• AMMO, Inc. Reports Third Quarter 2023 Financial Results

    ソース: Nasdaq GlobeNewswire / 14 2 2023 16:05:01   America/New_York

    SCOTTSDALE, Ariz., Feb. 14, 2023 (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 2023, ended December 31, 2023.

    Third Quarter Fiscal 2023 vs. Third Quarter Fiscal 2022

     Net Revenues decreased 40% to $38.7 million.
     Gross profit margin of approximately 32.3%.
     Historical Adjusted EBITDA of $7.9 million compared to $20.1million.
     Updated Adjusted EBITDA of $4.8 million compared to $10.7 million.
     Net loss of ($4.1) million, compared to net income of $9.1 million.
     Diluted EPS of ($0.04), compared to $0.07.
     Historical Adjusted EPS of $0.05, compared to $0.14.
     Updated Adjusted EPS of $0.05 compared to $0.08

    GunBroker.com “Marketplace” Metrics – Third Quarter 2023

     Marketplace revenue of approximately $15.4 million.
     New user growth averaged 40,000 per month.
     Average take rate increased to 5.7% compared to 5.4% in fiscal 2022.

    Fred Wagenhals, AMMO’s Chairman & CEO, commented that “[t]he entire ammunition market is currently facing significant headwinds primarily due to the current inflationary and recessionary drivers impacting the consumer. Despite these near-term challenges, the management team and AMMO Board remains excited about the Company’s prospects in both the short and long term. Our confidence is supported by the continued ramp up in the production capacity at our state-of-the-art facility in Manitowoc, along with the continuing rollout of enhancements to our Gunbroker.com Marketplace site.

    “These opportunities, coupled with the exciting addition of our newest executive management team member, Jared Smith, President & COO, supports the high level of confidence I have in AMMO’s future. Jared’s experience, the wealth of his relationships, intellect and drive are all valuable assets for our organization as we chart our path forward to a bright future through the balance of this fiscal year and beyond,” Mr. Wagenhals concluded.

    Third Quarter 2023 Results

    We ended our third quarter with total revenues of approximately $38.7M in comparison to approximately $64.7M in the prior year quarter - this was a decrease of 40% from the prior year quarter. The decrease in revenue was mainly attributable to our ammunition segment and the inflationary impacts that are currently affecting the market. These market conditions also impacted the revenue of our Marketplace segment effecting a 12% decrease from the prior year period. However, operating performance of our Marketplace, GunBroker.com still remained strong and although our top line revenues waivered, our margins are still comparable to historical performance.

    We continue to see margin compression on our ammunition segment as we have seen further pricing pressure as the US commercial markets continue to slow from the inflationary impact and approaching global recession. The reduction in sales, higher commodity and freight costs along with increased operating expenses such as, the remainder of the one-time legal expenses related to the proxy contention, stock compensation, corporate insurance and payroll have increased our cost of revenues and operating expenses resulting in a net loss for the period.

    To address these increases and as discussed earlier in the call we plan to recoup cash tied up in our inventory in our quarter ending in March and pivot the direction of our manufacturing operations to more profitable opportunities such as premium rifle brass. Additionally, we continue to push forward on the improvements to our marketplace, GunBroker.com, and expect the payment suite and cart platform to launch in the first half of our next fiscal year, which should drive growth and profitability to the site.

    Our Cost of Revenues was approximately $26.2M for the quarter compared to $42.2M in the comparable prior year quarter. This decrease was related to reduced sales volume and increased commodity costs. Accordingly, this resulted in a gross margin of $12.5M compared to $22.5M. As our sales volume fell in the reported quarter, we anticipate another quarter of margin compression due to these increased costs, but expect to swiftly transition to more profitable sales activity starting in the first quarter of our next fiscal year.

    Our balance sheet remains strong with our total current liabilities decreasing by 21% since our year end and our total current assets at virtually unchanged.

    We are revising our Adjusted EBITDA and Adjusted Net Income Per Share calculations moving forward, which we believe will provide the market with a more accurate representation of our operations. To transition to our new calculations, we are providing our historical Adjusted EBITDA and Adjusted Net Income Per Share calculations and as well the calculations you can expect to see moving forward and incorporated into our updated guidance. For the quarter, using our historical Adjusted EBITDA and Adjusted EPS calculation we recorded adjusted EBITDA of approximately $7.9M busing, compared to prior year quarter Adjusted EBITDA of $20.1M. Using our Updated Adjusted EBITDA calculation, we recorded $4.8M in Adjusted EBITDA for the period compared to $10.7M.

