucial for This mechanical current expenses we $XXX,XXX industrial more help offset initiated these we incurred $X.XX While prices even

expect customers continue in rifle we driven around the margin of increasing additional we demand customers we for future and sign continue and new the quarters, and product to high world quarter CapEx. note, our output Events We pistol OEM are strong new an roughly have of growth would the offerings, domestic where now. and by ammunition brass. but supply see on we be a are a XXX to that facility to demand thought for positive behind have brought we On

the to our While last prices not margin continue quarter. highest idle, set idle we over have sit

We over a expanded last compared last XX% this year. total XX% brass sales now have of quarter and year, by XX% increase to make sales, sales brass up

head at both worse growth ] on have and today. to been starting with limited is consolidation our products this reported of payoff am sales into we we and X.XX trends reinforce processing disappointed our international Events my strategic loaded see I on needs recent have coupled business. Since the the with commercial and cannot partly margins the in capabilities Although platform. have down in flipped and the and seen our the revenue we to demand performance our of October return further these ] ammunition the in from August, last GunBroker.com confidence in see industry, due [ in of earnings market time. we completely [ improved quarter, market our for to its Lake a ammunition its direction brass simply a City, market the payment market of increase

results to [ than and CFO, third Scheiner second I our way fiscal to Wiley, organization. to of retain the team review will Rob more recently more along to we The detail. talent in in I look hoped. to us turn is place better over with call recruit the bearing and help remainder Rob? our We on fruit, continue to quarter forward industry add bumps year. With talent veteran, and the turnaround in ] our albeit and the that, the Paul brought quarter results in our

Robert Wiley

you, Jared. Welcome, everyone. Thank

XXXX the are we optimistic our The margins segment of of our detail. although the gross ammunition review financials future struggles, our more in now And year me segment in on strong. in remains decreased Marketplace Let performance operational of have our fiscal margins aforementioned second due the quarter segment. the to this

the While robust. challenges today, in market remain casings demand continue for the our brass

we positive We quarter. demand are are seeing for ammunition beginning in into we increase on third fiscal and enter product activity as the GunBroker.com to see our our trends the

to financial We on are strong positive our positioned trends given these position. capitalize

equivalents of in million in current $XXX.X including reported current and liabilities. in have $XX.X we cash to million cash comparison $XX.X As million assets,

comparison first million approximately our from $XX.X year. midpoint $XX.X fiscal revenues with quarter generated of prior year the as to total in U.S. in ended We have Additionally, we activity the ammunition in market commercial million the quarter. decrease ammunition revenue million to through the result operations in of cash The was primarily the of segment during quarter. decrease in a state a the our from sales of $XX.X reported related

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

impacting compared quarter reported as others. quarter. the Our $XX.X of decrease in sold Marketplace our of as the approximately to a in year related was year million to decreased the prior revenue to decrease the well million sales the was quarter as was result quarter, the million cost compared environment volume. for which macroeconomic for The $XX.X Cost sold in comparable million of goods prior $XX.X industry goods current $XX.X in

to segment. shift related the going margin prior sales we margin compared cost or The for $XX.X the in gross was to experienced the in due or to of the also $X.X was million our in the rifle prices but period. with a casing setbacks our our profit decrease in to gross costs the higher quarter. associated million absorption XX.X% Our reported quarter mix, ammunition manufacturing Primarily, was result year in down process suffered as related our XX.X%

accruals second approximately related and activities XXXX $X.X control our additional million change of and XXXX commencing legal nonrecurring of and our compensation million of expense in $X.X in expenses write-offs also contingencies quarter. also There result from years. million of professional $X.X in to fiscal There fees were fiscal and incurred also a as was for stock

included to as are these add-backs others, of adjusted items, EBITDA. among All

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

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

base user We this and are our to our payment to platform the have formally shares soon us repurchased processing will and us you. of launched I outdoor platform stock process launch in for XXX,XXX the our pay, the cart our repurchased bringing thereafter. our questions. of X.X our platform, which We in approximately to onboarding opening common over turn now Thank plan the over shares to operator just million under plan. That call quarter, repurchase remarks. enable concludes total reported the under will

Operator

[Operator question with from today Koranda Instructions] Matt comes Our ROTH. first

Michael Zabran

the just to then? Mike we much. that demand segment. level pricing October? a on seen wholesale as It's starting guess, And demand have in uptick result, stand Zabran Has in the sustainable we since Maybe How that change is on I for saw Matt. at same ammo

Jared Smith

wholesale is says buys the market whole NASGW that pricing seeing, the event we're Mike, opportunistic lot before that out increase out we certainly into just for We're slightly. there. out escalate. continue and pricing question. There's see going in optimism that the that seeing great year. seeing optimistic We're the because sell event. going hold price a to this to continues We're the trends of price there election to happened

hold. that think long-term this that's think strategic a is repricing there We do XXXX happening -- going So year. we will it the a into is

Michael Zabran

across in board? specific And Got or pricing noticing it. we're just any the of calibers changing kind much

Jared Smith

Yes.

coulter on anything Israel Hamas. calibers, everybody is inquiries all between we're increased would But running us and XXX, customers. -- to say XX, that X.XX of military and I x news on board, increased the because your stuff getting larger So I X.XX across related bringing new the mean rifle demand for the and

Michael Zabran

on absorption trying casing ammo have just gauge, XQ. about cost the to lack both margins? from Or you side? of worse sense. Just coming pressure loaded we down. AMMO going negative know the Got worse casing sequentially casings of in referenced side it. the back and sequentially was business? gross margins casing gross from is Makes did the But And talked core and rifle margin entirely that slipped I the

