AMMO, Inc. Reports First Quarter Fiscal Year 2025 Financial Results
SCOTTSDALE, Ariz., Aug. 08, 2024 (GLOBE NEWSWIRE) -- AMMO, Inc. (Nasdaq: POWW, POWWP) (“AMMO” or the “Company”), the owner of GunBroker.com, the largest online marketplace serving the firearms and shooting sports industries, and a leading vertically integrated producer of high-performance ammunition and components, today reported results for its first quarter of fiscal 2025, ended June 30, 2024.
First Quarter Fiscal 2025 vs. First Quarter Fiscal 2024
| ● | Net Revenues of $31.0 million | |
| ● | Gross profit margin of approximately 31.6% compared to 40.9% | |
| ● | Adjusted EBITDA of $2.0 million compared to $6.6 million | |
| ● | Net loss of ($7.1) million, compared to a net loss of ($1.1) million | |
| ● | Diluted EPS of ($0.07), compared to ($0.02) | |
| ● | Adjusted EPS of $0.01, compared to $0.05 | |
GunBroker.com “Marketplace” Metrics – First Quarter 2025
| ● | Marketplace revenue of approximately $12.3 million | |
| ● | New user growth averaged approximately 25,000 per month | |
| ● | Average take rate increased to 6.2% compared to 5.8% in Q1 FY 2024 | |
Jared Smith, AMMO’s CEO, commented “In our first quarter of fiscal 2025, we continued to make progress on the primary core initiatives for each of our business units, transforming our ammunition plant to higher margin rifle and pistol production and transforming our marketplace into an innovative ecommerce leader.
“We have been building ammunition inventories to accelerate sales this fall for the launch of our new premium rifle hunting segments, and we started delivering on our 12.7X108 cases under our contractual obligations to ZRO Delta. At GunBroker, we see take rates further increasing in the quarters ahead as we push ahead with our Gearfire financing solution, and an anticipated increase in non-firearm accessory sales as we monetize the algorithms and tune our cross-selling capabilities,” Mr. Smith concluded.
First Quarter 2025 Results
We ended the first quarter of our 2025 fiscal year with total revenues of approximately $31.0 million in comparison to $34.3 million in the prior year quarter. Our ammunition segment made up $18.7 million of the total revenues and our marketplace segment generated the remaining $12.3 million in revenues. The decrease in revenue was primarily related to a decrease in activity across both our reporting segments, which we believe decreased as a result of the current macroeconomic environment impacting our industry as well as others.
Cost of revenues was approximately $21.2 million for the quarter compared to $20.2 million in the comparable prior year quarter. Cost of revenues for our marketplace segment was $1.8 million and our ammunition segment cost of revenues were $19.4 million.
This resulted in a total gross margin for the quarter of $9.8 million or 31.6% compared to $14.0 million or 40.9% in the prior year period. Our marketplace segment gross margin was $10.5 million or 85.6%. The gross margin for our ammunition segment was negative $0.7 million or (4.0%).
The increase in cost of revenues and decrease in gross profit margin was related to the shift in sales mix and production inefficiencies in our ammunition segment in comparison to the prior year period.
Although our margins decreased from the prior year period, the robust margins on GunBroker continue to hold strong, and while the margins in the ammunition segment remained down as the plant ramp is still underway, we are beginning to see increased production throughput and expect that we will see increased product marginality in future periods if we are able to continue with this trend.
There was approximately $6.3 million of nonrecurring expenses in the quarter related to legal and professional fees, which we have included as an addback to adjusted EBITDA. The $6.3 million of nonrecurring expenses also included a $3.2 million expense related to a contingency stemming from litigation GunBroker was involved with prior to our acquisition. We expect to recover 2.9 million shares of common stock as a result of this settlement, which will be cancelled and returned to our authorized but unissued share pool.
For the quarter, we recorded Adjusted EBITDA of approximately $2.0 million, compared to prior year quarter Adjusted EBITDA of $6.6 million.
This resulted in a loss per share of $0.07 for the quarter or Adjusted Net Income per Share of $0.01 in comparison to a loss per share of $0.02 in the prior year quarter or Adjusted Net Income per Share of $0.05.
