AMMO, Inc. Reports Third Quarter 2024 Financial Results

SCOTTSDALE, Ariz., Feb. 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 third quarter of fiscal 2024, ended December 31, 2024.

Third Quarter Fiscal 2024 vs. Third Quarter Fiscal 2023

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Net Revenues of $36.0 million
Gross profit margin of approximately 30.3% compared to 32.4%
Adjusted EBITDA of $5.4 million compared to $6.2 million
Net loss of ($1.6) million, compared to a net loss of ($4.1) million
Diluted EPS of ($0.02), compared to ($0.04)
Adjusted EPS of $0.04, compared to $0.04

GunBroker.com “Marketplace” Metrics – Third Quarter 2024

Marketplace revenue of approximately $14.0 million
New user growth averaged approximately 37,000 per month
Average take rate increased to 5.9% compared to 5.7% in fiscal 2023

Jared Smith, AMMO’s CEO, commented “Despite the challenges we faced in calendar 2023 for our industry, Ammo Inc. continues to transition its business to a stronger and leaner operating model. We have emerged from this time with an impeccable balance sheet and remain encouraged about the significant opportunities we have before us here in the fourth quarter and going forward.

“We continue to see increasing demand as the ammunition and firearms market recovers from 2022 and 2023’s post pandemic slump. As we look at opportunities going into fiscal 2025, we will focus on the transformation of our marketplace platform. We will also continue to transition our manufacturing model to one of pursuing higher margin, premium rifle and pistol ammunition opportunities as well as embracing the growing OEM brass business.,” Mr. Smith concluded.

Third Quarter 2024 Results

We experienced an improvement in the marginality of our ammunition segment while the margins of the GunBroker.com marketplace segment remain strong. We continue to see positive demand trends building for our ammunition product and activity continues to increase on GunBoker.com as we enter into the final quarter of our fiscal year.

We ended the third quarter with total revenues of approximately $36.0 million in comparison to $38.7 million in the prior year quarter. The decrease in revenue was primarily related to a decrease in sales activity from our ammunition segment as a result of a change in the US commercial ammunition market from the comparable prior year quarter. Our casing sales, however, which afford us higher gross margins, increased to $4.7 million up from $3.0 million in the prior year period. Our marketplace revenue was $14.0 million for the reported quarter, compared to $15.4 million in the prior year quarter, which decreased as a result of the current macroeconomic environment impacting our industry as well as others.

Cost of goods sold was approximately $25.1 million for the quarter compared to $26.2 million in the comparable prior year quarter. The decrease in cost of goods sold was related to the decrease in sales volume.

Our gross margin for the quarter was $10.9 million or 30.3% compared to $12.5 million or 32.4% in the prior year period. The decrease in gross profit margin was related to the shift in our sales mix.

Our cost cutting measures are paying off, there was a 5.4% decrease in operating expenses as a percentage of sales from the prior year quarter adjusted to exclude nonrecurring expenses.

There were approximately $1.5 million of nonrecurring expenses related to legal and professional fees which we have included as addbacks to Adjusted EBITDA.

For the quarter, we recorded Adjusted EBITDA of approximately $5.4 million, compared to prior year quarter Adjusted EBITDA of $6.2 million.

This resulted in a net loss per share of ($0.02) or adjusted net income per share of $0.04, compared to the prior year period of net loss per share of ($0.04) or adjusted net income per share of $0.04.

Our improvements to our marketplace, GunBroker.com, continue as our cart platform is on schedule to launch on April 1st.

We repurchased approximately 145,000 shares of our common stock under our repurchase plan in the reported quarter bringing us to just over 1.3 million shares repurchased in total under the plan since repurchases began in December 2022.

Conference Call

Management will host a conference call at 5:00 PM ET on February 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/10185867/fb6f640d8c

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. Third Quarter 2024 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=mnSsDVht, 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 Current Reports filed on Form 8-K.

Investor Contact:
CoreIR
Phone: (212) 655-0924
[email protected]

Source: AMMO, Inc. 

AMMO, Inc.