    This resulted in a loss per share of $(0.04) or Historical Adjusted Net Income per Share of $0.05 in comparison to $0.14 in the prior year period. Using our updated calculation, Adjusted Net Income per Share was $0.05 in comparison to Adjusted Net Income per Share of $0.08 in the prior year period.

    Outlook

    Due to the decline is sales activity due to the market shift, we are reducing our guidance for our 2023 fiscal year. We are updating our guidance to revenues of $185 million, adjusted EBITDA using our new calculation of $22 million, and EBITDA of $17 million.

    Conference Call

    Management will host a conference call to discuss the Company’s Fiscal second quarter 2023 results at 5:00 p.m. ET today, February 14th, 2023.

    Investors interested in participating in the live conference call or audio-only webcast, may join by dialing 1-866-777-2509 (domestic), 1-412-317-5413 (international), or via webcast at

    https://event.choruscall.com/mediaframe/webcast.html?webcastid=yW2dwlnP

    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 2023 Conference Call.”

    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

      December 31, 2022  March 31, 2022 
      (Unaudited)    
    ASSETS        
    Current Assets:        
    Cash and cash equivalents $27,093,614  $23,281,475 
    Accounts receivable, net  30,419,611   43,955,084 
    Due from related parties  -   15,000 
    Inventories  67,145,401   59,016,152 
    Prepaid expenses  3,838,968   3,423,925 
    Current portion of restricted cash  500,000   - 
    Total Current Assets  128,997,594   129,691,636 
             
    Property and Equipment, net  55,290,328   37,637,806 
             
    Other Assets:        
    Deposits  9,656,907   11,360,322 
    Patents, net  5,156,120   5,526,218 
    Other intangible assets, net  126,870,205   136,300,387 
    Goodwill  90,870,094   90,870,094 
    Right of use assets - operating leases  1,378,711   2,791,850 
    TOTAL ASSETS $418,219,959  $414,178,313 
             
    LIABILITIES AND SHAREHOLDERS’ EQUITY        
    Current Liabilities:        
    Accounts payable $20,964,686  $26,817,083 
    Factoring liability  1,678,450   485,671 
    Accrued liabilities  4,298,739   6,178,814 
    Inventory credit facility  -   825,675 
    Current portion of operating lease liability  518,778   831,429 
    Current portion of note payable related party  358,263   684,639 
    Current portion of construction note payable  258,430   - 
    Insurance premium note payable  119,449   - 
    Total Current Liabilities  28,196,795   35,823,311 
             
    Long-term Liabilities:        
    Contingent consideration payable  158,570   204,142 
    Notes payable related party, net of current portion  -   181,132 
    Construction note payable, net of unamortized issuance costs  10,967,947   38,330 
    Operating lease liability, net of current portion  980,009   2,091,351 
    Deferred income tax liability  2,819,962   1,536,481 
    Total Liabilities  43,123,283   39,874,747 
             
    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, 2022 and March 31, 2022, respectively  1,400   1,400 
    Common stock, $0.001 par value, 200,000,000 shares authorized        
    118,044,417 and 116,485,747 shares issued and 117,894,417 and        
    116,485,747 outstanding at December 31, 2022 and March 31, 2022, respectively  117,894   116,487 
    Additional paid-in capital  390,501,876   385,426,431 
    Accumulated deficit  (15,233,633)  (11,240,752)
    Treasury Stock  (290,861)  - 
    Total Shareholders’ Equity  375,096,676   374,303,566 
    TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $418,219,959  $414,178,313 


    AMMO, Inc.
    CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
    (Unaudited)

      For the Three Months Ended
    December 31,
      For the Nine Months Ended
    December 31,
     
      2022  2021  2022  2021 
                 
    Net Revenues                
    Ammunition sales $20,250,965  $44,069,473  $90,607,817  $112,629,655 
    Marketplace revenue  15,419,202   17,596,769   46,486,842   46,646,051 
    Casing sales  3,041,327   3,022,944   10,661,420   10,891,897 
       38,711,494   64,689,186   147,756,079   170,167,603 
                     