Looking forward, we are continuing to focus on streamlining our manufacturing processes, which should improve product throughput and marginality. For GunBroker, efforts to offer a flexible financing option to customers is well underway as well as our cross-selling solution which provides our users with the ability to view and purchase compatible items when going through the checkout process. We expect these enhancements will drive sales growth through better functionality and enhanced purchasing power of buyers.
Our financial position remains strong given our net working capital position as we have reported $134.0 million in current assets including $50.8 million of cash and cash equivalents along with $42.3 million of current liabilities. We believe this strong position will continue to stimulate our transformation efforts.
We repurchased approximately 580,000 shares of our common stock under our repurchase plan in the reported quarter, bringing us to just over 1.9 million total shares repurchased under the plan since December 2022.
Conference Call
Management will host a conference call at 5:00 PM ET today, August 8, 2024, to review financial results and provide an update on corporate developments. Following management’s formal remarks there will be a question-and-answer session.
Participants are asked to preregister for the call at the following link: https://dpregister.com/sreg/10190959/fd1589a7fa
Please note that registered participants will receive their dial-in number upon registration and will dial directly into the call without delay. Those without Internet access or who are unable to pre-register may dial in by calling 1-844-481-2698 (domestic) or 1-412-317-0655 (international).
Please join at least 5-10 minutes prior to the scheduled start and follow the operator’s instructions. When requested, please ask for “AMMO, Inc. First Quarter 2025 Conference Call.”
The conference call will also be available through a live webcast at the following link: https://event.choruscall.com/mediaframe/webcast.html?webcastid=mju9ciSM, which is also available through the Company’s website.
About AMMO, Inc.
With its corporate offices headquartered in Scottsdale, Arizona, AMMO designs and manufactures products for a variety of aptitudes, including law enforcement, military, sport shooting and self-defense. The Company was founded in 2016 with a vision to change, innovate and invigorate the complacent munitions industry. AMMO promotes branded munitions as well as its patented STREAK™ Visual Ammunition, /stelTH/™ subsonic munitions, and specialty rounds for military use via government programs. For more information, please visit: www.ammo-inc.com.
About GunBroker.com
GunBroker.com is the largest online marketplace dedicated to firearms, hunting, shooting and related products. Aside from merchandise bearing its logo, GunBroker.com currently sells none of the items listed on its website. Third-party sellers list items on the site and Federal and state laws govern the sale of firearms and other restricted items. Ownership policies and regulations are followed using licensed firearms dealers as transfer agents. Launched in 1999, GunBroker.com is an informative, secure and safe way to buy and sell firearms, ammunition, air guns, archery equipment, knives and swords, firearms accessories and hunting/shooting gear online. GunBroker.com promotes responsible ownership of guns and firearms. For more information, please visit: www.gunbroker.com.
Forward Looking Statements
This document contains certain “forward-looking statements”. All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws, including, but not limited to, any projections of earnings, revenue or other financial items; any statements of the plans, strategies, goals and objectives of management for future operations; any statements concerning proposed new products and services or developments thereof; any statements regarding future economic conditions or performance; any statements or belief; and any statements of assumptions underlying any of the foregoing.
Forward looking statements may include the words “may,” “could,” “estimate,” “intend,” “continue,” “believe,” “expect” or “anticipate” or other similar words, or the negative thereof. These forward-looking statements present our estimates and assumptions only as of the date of this report. Accordingly, readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the dates on which they are made. We do not undertake to update forward-looking statements to reflect the impact of circumstances or events that arise after the dates they are made. You should, however, consult further disclosures and risk factors we include in Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, and Reports filed on Form 8-K.
Investor Contact:
CoreIR
Phone: (212) 655-0924
IR@ammo-inc.com
Source: AMMO, Inc.
