Good day, ladies and gentlemen. Thank you for standing by. Welcome to today's conference call to discuss ammo, Inc. Financial Results for the 1st Quarter of 2022. At this time, all participants are in a listen only mode.
Following the formal remarks, we will conduct a question and answer session. Call. Hosting today's conference call will be Reed Anderson with ICR. Quarter. As a reminder, today's conference is being recorded.
And now, I would like to turn the conference over to Mr. Anderson. Please go ahead, sir.
Quarter. Thank you. Good afternoon and welcome to AMMO Inc. Conference call to discuss results for the 1st fiscal quarter of 2022. Quarter.
On the call today from AMMO Inc. With prepared remarks are Fred Wagenhals, Chairman and Chief Executive Officer Rob Goodminton, President quarter and Rob Wiley, Chief Financial Officer. By now, everyone should have access to the earnings release, which went out this afternoon at approximately 4:10 pm Eastern Time. Quarter. If you have not received the release, it is available on the Investor Relations portion of AMMO Inc.
Website at www.ammoinc.com. Quarter. This call is being webcast and a replay will be available on the company's website as well. Before we begin, we would like to remind everyone quarter. Our prepared remarks contain forward looking statements and management may make additional forward looking statements in response to your questions.
Quarter. These statements do not guarantee future performance and therefore undue reliance should not be placed upon them. These statements are based on current expectations quarter of the company's management and involve inherent risks and uncertainties, including those identified in the Risk Factors section of AMMO Inc. Most recently filed Forms 10 ks and 10 Q. Please note that during today's call, we will discuss non GAAP financial measures, quarter, including results on an adjusted basis.
Management believes these financial measures can facilitate a more complete analysis and greater transparency into AMMO Inc. Ongoing results of operations, particularly when comparing underlying operating results from period to period. Quarter. We've included a reconciliation of these non GAAP measures with today's release. This call also contains time sensitive information that is accurate fiscal year 2019.
The update any forward looking projections that may be made in today's release or call. Now, I will turn the call over to Fred Wagenhals, Chairman and Chief Executive Officer of AMMO Inc.
Thanks, Reed. I would like to extend my Personal appreciation to all of our great employees, customers and shareholders for continuing to quarter. I am pleased with our Q1 results, which showed fiscal year. Quarter. The Ammonition segment was a key sales driver, reflecting strong demands for our core product fiscal year.
Our marketplace segment quarter was the other significant factor behind our strong Q1 results as we had 2 months of high margin revenue from gunbroker.com, quarter, which we acquired on April 30. The gunbroker.com acquisition was a big event for Ammo Inc. Quarter. And we are just in the early innings of realizing its true potential. Over the next 12 months, we expect to leverage this quarter.
I would like to bring you up to date and answer most of our questions that I get hit with weekly from investors. Fiscal quarter. Our Board of Directors is a strong Board as far as our team effort, fiscal year. Chris Larson and myself have put together a team that I feel very proud of to take this company to the next level. Quarter.
Our Vice President, John Flynn, did a great job at securing enough land from the City of Manitowoc to build fiscal year. Our new factory and room for expansion in the future. My son, Todd Wagenalff,
quarter. The move
fiscal quarter. This will be a 165,000 square foot state of the art manufacturing facility. Jim Mann, our plant manager has done a remarkable job of integrating fiscal. Our Payson loading operation into Manitowoc's brass facility. Jim has had to rent 2 additional warehouse quarter totaling 70,000 square foot to keep up with the production demand until we move into our new building.
Fiscal quarter. Mark Hanisch, our President of Global Marketing and John Flynn have been working due diligently on new product development for commercial use and government contracts. At the present time, we have a DoD contract with the government. Fiscal year. Rob Wiley, our CFO and Susan Lokey, CFO of gunbroker.com and their team have worked around the clock to bring our
fiscal
year. We are fortunate to have our new accounting firm fiscal 2018. Matt Nicholson, our Vice President of Sales and Anthony Tate, our Director of National Accounts quarter. We've done a tremendous job over the past 16 months putting together an outstanding call center with fiscal quarter. This includes working with dealers, distributors and big box retailers.