    Cost of Revenues  26,184,315   42,166,320   104,257,529   102,457,775 
    Gross Profit  12,527,179   22,522,866   43,498,550   67,709,828 
                     
    Operating Expenses                
    Selling and marketing  1,010,543   1,510,574   3,987,214   4,226,817 
    Corporate general and administrative  7,835,201   3,737,455   17,920,197   10,976,288 
    Employee salaries and related expenses  4,705,636   2,939,095   11,414,434   7,943,076 
    Depreciation and amortization expense  3,309,074   3,725,921   9,950,752   10,044,994 
    Total operating expenses  16,860,454   11,913,045   43,272,597   33,191,175 
    Income/(Loss) from Operations  (4,333,275)  10,609,821   225,953   34,518,653 
                     
    Other Expenses                
    Other income/(expense)  (170,403)  363   28,193   21,788 
    Interest expense  (320,439)  (190,319)  (538,191)  (468,404)
    Total other expense  (490,842)  (189,956)  (509,998)  (446,616)
                     
    Income/(Loss) before Income Taxes  (4,824,117)  10,419,865   (284,045)  34,072,037 
                     
    Provision for Income Taxes  (721,125)  1,351,998   1,369,427   1,351,998 
                     
    Net Income/(Loss)  (4,102,992)  9,067,867   (1,653,472)  32,720,039 
                     
    Preferred Stock Dividend  (782,639)  (782,582)  (2,339,409)  (1,902,966)
                     
    Net Income/(Loss) Attributable to Common Stock Shareholders $(4,885,631) $8,285,285  $(3,992,881) $30,817,073 
                     
    Net Income/(Loss) per share                
    Basic $(0.04) $0.07  $(0.03) $0.28 
    Diluted $(0.04) $0.07  $(0.03) $0.27 
                     
    Weighted average number of shares outstanding                
    Basic  117,348,511   114,757,014   116,950,013   111,289,024 
    Diluted  117,348,511   116,717,500   116,950,013   113,350,998 


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

      For the Nine Months Ended
    December 31,
     
      2022  2021 
           
    Cash flows from operating activities:        
    Net Income/(Loss)  (1,653,472)  32,720,039 
    Adjustments to reconcile Net Income/(Loss) to Net Cash provided by (used in) operations:        
    Depreciation and amortization  12,950,972   12,778,103 
    Debt discount amortization  62,440   18,905 
    Employee stock awards  4,457,973   2,898,250 
    Stock grants  135,344   197,110 
    Stock for services     4,200 
    Warrants issued for services  106,909   148,508 
    Contingent consideration payable fair value  (45,572)  (362,753)
    Allowance for doubtful accounts  1,327,419   1,097,985 
    (Gain) on disposal of assets  -   (12,044)
    Reduction in right of use asset  512,063   496,469 
    Deferred income taxes  1,283,481   958,019 
    Changes in Current Assets and Liabilities        
    Accounts receivable  12,208,054   (20,755,245)
    Due to (from) related parties  15,000   - 
    Inventories  (8,129,249)  (30,599,676)
    Prepaid expenses  1,941,206   1,569,928 
    Deposits  1,678,415   (13,051,850)
    Accounts payable  (5,852,397)  7,538,451 
    Accrued liabilities  (2,044,248)  1,310,641 
    Operating lease liability  (522,917)  (514,872)
    Net cash provided by (used in) operating activities  18,431,421   (3,559,832)
             
    Cash flows from investing activities:        
    Purchase of equipment  (10,566,182)  (50,517,840)
    Gemini acquisition  -   (12,868,156)
    Proceeds from disposal of assets  -   59,800 
    Net cash used in investing activities  (10,566,182)  (63,326,196)
             