AMMO, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
| June 30, 2024 | March 31, 2024 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash and cash equivalents | $ | 50,754,570 | $ | 55,586,441 | ||||
| Accounts receivable, net | 19,436,712 | 28,221,321 | ||||||
| Due from related parties | 4,800,000 | - | ||||||
| Inventories | 54,717,709 | 45,563,334 | ||||||
| Prepaid expenses | 4,244,197 | 2,154,170 | ||||||
| Total Current Assets | 133,953,188 | 131,525,266 | ||||||
| Equipment, net | 57,998,933 | 58,082,040 | ||||||
| Other Assets: | ||||||||
| Deposits | 1,325,806 | 349,278 | ||||||
| Patents, net | 4,415,924 | 4,539,290 | ||||||
| Other intangible assets, net | 107,982,842 | 111,049,067 | ||||||
| Goodwill | 90,870,094 | 90,870,094 | ||||||
| Right of use assets - operating leases | 1,825,564 | 2,000,093 | ||||||
| Deferred income tax asset | 4,046,430 | 1,487,088 | ||||||
| TOTAL ASSETS | $ | 402,418,781 | $ | 399,902,216 | ||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable | $ | 22,678,651 | $ | 23,156,495 | ||||
| Accrued liabilities | 17,141,591 | 7,030,667 | ||||||
| Current portion of operating lease liability | 488,887 | 479,651 | ||||||
| Current portion of construction note payable | 276,616 | 273,459 | ||||||
| Insurance premium note payable | 1,680,594 | - | ||||||
| Total Current Liabilities | 42,266,339 | 30,940,272 | ||||||
| Long-term Liabilities: | ||||||||
| Contingent consideration payable | 39,852 | 59,838 | ||||||
| Construction note payable, net of unamortized issuance costs | 10,710,081 | 10,735,241 | ||||||
| Operating lease liability, net of current portion | 1,426,740 | 1,609,836 | ||||||
| Total Liabilities | 54,443,012 | 43,345,187 | ||||||
| Shareholders’ Equity: | ||||||||
| Series A cumulative perpetual preferred Stock 8.75%, ($25.00 per share, $0.001 par value) 1,400,000 shares issued and outstanding as of June 30, 2024 and March 31, 2024, respectively | 1,400 | 1,400 | ||||||
| Common stock, $0.001 par value, 200,000,000 shares authorized 120,686,636 and 120,531,507 shares issued and 118,756,733 and 119,181,067 outstanding at June 30, 2024 and March 31, 2024, respectively | 118,757 | 119,181 | ||||||
| Additional paid-in capital | 397,079,854 | 396,730,170 | ||||||
| Accumulated deficit | (45,455,985 | ) | (37,620,566 | ) | ||||
| Treasury Stock | (3,768,257 | ) | (2,673,156 | ) | ||||
| Total Shareholders’ Equity | 347,975,769 | 356,557,029 | ||||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 402,418,781 | $ | 399,902,216 | ||||
AMMO, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
| For the Three Months Ended June 30, | ||||||||
| 2024 | 2023 | |||||||
| Net Revenues | ||||||||
| Ammunition sales(1) | $ | 13,359,554 | $ | 14,106,029 | ||||
| Marketplace revenue | 12,281,991 | 13,912,202 | ||||||
| Casing sales | 5,312,005 | 6,236,344 | ||||||
| 30,953,550 | 34,254,575 | |||||||
| Cost of Revenues | 21,164,428 | 20,230,035 | ||||||
| Gross Profit | 9,789,122 | 14,024,540 | ||||||
| Operating Expenses | ||||||||
| Selling and marketing | 298,613 | 295,581 | ||||||
| Corporate general and administrative | 11,323,078 | 7,947,563 | ||||||
| Employee salaries and related expenses | 4,462,101 | 4,116,280 | ||||||
| Depreciation and amortization expense | 3,381,669 | 3,344,043 | ||||||
| Total operating expenses | 19,465,461 | 15,703,467 | ||||||
| Loss from Operations | (9,676,339 | ) | (1,678,927 | ) | ||||
| Other Income | ||||||||
| Other income | 252,232 | 692,951 | ||||||
| Interest expense | (196,522 | ) | (204,201 | ) | ||||
| Total other income | 55,710 | 488,750 | ||||||
| Loss before Income Taxes | (9,620,629 | ) | (1,190,177 | ) | ||||
| Provision for Income Taxes | (2,559,342 | ) | (97,144 | ) | ||||
| Net Loss | (7,061,287 | ) | (1,093,033 | ) | ||||
| Preferred Stock Dividend | (774,132 | ) | (774,132 | ) | ||||
| Net Loss Attributable to Common Stock Shareholders | $ | (7,835,419 | ) | $ | (1,867,165 | ) | ||
| Net Loss per share | ||||||||
| Basic | $ | (0.07 | ) | $ | (0.02 | ) | ||
| Diluted | $ | (0.07 | ) | $ | (0.02 | ) | ||
| Weighted average number of shares outstanding | ||||||||
| Basic | 119,105,502 | 117,713,805 | ||||||
| Diluted | 119,105,502 | 117,713,805 | ||||||
