POWW - Earnings call 3 2024

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Operator

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

Third Quarter 2024 Earnings Call. [Operator Instructions] Participants on 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 conference over to Mr. 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 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 risks, the described about accompanies Form SEC For these please periodic cautionary refer the reports the the filed more in call, this Form on AMMO's in company's the it. risk and most XX-Q, that with X-K recently information to particularly statements press filed release and today

performance. includes that be Today's believes conference measures financial non-GAAP call evaluating AMMO its can useful in

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

measure of located loss, financial please see financial For the comparable earnings a release. most non-GAAP company's GAAP table to reconciliation directly the press measure, net reconciliation this its in

The Smith. after today, February Jared is contains content any reflect circumstances of law except or required as obligation Chief publicly only XXXX, my and turn occur Officer, It update events Executive time-sensitive is call by accurate to over to to of that the revise information disclaims X, this as any that call. information this what now or call pleasure to AMMO's

Jared Smith

tough the U.S. to this economic very leaner XXXX Calendar business everyone. we model and push Despite was a and challenging economy. afternoon, operating through for our AMMO Good transition stronger for continued year backdrop, period. a its to this as industry

we here with opportunities the fourth time and in we going emerged and have from We an about impeccable us this significant balance quarter forward. the before encouraged have are sheet,

XXXX's increasing announced a and ammunition as from the demand firearms see and contract recently to the market ZRODelta slump. XXXX $XX-plus post-pandemic recovers and We continue with brass million

inventories quarter, Now reduction mostly generated turning this cash million $X.X of through by We to $X.X quarter. a in our million. third

continue will inventory through the progresses. to as year reductions work We

quarter was were Third the to up of quarter a loss $X.X revenues nearly a $X.X of quarter driven initiatives loss quarter $X.X $X.X on and a basis increase million for prior sequentially, improvement in of compared of point the to This million cost-cutting margins traffic was decreases loss expenses, loss but dramatically improved net same the in primarily prior GunBroker.com by the and in year. the million XXX in gross marketplace. million due to a tooling higher sequential

capacities expect optimistic production a We grow are to our fiscal are rifle the profitability in XXXX we and year. seeing for as case stronger January as pull-through we here to return during

take payment credit XX% to of application will and the XX% In for will of upward our of successfully addition, GunBroker.com with year throughout we we rest division to application tested increase card processing seasonal this for cart over our onboard April continue the to checkout in The live remaining on will sellers support business, the processing the quarter, Marketplace multi-item trend its or platform as before business. onboard and here our develop continues QX. we payment continuing centralized our X. sales our

search and will to As The launch major enable evolution platform more. of a industry. from our the sports the drive tiered eBay better first enhanced as our and said shooting evolutions the cross-selling, the past, financing, outdoor functionality experience, our eBay in is we subsequent much the we've user step fees, an in transition of category auction of shipping, this cart Amazon

like Now to transition I'd Ammunition division. the to

rifle our capacity. We continue continue to to for on see strong and products demand bring

and XXXX. production, than acceleration desired year to million We the this quarter into rifle XXXX start our transition we with cost-out effect have brass and the year, year. real seeing $X.XX this this place fiscal While in in now lines projects but quarter, million, invested our to slower start been will with in take effect savings fiscal initiatives result $X.X has which CapEx a in will of our

now. on Ammunition into HUNT StelTH on online launch shelves hitting while line. our portfolio core rebranding the our well focused and StelTH of will hitting rifle and our carry STREAK, our and Signature summer, repositioning with Hunt efforts packaging way have in-store our lines are This and and early ammunition, brands, STREAK, Signature, line rebranding premium We our through of our website, to in are displays the new stores pistol

Officer. us markets. our Transformation business I'm also black new greater proud in Paul in helping to stays and announce onboarded Compliance be maneuver regulated compliance the our Kosowsky, as Chief drive Paul and these will we recently we ensuring

at look we transformation will XXXX, focus of the fiscal opportunities marketplace. our on we going As into

will transition model as ammunition pistol opportunities continue premium our We also embracing one margins to pursuing growing the higher manufacturing business. OEM to and rifle of and as well

third Rob our through financials. to to now will off Wiley, walk I CFO, the hand our quarter call us

Robert Wiley

Thank you, everyone. Welcome, Jared.

in margins Let the of the Marketplace remained strong. segment experienced fiscal of financials GunBroker.com detail. of our year me the an review now marginality We our XXXX the improvement more segment, Ammunition third in of quarter while the

as We enter product final quarter fiscal continue our building year. to see ammunition for on positive trends and into activity to demand GunBroker.com of continued we increase our the