Fiscal quarter. Also, Matt Anthony and Nate Accort, Head of our Purchasing, have found primers and gunpowder throughout the world fiscal quarter. We also have signed a 5 year contract with Vista Federal to supply them with brass casings quarter. Gunbroker.com, the acquisition allowed Ammo Inc. Fiscal year.
Steve Ervin is on our Board and is also active in quarter. Steve Verska is the man in charge of gunbroker.com on a daily basis and has been running Gunbroker for the past 10 years. We have put together a team with Steve Burska fiscal year. Beth Cross, Director of Purchasing Matt Nicholson and Anthony Tate. Beth is leading that team to secure ammunition and
fiscal
fiscal. Rob Goodmanson, President, Board Member. Rob was brought in to call. Help me run the day to day operations of this company. Because of his financial background and his Wall Street background, fiscal quarter.
Fiscal quarter. I don't plan on retiring. I plan on being here every day at 5:30 in the morning and conducting our 8 o'clock production meetings. With that, I want to turn it over to Rob Goodmanson.
Thank you, Fred, and welcome to our earnings call. Quarter. We couldn't be more proud of the incredible team that Fred has put together and the hard work everyone has put forth
quarter. We created an outstanding
quarter and all the successes we will have moving forward. Total sales rose 3 60%, quarter of almost $45,000,000 by the way, which only includes 2 months of our marketplace gunbrokers.com. Quarter. Our gross margins of 42.7 percent compared to last year of 11.1%. Quarter.
The demand trends in the U. S. Domestic market and international ammunition markets remain extremely strong and show no signs of slowing. As most of you know, when Fred had the idea of ammo, quarter. It was not just an ammunition company.
It was to take an industry that is extremely antiquated quarter and bring technology and patented ideas to the forefront. Our acquisition of Gun Brokers has been transformative. Quarter. The integration of the marketplace business with ammo, albeit in the early stages, has been wildly successful, quarter even though we've owned it for just over 90 days. As a leading marketplace for firearms and shooting sports enthusiasts, quarter.
We're very excited about the impact from this business in accelerating our sales and earnings in 2022 beyond. Quarter. The marketplace is 70% of our profits and ammo is 78% of our revenues. Quarter. This should show The Street who we are, that we're not just a manufacturing company.
Quarter. We've implemented many new initiatives that are focused on improving the overall experience in the marketplace. Quarter. For example, we've been adding personnel within customer service to speed up the process, whether it be the sale quarter or any issues that come to light. We are adding new products, as Fred mentioned, quarter.
We will provide easy access to 3rd party financing options along with loyalty programs quarter. We are pleased to capture a broader share of potential transactions, while increasing our average ticket size and making the relationships quarter. As Fred stated, this acquisition of GunBroker was truly quarter and are transformational for our company. 1st quarter results give you an early glimpse of the significant long term potential. Quarter.
This leading marketplace platform is highly leverageable and complementary to our businesses. Quarter. With that, I will turn this over to our CFO, Rob Wylie. Rob?
Thank you, Rob.
Welcome, everyone. Quarter. Let me walk you through our Q1 financials in more detail. Total net revenue for the Q1 of fiscal 2022 were $44,500,000 quarter, up 3 60 percent from the $9,700,000 we reported in the year earlier period. Growth in ammunition was the largest factor contributing to the year over year increase.
For the quarter, ammunition sales were $28,400,000 compared to $6,400,000 fiscal quarter. Our marketplace segment had revenue of $12,300,000 versus nothing a year earlier, quarter reflecting the acquisition of gunbroker.com at the end of April 2021. For perspective on the significant growth we are seeing in our marketplace segment, note that the 2 months of gunbroker.comrevenue we reported in the Q1 were 59% higher than the comparable 2 month period last year. Quarter. Higher sales drove a significant increase in gross profit to $19,000,000 in the Q1 versus $1,100,000 in the year earlier period.
