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AMMO, INC. (POWW)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 FY2024 revenue was $40.4M, up sequentially from $36.0M in Q3 but down year over year from $43.7M; gross margin compressed to ~23.3% (vs. 30.3% in Q3 and 27.3% in prior-year Q4) as mix and ammo margin underperformance weighed on results .
  • GAAP net loss widened to ($5.3M) and diluted EPS to ($0.05); Adjusted EBITDA was $2.2M and adjusted EPS $0.01, with ~$2.4M of nonrecurring legal/professional fees added back .
  • GunBroker launched multi-item cart in March, is adding financing (Gearfire) and premium auction features; marketplace take rate reached 6.0% in Q4 with robust margins; NPS measured at 71% .
  • Management emphasized rifle casing ramp (ZRODelta 50 cal deliveries started), a 28–30 week operations improvement engagement, and expects improved marginality as capacity increases; strong liquidity ($55.6M cash) and $4.3M Q4 operating cash flow support the plan .

What Went Well and What Went Wrong

  • What Went Well

    • Sequential revenue growth and ammo demand improvement versus Q3; ammo revenues rose quarter over quarter (+$4.8M), while casing sales improved year over year .
    • GunBroker execution: cart live in March, increasing take rate to ~6.0% and maintaining robust marketplace margins; early signs of higher cart values and no rollout dip; NPS 71% .
    • Strategic progress in rifle cases: first deliveries under ZRODelta, line running with additional annealing capacity coming; management reiterated strong pipeline and 30–40% casing output increase targeted later in FY2025 .

  • What Went Wrong

    • Margin pressure: consolidated gross margin fell to ~23.3% from 30.3% in Q3 and 27.3% in prior-year Q4; ammo segment margins “did not meet expectations” due to mix and overhead absorption .
    • Profitability deterioration: net loss widened to ($5.3M) vs. ($1.6M) in Q3; Adjusted EBITDA fell to $2.2M vs. $5.4M in Q3; legal/professional nonrecurring costs of ~$2.4M impacted reported results .
    • Macro softness in marketplace activity and input-cost headwinds (copper, propellant) continued; management expects constraints in propellant markets to persist though believes it can mitigate via contracts and pricing .

Financial Results

Sequential trend (Q2 → Q3 → Q4 FY2024)

MetricQ2 2024Q3 2024Q4 2024
Revenue ($M)$34.372 $36.006 $40.421
Gross Profit ($M)$8.288 $10.910 $9.400
Gross Margin (%)24.1% 30.3% 23.3%
Adjusted EBITDA ($M)$1.221 $5.410 $2.166
Net Income (Loss) ($M)($7.495) ($1.644) ($5.333)
Diluted EPS ($)($0.07) ($0.02) ($0.05)
Adjusted EPS ($)$0.00 $0.04 $0.01

Year-over-year (Q4 FY2023 vs Q4 FY2024)

MetricQ4 2023Q4 2024
Revenue ($M)$43.684 $40.421
Gross Profit ($M)$11.910 $9.400
Gross Margin (%)27.3% 23.3%
Adjusted EBITDA ($M)$3.815 $2.166
Net Income (Loss) ($M)($2.943) ($5.333)
Diluted EPS ($)($0.04) ($0.05)
Adjusted EPS ($)$0.02 $0.01

Revenue mix (categories)

Category Revenue ($M)Q2 2024Q3 2024Q4 2024
Ammunition Sales$15.517 $17.323 $22.445
Casing Sales$6.381 $4.698 $4.406
Marketplace Revenue (GunBroker)$12.475 $13.985 $13.570

KPIs and balance sheet

KPIQ2 2024Q3 2024Q4 2024
GunBroker Take Rate (%)6.0% 5.9% 6.0%
New Users per Month (approx.)26,000 37,000 32,000
Cash & Equivalents (period end, $M)$49.565 $54.680 $55.586
Operating Cash Flow (quarter, $M)n/a~$5.1 (mgmt) $4.3

Non-GAAP/one-offs

  • Q4 nonrecurring expenses: ~$2.373M (legal/professional) included in Adjusted EBITDA addback .
  • Q3 nonrecurring expenses: ~$1.499M (legal/professional) added back to Adjusted EBITDA .
  • Q2 nonrecurring expenses: ~$3.868M (legal/professional and other) added back to Adjusted EBITDA .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueFY2025NoneNo formal guidance provided; management not providing guidance at this time n/a
Gross MarginFY2025NoneExpect improvement as capacity increases and mix shifts to rifle cases; marketplace margins robust n/a
EPSFY2025NoneNo formal guidance provided n/a
Adjusted EBITDAFY2025NoneNo formal guidance; aims for improved marginality via operations program n/a
Operational InitiativesFY2025n/aCart launched (Mar-24); financing partnerships (Gearfire) to roll out; shipping/cross-sell/search enhancements forthcoming Implementation