    Cash flow from financing activities:        
    Payments on inventory facility, net  (825,675)  (896,287)
    Proceeds from factoring liability  57,300,000   86,465,962 
    Payments on factoring liability  (56,107,221)  (84,210,284)
    Payments on note payable - related party  (507,508)  (463,192)
    Payments on insurance premium note payment  (1,916,070)  (1,922,651)
    Proceeds from construction note payable  1,000,000   - 
    Payments on construction note payable  (66,586)  - 
    Preferred stock dividends paid  (2,195,075)  (1,758,405)
    Common stock repurchase plan  (291,011)    
    Common stock issued for exercised warrants  56,046   943,907 
    Payments on assumed debt from Gemini  -   (50,000,000)
    Payments on note payable  -   (4,000,000)
    Sale of preferred stock  -   35,000,000 
    Common stock issuance costs  -   (3,199,922)
    Net cash used in financing activities  (3,553,100)  (24,040,872)
             
    Net increase/(decrease) in cash  4,312,139   (90,926,900)
    Cash, beginning of period  23,281,475   118,341,471 
    Cash and restricted cash, end of period $27,593,614  $27,414,571 

    (Continued)

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

      For the Nine Months Ended
    December 31,
     
      2022  2021 
           
    Supplemental cash flow disclosures:        
    Cash paid during the period for:        
    Interest $433,761  $474,454 
    Income taxes $1,302,811  $- 
             
    Non-cash investing and financing activities:        
    Construction note payable $10,237,032  $- 


    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 Quarterly Report on Form 10-Q 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.

    Historical Reconciliation of GAAP net income to Adjusted EBITDA

      For the Three Months Ended  For the Nine Months Ended 
      31-Dec-22  31-Dec -21  31-Dec -22  31-Dec -21 
                     
    Reconciliation of GAAP net income to Adjusted EBITDA                
    Net Income (Loss) $(4,102,992) $9,067,867  $(1,653,472) $32,720,039 
    Provision for Income Taxes  (721,125)  1,351,998   1,369,427   1,351,998 
    Depreciation and amortization  4,356,004   4,623,355   12,950,972   12,778,103 
    Excise Taxes  1,669,206   3,982,221   7,816,598   10,317,110 
    Interest expense, net  320,439   190,319   538,191   468,404 
    Employee stock awards(1)  2,106,535   1,045,125   4,457,973   2,898,250 
    Stock grants  43,750   65,098   135,344   197,110 
    Stock for services  -   4,200   -   4,200 
    Warrant Issuance  106,909   145,508   106,909   145,508 
    Other income/(expenses), net  170,403   (363)  (28,193)  (21,788)
    Contingent consideration fair value  (20,326)  (359,309)  (45,572)  (362,753)
    Proxy contention fees  3,983,254   -   4,724,385   - 
    Adjusted EBITDA $7,912,057  $20,116,019  $30,372,562  $60,496,181 

    (1) Includes proxy contention fees of $910,000 for Employee Stock Awards issued as a result of the Settlement Agreement as discussed in our Quarterly Report on Form 10-Q.

    Updated Reconciliation of GAAP net income to Adjusted EBITDA

      For the Three Months Ended  For the Nine Months Ended 
      31-Dec-22  31-Dec -21  31-Dec -22  31-Dec -21 
                     
    Reconciliation of GAAP net income to Adjusted EBITDA                
    Net Income (Loss) $(4,102,992) $9,067,867  $(1,653,472) $32,720,039 
    Provision for Income Taxes  (721,125)  1,351,998   1,369,427   1,351,998 
    Depreciation and amortization  4,356,004   4,623,355   12,950,972   12,778,103 
    Interest expense, net  320,439   190,319   538,191   468,404 
    Employee stock awards(1)  2,106,535   1,045,125   4,457,973   2,898,250 
    Stock grants  43,750   65,098   135,344   197,110 
    Stock for services  -   4,200   -   4,200 
    Warrant Issuance  106,909   145,508   106,909   145,508 
    Other income/(expenses), net  170,403   (363)  (28,193)  (21,788)
    Contingent consideration fair value  (20,326)  (359,309)  (45,572)  (362,753)
    Proxy contention fees  3,983,254   -   4,724,385   - 
    Tax effect(2)  (1,438,439)  (5,476,081)  (5,350,584)  (5,290,304)
    Adjusted EBITDA $4,804,412  $10,657,717  $17,205,381  $44,888,767 

    (1) Includes proxy contention fees of $910,000 for Employee Stock Awards issued as a result of the Settlement Agreement as discussed in our Quarterly Report on Form 10-Q.
    (2) Tax effect computed at statutory rates.

