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Ammo, Inc. Halves Fiscal Q3 Loss Despite Sales Decline as Costs Cutting Continues

Ammo, Inc., the owner of GunBroker.com, reported an improvement in the marginality of its ammunition segment when reporting results for the fiscal third quarter ended December 31, while the margins of the GunBroker.com marketplace segment reportedly remained strong. The company said it continued to see positive demand trends for its ammunition product, and activity continued to increase on GunBoker.com as it entered the final quarter of its fiscal year.

Ammo ended the fiscal 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 the decline in sales activity from its ammunition segment due to a change in the U.S. commercial ammunition market from the comparable prior-year quarter. However, casing sales, which afford the company higher gross margins, increased to $4.7 million, up from $3.0 million in the prior-year period. Marketplace revenue was $14.0 million for the reported quarter, compared to $15.4 million in the prior year quarter, which decreased due to the current macroeconomic environment impacting the industry and others.

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

Gross margin for the quarter was $10.9 million. or 30.3 percent of sales, compared to $12.5 million ,or 32.4 percent in the prior-year period. The decrease in gross profit margin was related to the shift in sales mix.

Cost-cutting measures are paying off. There was a 5.4 percent 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 the company included as add-backs to Adjusted EBITDA.

For the quarter, Ammo recorded an Adjusted EBITDA of approximately $5.4 million, compared to the prior year’s quarter of Adjusted EBITDA of $6.2 million, resulting in a net loss per share of 2 cents, or adjusted net income per share of 4 cents per share, compared to the prior-year period and net loss per share of 4 cents or Adjusted net income per share of 4 cents.

Ammo’s improvements to its marketplace, GunBroker.com, continue as the cart platform is on schedule to launch on April 1.

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 percent compared to 5.7 percent 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 transforming 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,” Smith concluded.

The company repurchased approximately 145,000 shares of its common stock under Ammo’s repurchase plan in the reported quarter, bringing it to just over 1.3 million shares in total under the plan since repurchases began in December 2022.

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