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2 and Q-1)Current Period (Q4 FY2024)Trend
GunBroker payments/cart & monetizationQ2: OutdoorPay launched; onboarding to enable cart “soon” . Q3: Centralized payments tested; cart live on/before Apr 1; plan tiered fees, cross-sell, shipping, financing .Cart launched Mar-24; early adoption, flat-to-higher cart value; take rate increases; signing Gearfire financing; premium Collector’s Elite launched .Positive execution; monetization levers increasing.
Operations/process improvementsQ2: Operational challenges (press downtime), cost absorption issues . Q3: Cost-out initiatives and margin improvement; rebranding .Engaged global consulting firm for ~28–30 weeks to improve material flow, SIOP, constraints; focus on rifle case production .Structural improvement underway.
Rifle casing ramp & ZRODeltaQ3: $10M+ brass contract; ~40% margin at 6M pieces; capacity <30% but ramping .First 15,000 pieces of 12.7x108 delivered; annealing oven to remove bottleneck; expect 30–40% casing output increase by Q2–Q3 FY2025 .Execution starting; capacity additions continue.
Input costs & supplyQ3: Propellant constraints expected, impacts smaller players .Copper pressure (mitigated via contract metals pricing); propellant constraints continue but AMMO supply position solid .Manageable headwinds via contracts/supply.
Marketplace demand vs macroQ3: GMV down YoY amid macro; platform upgrades expected to help .Macro softness still impacting marketplace volumes; robust margins maintained .Stable-to-improving with product rollouts.

Management Commentary

  • “AMMO is at a pivotal point… We believe we have changed the trajectory of the business in these past 12 months… Our ongoing transition from low margin pistol ammo to high margin rifle cases will sustain a more stable and profitable business model going forward.” – CEO Jared Smith .
  • “We recently scored a Net Promoter Score… of 71% where above 50 is excellent and 80% is considered world-class.” – CEO Jared Smith .
  • “We… delivered the first 15,000 pieces of 12.7 x 108… for our delivery to ZRODelta and will continue production… throughout 2024.” – CEO Jared Smith .
  • “There was approximately $2.4 million of nonrecurring expenses in the quarter related to legal and professional fees, which we have included as an addback to adjusted EBITDA.” – CFO Robert Wiley .
  • “We are well positioned financially heading into fiscal 2025… $55.6 million of cash and cash equivalents along with $30.9 million of current liabilities… generated $32.6 million in cash from operations for the period.” – CFO Robert Wiley .

Q&A Highlights

  • Factory optimization: 28–30 week engagement to overhaul material flow, shift handoffs, SIOP, documentation; comprehensive plant-wide effort focused on rifle cases .
  • Ammo margins: pullback from Q3 to Q4; overhead absorption impacted; expect improvement as production increases .
  • Casing ramp: expects 30–40% increase in rifle casing output by Q2–Q3 FY2025; Q4 dip due to equipment line-up and inventory staging for seasonal loading .
  • GunBroker monetization: early cart adoption with higher value; take rate increases; financing not yet rolled out in Q4; to execute in Q2–Q3 .
  • Input costs: copper pressure manageable via contract metals pricing; propellant constraints expected to persist but AMMO’s supply position is strong .
  • ZRODelta economics: estimated ~40% margin on 6M 50-cal cases; production extends into early CY2025; major margin lever as capacity ramps .

Estimates Context

  • Wall Street consensus (S&P Global) for Q4 FY2024 EPS and revenue was unavailable at time of query due to an S&P Global API request limit. We could not verify beats/misses against consensus and will refresh when access resumes.
  • Without consensus, we benchmark performance sequentially and year over year as shown above .

Key Takeaways for Investors

  • Near-term margin recovery hinges on rifle case capacity increases and factory process improvements; management has initiated a structured 28–30 week program and is removing bottlenecks (annealing) .
  • Marketplace monetization catalysts (cart, take-rate tweaks, financing, cross-sell, premium auctions) create a multi-quarter ARPU/GMV uplift path with resilient margins on GunBroker .
  • Mix shift toward higher-margin rifle cases and premium rifle ammo is central to the medium-term thesis; early ZRODelta deliveries and targeted 30–40% casing output growth by Q2–Q3 FY2025 support this .
  • Liquidity remains a strength ($55.6M cash; $32.6M OCF in FY2024), providing runway to execute operations and marketplace roadmaps despite current profitability pressures .
  • Watch for catalysts: visible casing volume ramp, sustained marketplace take-rate improvement, stabilization of input costs/propellant availability, and reduction in nonrecurring legal spend .
  • Risk factors: persistent macro softness in firearms retail, propellant constraints, and slower-than-expected capacity absorption could delay margin normalization .
  • Trading setup: absent consensus comparisons, near-term stock reaction likely tracks narrative on capacity ramp milestones and GunBroker monetization updates on the next call .

Appendix: Additional Data Points

  • Q4 FY2024: Revenue $40.4M; Gross Profit $9.4M; Gross Margin ~23.3%; Net Loss ($5.3M); Diluted EPS ($0.05); Adjusted EBITDA $2.2M; Adjusted EPS $0.01 .
  • GunBroker Q4: Marketplace revenue ~$13.6M; Take rate 6.0%; New users ~32k/month .
  • Balance sheet (Mar 31, 2024): Cash & equivalents $55.6M; Current assets $131.5M; Current liabilities $30.9M .
  • Cash from operations: $4.3M in Q4; $32.6M in FY2024 .