     Historical Adjusted EPS For the Three Months Ended 
      31-Dec-22  31-Dec-21 
    Reconciliation of GAAP net income to Fully Diluted EPS                 
    Net Income (Loss) $(4,102,992  $(0.03) $9,067,867  $0.08  
    Provision for income taxes  (721,125)   (0.01  1,351,998   0.01  
    Depreciation and amortization  4,356,004    0.04   4,623,355   0.04  
    Interest expense, net  320,439    -   190,319   -  
    Employee stock awards  2,106,535    0.02   1,045,125   0.01  
    Stock grants  43,750    -   65,098   -  
    Stock for services  -    -   4,200   -  
    Warrants issued for services  106,909    -   145,508   -  
    Other income, net  17,403    -   (363)  -  
    Contingent consideration fair value  (20,326)   -   (359,309)  -  
    Proxy contention costs  3,983,254    0.03   -   0.04  
    Adjusted Net Income $6,242,851   $0.05  $16,133,798  $0.14  


     Historical Adjusted EPS For the Nine Months Ended 
      31-Dec-22  31-Dec-21 
    Reconciliation of GAAP net income to Fully Diluted EPS                 
    Net Income (Loss) $(1,653,472) $(0.01) $32,720,039  $0.29  
    Provision for income taxes  1,369,427   0.01   1,351,998   0.01  
    Depreciation and amortization  12,950,972   0.11   12,778,103   0.11  
    Interest expense, net  538,191   -   468,404   -  
    Employee stock awards  4,457,973   0.04   2,898,250   0.03  
    Stock grants  135,344       197,110   -  
    Stock for services  -   -   4,200   -  
    Warrants issued for services  106,909)  -   145,508   -  
    Other income, net  (28,193)      (21,788)  -  
    Contingent consideration fair value  (45,572)  -   (362,753  -  
    Proxy contention costs  4,724,385   0.04   -   -  
    Adjusted Net Income $22,555,964  $0.19  $50,179,071  $0.44  


     Updated Adjusted EPS For the Three Months Ended 
      31-Dec-22  31-Dec-21 
    Reconciliation of GAAP net income to Fully Diluted EPS                 
    Net income/(loss) $(4,102,992) $(0.03) $9,067,867  $0.08  
    Depreciation and amortization  4,356,004   0.04   4,623,355   0.04  
    Interest expense, net  320,439   -   190,319   -  
    Employee stock awards  2,106,535   0.02   1,045,125   0.01  
    Stock grants  43,750   -   65,098   -  
    Stock for services  -   -   4,200   -  
    Warrants issued for services  106,909   -   145,508   -  
    Contingent consideration fair value  (20,326)  -   (359,309)  -  
    Proxy contention costs  3,983,254   0.03   -   -  
    Tax effect (1)  (1,390,215)  (0.01)  (5,476,184)  (0.05) 
    Adjusted Net Income $5,403,358  $0.05  $9,305,979  $0.08  

     (1) Tax effect computed at statutory rates.

     Updated Adjusted EPS For the Nine Months Ended 
      31-Dec-22  31-Dec-21 
    Reconciliation of GAAP net income to Fully Diluted EPS                 
    Net income/(loss) $(1,653,472) $(0.01) $32,720,039  $0.29  
    Depreciation and amortization  12,950,972   0.11   12,778,103   0.11  
    Interest expense, net  538,191   -   468,404   -  
    Employee stock awards  4,457,973   0.04   2,898,250   0.03  
    Stock grants  135,344   -   197,110   -  
    Stock for services  -   -   4,200   -  
    Warrants issued for services  106,909   -   145,508   -  
    Contingent consideration fair value  (45,572)  -   (362,753)  -  
    Proxy contention costs  4,724,385   0.04   -   -  
    Tax effect (1)  (5,358,562)  (0.05)  (5,296,470)  (0.05) 
    Adjusted Net Income $15,856,168  $0.14  $43,552,391  $0.38  

    (1) Tax effect computed at statutory rates.

      For the Three Months Ended
    December 31,
      For the Nine Months Ended
    December 31,
     
      2022  2021  2022  2021 
    Weighted average number of shares outstanding                
    Basic  117,348,511   114,757,014   116,950,013   111,289,024 
    Diluted  117,348,511   116,717,500   116,950,013   113,350,998 


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