| (1 | ) | Included in revenue for the three months ended June 30, 2024 and 2023 are excise taxes of $1,303,603 and $1,175,796, respectively. |
AMMO, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(Unaudited)
| For the Three Months Ended June 30, | ||||||||
| 2024 | 2023 | |||||||
| Cash flows from operating activities: | ||||||||
| Net Loss | $ | (7,061,287 | ) | $ | (1,093,033 | ) | ||
| Adjustments to reconcile Net Loss to Net Cash provided by/(used in) operations: | ||||||||
| Depreciation and amortization | 4,692,556 | 4,620,087 | ||||||
| Debt discount amortization | 20,813 | 20,813 | ||||||
| Employee stock awards | 606,199 | 822,797 | ||||||
| Stock grants | 68,750 | 50,750 | ||||||
| Common stock purchase options | 41,055 | - | ||||||
| Contingent consideration payable fair value | (19,986 | ) | (21,024 | ) | ||||
| Allowance for doubtful accounts | 87,689 | 909,717 | ||||||
| Reduction in right of use asset | 174,529 | 120,216 | ||||||
| Deferred income taxes | (2,559,342 | ) | (97,144 | ) | ||||
| Changes in Current Assets and Liabilities | ||||||||
| Accounts receivable | 8,696,920 | 7,088,437 | ||||||
| Due from related parties | (4,800,000 | ) | - | |||||
| Inventories | (9,154,375 | ) | (1,579,836 | ) | ||||
| Prepaid expenses | 312,409 | 888,412 | ||||||
| Deposits | (976,528 | ) | 2,964,365 | |||||
| Accounts payable | (477,844 | ) | (1,722,783 | ) | ||||
| Accrued liabilities | 9,974,813 | 152,021 | ||||||
| Operating lease liability | (173,860 | ) | (127,704 | ) | ||||
| Net cash provided by/(used in) operating activities | (547,489 | ) | 12,996,091 | |||||
| Cash flows from investing activities: | ||||||||
| Purchase of equipment | (1,419,857 | ) | (1,313,939 | ) | ||||
| Net cash used in investing activities | (1,419,857 | ) | (1,313,939 | ) | ||||
| Cash flow from financing activities: | ||||||||
| Payments on insurance premium note payment | (721,842 | ) | (970,541 | ) | ||||
| Payments on construction note payable | (42,816 | ) | (64,959 | ) | ||||
| Proceeds from factoring liability | - | 14,610,314 | ||||||
| Payments on factoring liability | - | (14,610,314 | ) | |||||
| Payments on note payable - related party | - | (180,850 | ) | |||||
| Preferred stock dividends paid | (638,021 | ) | (638,038 | ) | ||||
| Repurchase of common shares | (366,164 | ) | - | |||||
| Common stock repurchase plan | (1,095,682 | ) | (1,456,744 | ) | ||||
| Net cash used in financing activities | (2,864,525 | ) | (3,311,132 | ) | ||||
| Net increase/(decrease) in cash | (4,831,871 | ) | 8,371,020 | |||||
| Cash, beginning of period | 55,586,441 | 39,634,027 | ||||||
| Cash, end of period | $ | 50,754,570 | $ | 48,005,047 | ||||
(Continued)
AMMO, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(Unaudited)
| For the Three Months Ended June 30, | ||||||||
| 2024 | 2023 | |||||||
| Supplemental cash flow disclosures: | ||||||||
| Cash paid during the period for: | ||||||||
| Interest | $ | 196,552 | $ | 184,385 | ||||
| Income taxes | $ | - | $ | - | ||||
| Non-cash investing and financing activities: | ||||||||
| Insurance premium note payment | $ | 2,402,436 | $ | 1,056,199 | ||||
| Dividends accumulated on preferred stock | $ | 136,111 | $ | 136,094 | ||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
Non-GAAP Financial Measures
We analyze operational and financial data to evaluate our business, allocate our resources, and assess our performance. In addition to total net sales, net loss, and other results under accounting principles generally accepted in the United States (“GAAP”), the following information includes key operating metrics and non-GAAP financial measures we use to evaluate our business. We believe these measures are useful for period-to-period comparisons of the Company. We have included these non-GAAP financial measures in this Current Report on Form 8-K because they are key measures we use to evaluate our operational performance, produce future strategies for our operations, and make strategic decisions, including those relating to operating expenses and the allocation of our resources. Accordingly, we believe these measures provide useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and board of directors.