CONDENSED CONSOLIDATED BALANCE SHEETS

    December 31, 2023     March 31, 2023  
      (Unaudited)          
ASSETS                
Current Assets:                
Cash and cash equivalents   $ 54,679,868     $ 39,134,027  
Accounts receivable, net     21,121,450       29,346,380  
Inventories     49,502,732       54,344,819  
Prepaid expenses     3,708,865       5,126,667  
Current portion of restricted cash           500,000  
Total Current Assets     129,012,915       128,451,893  
                 
Equipment, net     57,278,603       55,963,255  
                 
Other Assets:                
Deposits     2,265,932       7,028,947  
Patents, net     4,662,656       5,032,754  
Other intangible assets, net     114,296,627       123,726,810  
Goodwill     90,870,094       90,870,094  
Right of use assets – operating leases     2,113,943       1,261,634  
Deferred income tax asset     115,908        
TOTAL ASSETS   $ 400,616,678     $ 412,335,387  
                 
LIABILITIES AND SHAREHOLDERS’ EQUITY                
Current Liabilities:                
Accounts payable   $ 19,146,138     $ 18,079,397  
Accrued liabilities     6,570,668       4,353,354  
Current portion of operating lease liability     463,059       470,734  
Note payable related party           180,850  
Current portion of construction note payable     265,977       260,429  
Insurance premium note payable     173,029       2,118,635  
Total Current Liabilities     26,618,871       25,463,399  
                 
Long-term Liabilities:                
Contingent consideration payable     80,080       140,378  
Construction note payable, net of unamortized issuance costs     10,797,696       10,922,443  
Operating lease liability, net of current portion     1,737,615       903,490  
Deferred income tax liability           2,309,592  
Total Liabilities     39,234,262       39,739,302  
                 
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 December 31, 2023 and March 31, 2023, respectively     1,400       1,400  
Common stock, $0.001 par value, 200,000,000 shares authorized 119,994,033 and 118,562,806 shares issued and 118,643,593 and 118,294,478 outstanding at December 31, 2023 and March 31, 2023, respectively     118,644       118,294  
Additional paid-in capital     395,449,082       391,940,374  
Accumulated deficit     (31,513,554 )     (18,941,825 )
Treasury Stock     (2,673,156 )     (522,158 )
Total Shareholders’ Equity     361,382,416       372,596,085  
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY   $ 400,616,678     $ 412,335,387  


AMMO, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

    For the Three Months Ended
December 31,
    For the Nine Months Ended
December 31,
 
    2023     2022     2023     2022  
                         
Net Revenues                                
Ammunition sales(1)   $ 17,322,967     $ 20,250,965     $ 46,945,585     $ 90,607,817  
Marketplace revenue     13,985,034       15,419,202       40,371,952       46,486,842  
Casing sales     4,698,463       3,041,327       17,315,888       10,661,420  
      36,006,464       38,711,494       104,633,425       147,756,079  
                                 
Cost of Revenues     25,096,088       26,184,315       71,410,243       104,257,529  
Gross Profit     10,910,376       12,527,179       33,223,182       43,498,550  
                                 
Operating Expenses                                
Selling and marketing     236,565       1,010,543       822,098       3,987,214  
Corporate general and administrative     5,803,255       7,835,201       21,606,442       17,920,197  
Employee salaries and related expenses     3,390,153       4,705,636       13,096,468       11,414,434  
Depreciation and amortization expense     3,401,156       3,309,074       10,117,001       9,950,752  
Total operating expenses     12,831,129       16,860,454       45,642,009       43,272,597  
Income/(Loss) from Operations     (1,920,753 )     (4,333,275 )     (12,418,827 )     225,953  
                                 
Other Expenses                                
Other income/(loss)     4,576       (170,403 )     376,186       28,193  
Interest expense     (193,046 )     (320,439 )     (609,561 )     (538,191 )
Total other expense, net     (188,470 )     (490,842 )     (233,375 )     (509,998 )
                                 
Loss before Income Taxes     (2,109,223 )     (4,824,117 )     (12,652,202 )     (284,045 )
                                 
Provision for Income Taxes     (465,234 )     (721,125 )     (2,419,883 )     1,369,427  
                                 
