AMMO, Inc. Reports Third Quarter 2024 Financial Results

SCOTTSDALE, Ariz., Feb. 08, 2024 (GLOBE NEWSWIRE) — AMMO, Inc. (Nasdaq: POWW, POWWP) (โ€œAMMOโ€ or the โ€œCompanyโ€), 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

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


GunBroker.com โ€œMarketplaceโ€ Metrics โ€“ Third Quarter 2024

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

Jared Smith, AMMOโ€™s CEO, commented โ€œDespite 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.

โ€œWe continue to see increasing demand as the ammunition and firearms market recovers from 2022 and 2023โ€™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.,โ€ 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 managementโ€™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 operatorโ€™s instructions. When requested, please ask for โ€œAMMO, Inc. Third Quarter 2024 Conference Call.โ€

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 Companyโ€™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 STREAKโ„ข Visual Ammunition, /stelTH/โ„ข 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 โ€œforward-looking statementsโ€. All statements other than statements of historical fact are โ€œforward-looking statementsโ€ 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 โ€œmay,โ€ โ€œcould,โ€ โ€œestimate,โ€ โ€œintend,โ€ โ€œcontinue,โ€ โ€œbelieve,โ€ โ€œexpectโ€ or โ€œanticipateโ€ 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
IR@ammo-inc.com

Source: AMMO, Inc.

AMMO, Inc.

CONDENSED CONSOLIDATED BALANCE SHEETS

ย  December 31, 2023 ย  ย  March 31, 2023 ย 
ย  ย  (Unaudited) ย 
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 SHAREHOLDERSโ€™ 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
Shareholdersโ€™ 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 Shareholdersโ€™ Equity 361,382,416 372,596,085
TOTAL LIABILITIES AND SHAREHOLDERSโ€™ EQUITY $ 400,616,678 $ 412,335,387

AMMO, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

ย  For the Three Months Ended

December 31,ย ย For the Nine Months Ended

December 31,ย 
ย 2023ย ย 2022ย ย 2023ย ย 2022ย 

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)

ย  For the Nine Months EndedDecember 31, ย 
ย  2023 ย  ย  2022 ย 
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)

ย  For the Nine Months EndedDecember 31, ย 
ย  2023 ย  ย  2022 ย 
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 (โ€œGAAPโ€), 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 MonthsEnded For the Nine MonthsEnded
ย  31-Dec-23 ย  ย  31-Dec-22 ย  ย  31-Dec-23 ย  ย  31-Dec-22 ย 
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

ย  For the Three Months Ended ย 
ย  31-Dec-23 ย  ย  31-Dec-22 ย 
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
ย  For the Nine Months Ended ย 
ย  31-Dec-23 ย  ย  31-Dec-22 ย 
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.
ย  For the Three Months EndedDecember 31, ย  ย  For the Nine Months EndedDecember 31, ย 
ย  2023 ย  ย  2022 ย  ย  2023 ย  ย  2022 ย 
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

Source: AMMO, Inc.