Jared Smith

left flushing in We and purchases all took sitting on and much out. erosion we've not in It on of casings, not were X June hit -- flushed over month on another 'XX. and expensed any that really online only seen a that product And price not tooling our margin really press on erosion too we price any we inventory when upon first We've time XXX. We slow-moving brass gross press from some that the did come made month, was that bunters, inventory. strategic come we contact after back receiving tooling online. didn't had seen

tooling in expenses the And the division. ammunition in. flow those major And to and our so profitability that's continue contract to really that hit

Michael Zabran

to on the climb GunBroker, to Got good the coming Last just quarters to it. payment the a about we result. as me. to should the Maybe magnitude of and how Makes us processing see take sense. take expect one in Maybe rate see rate benefit on how finalized. remind think just for

Jared Smith

rate Well, is to affect just seeing but take new see to X.X we capture over card our we between rate months really as between fees to the take that X% effect the take GunBroker, that the an in the I'm to somewhere these X also credit seasonality due see X% Well, see over take climbing to We're sheer what doesn't sellers. our looking next for. going the X% somewhere rate. a rate, you're uptick onboard to as main see going you're X% we also we that --

Michael Zabran

it. Got

quick remarks. live. I prepared last I carding one. thought it reference from Is on benefits you And the heard Okay.

Jared Smith

Yes.

onboarding until not we We carding will yet our centralized but we're onboarding are happening and sellers. and come payment finish now, our through not what's gateway right those all cabin sellers on processing

Operator

Smith Lake The Street. from with is next question Mark

Mark Smith

here. things A bunch to of walk through

first, Can little just did that much And that deeper we a hit was maybe your the talk see you impact First, you bit GunBroker the demand business. just how environment a October. about you demand maybe saw saw little that maybe on in consumer the what uptick? within

with said think us the seasonality. I the typical XX.X% but you're through that on kind of ground or consumers? was seeing that you sequentially, Walk that what at was you quantified

Jared Smith

Yes.

to was the half your because So Israel XX.X%. in X% happened second we saw October. a expect would anywhere X% really events in And into pretty trend the that in uptick a we after the that was And of between increase X This that's trend and and September it October, X, from a a sharp the events really these coming incline gentle Hamas or of X-part question. sharp

So please repeat.

Mark Smith

and elaborate Yes. of spread primarily is Maybe just firearms, firearms? on ammunition you on demand is that that that demand, seeing that. kind accessory. across Or other Are

Jared Smith

sales arms ammunition. platform and an across spread on those suspect the in in And certainly ammunition we're calendars. It's seeing increase

Mark Smith

as significantly around then don't OEM quantify maybe demand seeing know you that? And seeing in if there's through Okay. of you other brass casings. October Are demand, anything that from the uptick can what And well? you're increased customers piece walk us I for

Jared Smith

coming is take for a been And not to until come The Mark. out quite new we've need orders issue really we're that any because wanting online, that make sold presses sure while, these May to we being, orders online. press we're March, placed on and orders getting supplying books that that new April back that we our was we our forecasted in this we the that customers when and have are

take a case that's biggest really million on brass a ] in operational that's [ go where exceeds output capacity, XXX but the issue. in So that We we've our today capacity, shortfall efficiencies. case out more XXX our and could demand rifle had and million, is

Mark Smith

you've the quarter, as these equipment kind had, process, maybe we versus are today that of where the were rifle at of on think then we where that end we at the issues And mid-quarter.

Jared Smith

question. Great Yes.

So the back plant, we redundancy of in the April, new that walk-through have that do when needed. we recognized the we started didn't to we

up together press everybody running week. the bought during So ready. but went demand. This a until this not we're from lack not won't down, we that again, a additional and get week, testing pulling this trying from December. parts Once presses, up press presses of online COVID. bought showed press was it's off those and lack to of The come It's last

were during Some COVID. made of the parts

that on been to the -- are manufacturer But original versus to for forward. experience get work we very X the going when equipment back being think everybody we parts they team. last for parts by being to today the the trying parts sending X the and forth frustrating has months that a so outsource and the of And the made on are press a count made these can have we parts

will that of process, press things and it other presses this X press, part explain the preformed of feeds help our about One this as downstream.

like somewhere press million down feeder It our million ] work which press [ XX So single press. ] on entire for to between medium and it's a capacity you action it. goes the that not line, piece is around just XXX have [ we

and So big deal for it's has been. us a

Mark Smith

and piece for any in I Okay. here The others. me, jump back can last maybe with

an the about As how of it kind loaded the else we'll into through roll as is or the got And not or turn was that during maybe as ammo impacted quantify we around like there allowed feel call anything then at some you quarter? also, or we think you loss process don't in you if remaining can quarter? clearing that that there QX. Or even by margin of know profitability impact out, had big do the make inventory. still aids that I

Jared Smith

goods on sold. Part cleared forward, inventory point old are our our is of older that out this our get to out push calculated we've inventory. At No. overheads going that

to hit the margins off presses, over be now, better we overhead So hard rifle not that want should footing. pushed we're had But we really to a the and we at running didn't because bleeding even our take. on from such a

Mark Smith

Yes. of Was end? but don't kind got you said Maybe, up. Jared, I post-quarter still you price know me, if that taking

Jared Smith

what as that's I much seeing price demand in seeing, little breathing XXXX allows seeing that the margin yes, end. not [indiscernible] bit past. of you've least we're mean We're a us compression in Yes. at post quarter as seen You're

Operator

This over conference closing to Smith would any to question-and-answer the Jared like I back concludes session. remarks. turn for our

Jared Smith

XXXX our investors thank we today's wish in I I We just Inc. day. on and want good all progress appreciate to next sticking want third your early fiscal for quarter us, AMMO interest year. participating ongoing I report the everybody with call look a just forward to sharing and you when results to

Operator

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

You may now disconnect.

AMMO (POWW) 9 Nov 232024 Q2 Earnings call transcript