Net Loss     (1,643,989 )     (4,102,992 )     (10,232,319 )     (1,653,472 )
                                 
Preferred Stock Dividend     (782,639 )     (782,639 )     (2,339,410 )     (2,339,409 )
                                 
Net Loss Attributable to Common Stock Shareholders   $ (2,426,628 )   $ (4,885,631 )   $ (12,571,729 )   $ (3,992,881 )
                                 
Net Loss per share                                
Basic   $ (0.02 )   $ (0.04 )   $ (0.11 )   $ (0.03 )
Diluted   $ (0.02 )   $ (0.04 )   $ (0.11 )   $ (0.03 )
                                 
Weighted average number of shares outstanding                                
Basic     118,447,154       117,348,511       118,110,943       116,950,013  
Diluted     118,447,154       117,348,511       118,110,943       116,950,013  
(1 ) Included in revenue for the three months ended December 31, 2023 and 2022 are excise taxes of $1,498,429 and $1,669,206, respectively. Included in revenue for the nine months ended December 31, 2023 and 2022 are excise taxes of $3,958,391 and $7,816,598, respectively.

AMMO, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(Unaudited)

    For the Nine Months Ended
December 31,
 
    2023     2022  
             
Cash flows from operating activities:                
Net Loss   $ (10,232,319 )   $ (1,653,472 )
Adjustments to reconcile Net Loss to Net Cash provided by operations:                
Depreciation and amortization     14,047,216       12,950,972  
Debt discount amortization     62,440       62,440  
Employee stock awards     2,977,845       4,457,973  
Stock grants     152,250       135,344  
Common stock purchase options     380,045        
Warrants Issued for Services           106,909  
Contingent consideration payable fair value     (60,298 )     (45,572 )
Allowance for doubtful accounts     1,117,565       1,327,419  
Reduction in right of use asset     362,402       512,063  
Deferred income taxes     (2,425,500 )     1,283,481  
Changes in Current Assets and Liabilities                
Accounts receivable     7,107,365       12,208,054  
Due from related parties           15,000  
Inventories     4,842,087       (8,129,249 )
Prepaid expenses     2,474,001       1,941,206  
Deposits     4,763,015       1,678,415  
Accounts payable     1,066,741       (5,852,397 )
Accrued liabilities     2,072,696       (2,044,248 )
Operating lease liability     (388,261 )     (522,917 )
Net cash provided by operating activities     28,319,290       18,431,421  
                 
Cash flows from investing activities:                
Purchase of equipment     (5,562,283 )     (10,566,182 )
Net cash used in investing activities     (5,562,283 )     (10,566,182 )
                 
Cash flow from financing activities:                
Proceeds from factoring liability     37,252,869       57,300,000  
Payments on factoring liability     (37,252,869 )     (56,107,221 )
Payments on inventory facility, net           (825,675 )
Payments on note payable – related party     (180,850 )     (507,508 )
Payments on insurance premium note payment     (3,001,805 )     (1,916,070 )
Proceeds from construction note payable           1,000,000  
Payments on construction note payable     (181,639 )     (66,586 )
Preferred stock dividends paid     (2,194,792 )     (2,195,075 )
Common stock repurchase plan     (2,152,080 )     (291,011 )
Common stock issued for exercised warrants           56,046  
Net cash used in financing activities     (7,711,166 )     (3,553,100 )
                 
Net increase in cash     15,045,841       4,312,139  
Restricted cash, beginning of period     500,000        
Cash, beginning of period     39,134,027       23,281,475  
Cash and restricted cash, end of period   $ 54,679,868     $ 27,593,614  
Restricted cash, end of period   $     $ 500,000  
Cash, end of period   $ 54,679,868     $ 27,093,614  

(Continued)

AMMO, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(Unaudited)

    For the Nine Months Ended
December 31,
 
    2023     2022  
             
Supplemental cash flow disclosures:                
Cash paid during the period for:                
Interest   $ 548,118     $ 433,761  
Income taxes   $     $ 1,302,811  
                 