Quarter. The improvement in gross profit margin was equally impressive, reflecting the influence of our rapidly growing marketplace revenues. Quarter. For the quarter, gross profit margin rose to 42.7 percent from 11.1% in last year's Q1 quarter due to the inclusion of marketplace revenues, which had an 86.5% gross margin in the quarter. Quarter.
1st quarter operating expenses totaled $9,300,000 up from $3,900,000 a year ago. Several factors fiscal quarter. The increase including the addition of marketplace operations, higher commission payments stemming from the growth in our ammunition sales, higher non cash stock based compensation expense and professional fees related to the acquisition of gunbroker.com. Quarter. As a percentage of net sales, operating expenses declined to 20.9% in the Q1 of fiscal 2022 fiscal quarter.
40% in the year earlier period, reflecting operating leverage, manufacturing scale and the mix shift in favor of higher margin marketplace revenues. Quarter. Operating income was $9,700,000 in the Q1 compared to an operating loss of $2,800,000 in the year earlier period. Quarter. As a percentage of net sales, operating income was 21.8%, driven by a 60.5% operating margin in the marketplace segment.
Quarter. Net income available to common shareholders for the Q1 of fiscal 2022 was $9,200,000 or $0.08 quarter diluted share compared to a net loss of $3,100,000 or a negative $0.07 loss per diluted share in the Q1 of fiscal 2021. Quarter. Adjusted net income per share was $0.13 versus an adjusted per share loss of 0 point 0 $1 Adjusted EBITDA was 16 point $3,000,000 compared to adjusted EBITDA loss of $300,000 in the year earlier period. The significant improvement
quarter. Adjusted EBITDA was due to
the increased sales and improved gross margins, reflecting growth in the core ammunition segment, plus the addition of our higher margin marketplace segment. Quarter. Please note that adjusted EBITDA is a non GAAP measure and you should refer to a reconciliation of our GAAP to non GAAP results in today's press release quarter for additional details. Our total assets have increased significantly following the acquisition of gunbroker.com from 170,000,000 quarter to $381,000,000 Notable increases in our assets include intangible assets and goodwill from the acquisition as well as accounts receivable, which increased $14,800,000 and inventories, which increased 12,100,000 quarter. We've built a backlog of $238,000,000 even as we continue to increase our sales and deliver to our customers.
Quarter. Now let me provide you
an update on our guidance. Given strong underlying demand and our better than expected results in the latest quarter, quarter. We are increasing our full year fiscal 2022 revenue guidance from $190,000,000 to $210,000,000 This includes reiterating our 2nd quarter quarter. We estimate $51,000,000 that we first shared with you on July 15 and the expectation that revenues will be approximately $60,000,000 in the 3rd fiscal quarter. Our full year adjusted EBITDA estimate for fiscal 2022 is now $70,000,000 up from the prior forecast of $65,000,000 Mostly reflecting higher expectations for revenue growth.
As we look towards the remainder of our fiscal 2022, quarter. We expect to be able to offset a significant portion of our potential tax liability with our $31,000,000 in net operating losses generated through our prior fiscal year end. Quarter. This concludes our prepared remarks. We are now ready to take questions.
So I'll pass it back to our moderator. Thank you.
Quarter. Thank you. We will now be conducting a question and answer session. Call. Please proceed with your questions.
Hey guys, thanks. Just wondering in the outlook that you provided the $210,000,000 for revenue, how to think about the split between Gunbroker and the core ammunition business. And then I guess if I plug your 2nd quarter and third quarter guidance with the full year guide, it does seem to imply a sequential drop in the 4th quarter. So just wanted to see if you could speak to seasonality that maybe you're embedding in the outlook or if there's just conservatism there.
Quarter. Hey, Matt. This is Rob Wiley. Thank you for the question. So the way we look at our guidance increasing from $190,000,000 to 210,000,000 quarter.
It's really made up of even split of the activity that will be generated through the gunbroker.commarketplace as well as our ammunition manufacturing operations. And we really don't view any sort of seasonality impacting that total guidance overall.