Reconciliation of GAAP net loss to Adjusted EBITDA
Adjusted EBITDA
| For the Three Months Ended | ||||||||
| 30-Jun-24 | 30-Jun-23 | |||||||
| Reconciliation of GAAP net loss to Adjusted EBITDA | ||||||||
| Net Loss | $ | (7,061,287 | ) | $ | (1,093,033 | ) | ||
| Provision for income taxes | (2,559,342 | ) | (97,144 | ) | ||||
| Depreciation and amortization | 4,692,556 | 4,620,087 | ||||||
| Interest expense, net | 196,522 | 204,201 | ||||||
| Employee stock awards | 606,199 | 822,797 | ||||||
| Stock grants | 68,750 | 50,750 | ||||||
| Common stock purchase options | 41,055 | - | ||||||
| Other income, net | (252,232 | ) | (692,951 | ) | ||||
| Contingent consideration fair value | (19,986 | ) | (21,024 | ) | ||||
| Other nonrecurring expenses(1) | 6,249,893 | 2,759,726 | ||||||
| Adjusted EBITDA | $ | 1,962,128 | $ | 6,553,409 | ||||
| 1 | ) | For the three months ended June 30, 2024 and 2023, other nonrecurring expenses consist of professional and legal fees that are nonrecurring in nature. There were $3.2 million in expenses related to the settlement contingency included in other nonrecurring expenses for the three months ended June 30, 2024. | |
Reconciliation of GAAP net income to Fully Diluted EPS
| For the Three Months Ended | ||||||||||||||||
| 30-Jun-24 | 30-Jun-23 | |||||||||||||||
| Reconciliation of GAAP net loss to Fully Diluted EPS | ||||||||||||||||
| Net Loss | $ | (7,061,287 | ) | $ | (0.06 | ) | $ | (1,093,033 | ) | $ | (0.01 | ) | ||||
| Depreciation and amortization | 4,692,556 | 0.04 | 4,620,087 | 0.04 | ||||||||||||
| Interest expense, net | 196,522 | - | 204,201 | - | ||||||||||||
| Employee stock awards | 606,199 | 0.01 | 822,797 | 0.01 | ||||||||||||
| Stock grants | 68,750 | - | 50,750 | - | ||||||||||||
| Contingent consideration fair value | (19,986 | ) | - | (21,024 | ) | - | ||||||||||
| Nonrecurring expenses | 6,249,893 | 0.05 | 2,759,726 | 0.03 | ||||||||||||
| Tax effect(1) | (3,154,317 | ) | (0.03 | ) | (2,009,764 | ) | (0.02 | ) | ||||||||
| Adjusted Net Income | $ | 1,578,330 | $ | 0.01 | $ | 5,333,740 | $ | 0.05 | ||||||||
| (1 | ) | Tax effects are estimated by applying the statutory rate to each applicable Non-GAAP adjustment. |
| For the Three Months Ended June 30, | |||||||||
| 2024 | 2023 | ||||||||
| Weighted average number of shares outstanding | |||||||||
| Basic | 119,105,502 | 117,713,805 | |||||||
| Diluted | 119,105,502 | 117,713,805 | |||||||
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