Non-cash investing and financing activities:                
Operating lease liability   $ 1,214,711     $ 901,076  
Insurance premium note payment   $ 1,056,199     $ 2,035,519  
Dividends accumulated on preferred stock   $ 144,618     $ 144,334  
Construction note payable   $     $ 10,237,032  
Warrants issued for services   $     $ 427,639  

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 income to Adjusted EBITDA

Adjusted EBITDA

    For the Three Months
Ended
    For the Nine Months
Ended
 
    31-Dec-23     31-Dec-22     31-Dec-23     31-Dec-22  
                         
Reconciliation of GAAP net income to Adjusted EBITDA                                
Net Loss   $ (1,643,989 )   $ (4,102,992 )   $ (10,232,319 )   $ (1,653,472 )
Provision for Income Taxes     (465,234 )     (721,125 )     (2,419,883 )     1,369,427  
Depreciation and amortization     4,753,650       4,356,004       14,047,216       12,950,972  
Interest expense, net     193,046       320,439       609,561       538,191  
Employee stock awards     687,099       2,106,535       2,977,845       4,457,973  
Stock grants     50,750       43,750       152,250       135,344  
Common stock purchase options     380,045             380,045        
Warrant Issuance           106,909             106,909  
Other (income) expense, net     (4,576 )     170,403       (376,186 )     (28,193 )
Contingent consideration fair value     (39,274 )     (20,326 )     (60,298 )     (45,572 )
Other nonrecurring expenses(1)     1,498,684       3,983,254       8,126,102       4,724,385  
Adjusted EBITDA   $ 5,410,201     $ 6,242,851     $ 13,204,333     $ 22,555,964  
  1 ) For the three and nine months ended December 31, 2023, other nonrecurring expenses consist of professional and legal fees that are nonrecurring in nature. For the three and nine months ended December 31, 2022, other nonrecurring expenses consist of proxy contest fees.

Reconciliation of GAAP net income to Fully Diluted EPS

    For the Three Months Ended  
    31-Dec-23     31-Dec-22  
Reconciliation of GAAP net income to Fully Diluted EPS                                
Net Loss   $ (1,643,989 )   $ (0.01 )   $ (4,102,992 )   $ (0.03 )
Depreciation and amortization     4,753,650       0.04       4,356,004       0.04  
Interest expense, net     193,046             320,439        
Employee stock awards     687,099       0.01       2,106,535       0.02  
Stock grants     50,750             43,750        
Common stock purchase options     380,045                    
Warrant issuance                 106,909        
Contingent consideration fair value     (39,274 )           (20,326 )      
Nonrecurring expenses     1,498,684       0.01       3,983,254       0.03  
Tax effect(1)     (1,708,026 )     (0.01 )     (2,294,820 )     (0.02 )
Adjusted Net Income   $ 4,171,985     $ 0.04     $ 4,498,753     $ 0.04  
    For the Nine Months Ended  
    31-Dec-23     31-Dec-22  
Reconciliation of GAAP net income to Fully Diluted EPS                                
Net Loss   $ (10,232,319 )   $ (0.09 )   $ (1,653,472 )   $ (0.01 )
Depreciation and amortization     14,047,216       0.12       12,950,972       0.11  
Interest expense, net     609,561             538,191        
Employee stock awards     2,977,845       0.03       4,457,973       0.04  
Stock grants     152,250             135,344        
Common stock purchase options     380,045                      
Warrant issuance                   106,909        
Contingent consideration fair value     (60,298 )           (45,572 )      
Nonrecurring expenses     8,126,102       0.07       4,724,385       0.04  
Tax effect(1)     (6,037,463 )     (0.05 )     (4,826,590 )     (0.04 )
Adjusted Net Income   $ 9,962,939     $ 0.08     $ 16,388,140     $ 0.14  
  (1 ) Tax effects are estimated by applying the statutory rate to each applicable Non-GAAP adjustment.
    For the Three Months Ended
December 31,
    For the Nine Months Ended
December 31,
 
    2023     2022     2023     2022  
Weighted average number
of shares outstanding
                       
Basic     118,447,154       117,348,511       118,110,943       116,950,013  
Diluted     118,447,154       117,348,511       118,110,943       116,950,013  

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