$XX.X change from to total The with quarter. activity of We result year comparison in a approximately the sales revenue a of market the decrease in million the our commercial a U.S. to decrease Ammunition segment ended prior in in as was the million in prior from revenues third ammunition $XX quarter quarter. related comparable

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

in industry the result million year a compared the environment for prior decreased which reported impacting as revenue was to quarter, $XX the macroeconomic marketplace as $XX.X others. quarter current as Our of well million our

the was million in goods of comparable the goods was to decrease prior $XX.X sold volume. $XX.X quarter. in to related quarter the for decrease compared of approximately The Cost cost year sales million in sold

mix. to the the in our or XX.X% XX.X% period. Our the prior million sales quarter million The to $XX.X margins margin was year profit in for gross gross shift were decrease compared or $XX.X in related

X.X% are the There measures expenses. million related decrease operating year was percentage approximately and add-back expenses a as a off. as cost-cutting included sales to we There of expenses nonrecurring nonrecurring prior exclude paying legal are to EBITDA. Our to professional an adjusted quarter $X.X from have adjusted of which in fees,

prior we quarter to quarter, $X.X the year $X.X For compared approximately recorded EBITDA EBITDA million adjusted of adjusted million. of the

net per per $X.XX $X.XX loss net or a adjusted compared per share income share in net the of of resulted of $X.XX. to of or adjusted quarter per share prior loss of year income share net $X.XX This

as plan to progresses is on to stock marketplace, the schedule plan. us approximately the our quarter, our bringing X. cart X.X of in shares our GunBroker.com, repurchase total under purchased April shares platform launch just to over under reported in common improvement XXX,XXX repurchased our on Our We million

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

Operator

[Operator Instructions] with ROTH come Koranda MKM. And the first from question will Matt

Matt Koranda

bit it and volume can bunch headed talk few any where AMMO But just we'll basis? about additional a pertains should brass up the and sort the of volume? a why cover puts as takes the off talk in about beyond? year-over-year. meaningful They then then the just about first, maybe GunBroker. business that that we fourth quarter. think kind Maybe that fell obviously in just on as Maybe But on fell And to just a drivers be a color sequentially, brass a around you've and I quarter of quarter-over-quarter driver. of mentioned it know the revenue

Jared Smith

for you Thank the Absolutely. Sure. question, Matt.

great It's for our next Our brass over every X we've for loading. brass still back November. are available own the production, quarters. online we strong, a capacity meet coming that just some pass internal pipeline, we Brass the us, brass production production and quarter it sales holding to launched sure that more the came making back will -- for our really online is course we're through great really, But and back back inventories our of future own some to was in Hunt as play day. got line, loading held

Matt Koranda

Jared, side terms the of in combination more pricing Nice up you kind territory on the sequential round the thinking talk firming basis. loaded us about maybe to have a in just of it's the your assume quarter. I you're sales, maybe into fourth But the things. margin gross improvement just for getting at of then of positive And brass margins mix a that how to of here disposal levers, Okay. in more bit gross in about fourth get a that unpack positive quarter?

Jared Smith

Our brass have. we total less of still the production, Matt, capacity than that XX% is

into our price really a to it's decrease So continuing saw We for we entire push as these those more reduction larger casings out reduction brass in division lines. build sequential in calibers. brass tooling costs, about material

the very line. As play on I XXXX. going with x cal XX for contract margin into That's XXX big XX.X we in conjunction mentioned, just large a us a landed further ZRODelta

We'll We healthy. on out comes see trends larger continue think market capacity are on more to price positive calibers online. Inventories there press We fairly ahead. as is healthy. these the

Matt Koranda

expect positive Does in margins the mean fourth business the in gross quarter? that we can AMMO

Jared Smith

whether or more yes, XX.X start our positive XXXX I contract, those think QX in -- making quarter. fiscal we're dates going But cranking more to ability the that gross are way We're QX really confident about our sure year. and fourth break it's on margins target. super start even our to brass. on out This well confident, on our to we're it's be

Matt Koranda

GunBroker. turning firearms down in saw surge like that primary and question of November. And It in if Okay. curious, then just up at of right. the I'm to despite sort guess looks the year-over-year, least is and All it was look I Helpful. in GMV terms at you was October obvious the market. activity we

December in positive marginally of kind think I even.

to get on understanding versus much you any Just pickup? Nick's? business. the of just see Why for there guys necessarily So for be you help kind didn't of helpful as the the differential the

Jared Smith

it? as that was, we you not I way as were why think high the asked Nick's? at to What question that Is look the right up

Matt Koranda

Yes, yes. Exactly.

Jared Smith

resource not And the to often. We Okay. GunBroker saw of guns trends. an going for on as necessarily down running positive They're when industry. there's this still and abundance GunBroker a is shelf.

We into roll XXXX going upside that checkout And got and marketplace as into to a see going out features. you we big to we haven't to cart continue multi-item our as positive And checkout enhanced process. us see QX. trends of QX the for we really delivered remember,

Matt Koranda

What the happen up then, you. Okay. clear carting to could coming over be initiative that last say hurdles fast correctly, are you pretty here, swing before, X? you items last before Got that payments and the heard to additional any month on have in away. of I of if Maybe the just get a guess, guess, I to All things I tackled? discuss one April that what little right. carting? terms it's did I a I And getting mean, GunBroker. need are to or hear, to And just you did on you X April some on

Jared Smith

need a one Honestly, see out, and impediment us few of Sundays we we a us it just anything really more I successfully. testing. from it that sure when weeks traffic. just keeping to can't We'd of do There's making going out not that speak roll to couple and any that's higher live. volume keeps rolls like really

Operator

next come with Lake Mark question The Smith will from Street.

Mark Smith

kind business business? I me. give AMMO just maybe you would I or if any what don't us about versus casing margin like brass ask profitability Jared, Or this contract. contract quantify one for typical can details? know or be you wanted if your additional could typical on recent First of this to

Jared Smith

a it's -- Well, business ammunition of the bag than a overheads or across still higher because mixed we a the factory, would margin little across bit our Absolutely. like. seeing on entire entire little we're

XX% based margin So estimates, XX% on, at I there's with this plus this play turning million line X pieces. on margin a -- mean, upon our

of into It's well part XXXX XX% calendar on year. this producing a strong just be will margin We first play those cases. the

Mark Smith

stuff had the that in then the Perfect. new of a new looked some in like proprietary better looked boxes and quarter -- than some just that or Was the And of little things branding expected. -- little better the AMMO a it maybe shipping quarter? some I'd sales during

Jared Smith

is or that in really think its QX We've out little is out would QX. of you market hit in hitting our a of I better think it and The team We're stride part the out. boxes big black team the a presence. to QX. was It's it's stride rebranding have starting the just in and AMMOing and a on I again. bit in QX yellow got sales brand recognize recovery. a strong The people now. I And that pricing are QX going healthier really are tell rebranding. than there the that really Shipments

Mark Smith

Okay.

Presto I'm is call little still me for of the maybe, you of much headwinds that are industry, onetime for tough. you being of hurting at loaded curious there is down versus powder for here, particular seeing propellent just it, AMMO are more, margin with in AMMO, was margin other that the nature question on kind any out in a But what that if just now? how can looking in costs bit right into dive Next are we'll kind

Jared Smith

There the see and year that a market mean as constraint constrain I is -- certainly more think for more propellent. to is goes going the I on.

players the going of the I more to impact some smaller players. that's think than bigger

production. at rifle less we the And capacity onetime and is on I XX% day more mean, into sitting as a there said once of capacity still massive earlier, there capacity I again, day. more plays, we our we're still than by it as bring As of look kind

comes the off is I where 'XX to really the all post are market. are election and in SHOT Everybody slump healthy. the retailers And our that's So and we're Despite being came levels coming margin pretty what there seeing of kind an the inventory this out year, I from. U.S. out 'XX, relatively people we out think in of of dealers about creation talking confident it then think And Show there. market

Mark Smith

business? business, global just got the -- last Happy business. a update Signature and of contract feel across positive. you think contract You've kind me. military target. Okay. the for or board is on about how was contract any for your happy you your And I your got certainly Curious, new This outlook I rounds. on question on kind curious, of

Jared Smith

get to before they I because mean for really, no before start of us It's but to I we clients internal and performance large And for in contracts, sign on our of wanted waiting any we ability to to deals. wanted us real we've -- multiyear really really off solid, first go held think taking and go out some we first. lack on sending of perform larger are orders. more contracts there's proof perform

future cases They know on again, their of it's But proof rifle can supply factory. to They they know entire new want a we the produce cartridges. lines see our. and the they premium before once bet

XX.X start by gaining taking day I so such contracts, And just that XXX contract we're back think x that confidence those larger day, and we this as we'll took.

Operator

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

Jared Smith

I June. want thank report your AMMO when our quarter our to interest today's day. for sharing fiscal and and look all have Inc. full We and XXXX we progress forward year fourth to in you in Thanks, on call results a participating great fiscal

Operator

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

You disconnect. may now

AMMO (POWW) 8 Feb 242024 Q3 Earnings call transcript