Okay, got you. And then I guess the other piece of the outlook, quarter. If I just take sort of the remaining year worth of EBITDA and the remaining year worth of revenue, It does seem to imply margins tick down a little bit and just wanted to get your thoughts on we put up a 37% fiscal
No, we don't expect any margin degradation. Quarter. In fact, looking on to our next quarter, with a full 3 months of gun broker activity coupled with our increasing ammunition operations and leveraging that platform, We expect our margins to end up in approximately 45% conservatively. And you mentioned just fiscal year. Our adjusted EBITDA may seem low in comparison to the increase in guidance.
Historically, we feel like we've been conservative with our guidance quarter. And we'll update The Street on potential updates and guidance as we feel necessary.
Quarter. Okay. That's fair. And then I guess a couple more on one on backlog. So the $238,000,000 implies pretty Strong order flow in the Q1.
So I just wondered if you guys could maybe disentangle and speak to what drove the order flow in the Q1. Is there any of the military orders that you guys have press released within that backlog? Or is it all commercial? And then any sort of new customer orders that you can call out On the commercial side that maybe drove the backlog as well.
This is Fred Wagonall. It's mostly commercial.
Okay. Got you. I'll take the rest of that offline. And then One more for me and then I'll leave it to someone else here. But the $25,000,000 goal of new goods through gunbroker.com, I think that was quarter.
Interesting and kind of incremental here. Is that all ammunition or are there other products that you can put through the platform? Any more detail you can provide on sort of Tracking toward that $25,000,000 goal for the year, have we achieved any of it as of yet or is that all on the come for the rest of the year?
Fiscal year. That's all I'm
going to come for the rest of the year, but it's not all ammunition, it's
quarter. Thank you. Our next questions come from the line of Mark Smith with Lake Street Capital. Please proceed with your questions.
Hi, guys. Quick question for me. First on demand and I think Rob Goodmanson, you might have talked about it a little bit in your commentary, but have you seen any change
fiscal We have not seen any change. Quarter. As you think we could get rid of our backlog as everything is shipped more orders come in.
Fiscal year. The backlog
keeps growing. The manufacturing as soon as it's completed to ship, that is what we're seeing. Quarter. We have not seen really we've seen the only thing we've seen is a little price compression in some of the different rounds, but nothing significant, The demand is still very strong internationally and domestically.
Okay. And any change in your production as we look at just different calibers and different ammunition, is it safe to assume that still 9 millimeter 2.23 continues to be high demand or have you started to mix into maybe some other Rounds of ammunition that may be kind of going back to them if we're starting to meet some of the demand for some of those high demand rounds.
Sure. Now we have a 2 to 3 and the 9 millimeter is always going to be there, but there has been a shift More of the specialized rounds. Frankly, the margins are better. There's been no price compression at all, and the demand is out there for it. Fiscal year.
And oftentimes, we see a lot of the manufacturers converting to doing virtually nothing but 9 millimeter. And rather than compete for lower prices, we'd rather compete at a higher margin.
Quarter. Okay. And then I know you guys have had a lot of changes up in Manitowoc at your current facility. Can you talk about kind of during the quarter, Any capacity increases maybe within the footprint that you've got today, potential on increasing fiscal capacity and kind of even if you can speak to kind of if you're pleased with the level of your operating out of that facility today.
Quarter. I'm very pleased with what we're doing up there. And as I said earlier, Jim Mann's done a great job of fiscal quarter. When we shut down Payson, integrating Payson into the brass manufacturer, we found out real quickly we couldn't Put our whole operation in a 50,000 square foot building. John Flynn went out and helped us get us fiscal year.
Two new buildings or 2 buildings that we rented 70,000 square foot. And Jim has done a great job of quarter. Getting those buildings up and running, in today's world, you always have a people problem, but we We seem to be toughening out and solving that problem on a daily basis. It's Definitely going to be a lot better when we're in one building and we have a new facility that's going to be the State of the art ammunition facility in this country. But, for right now, quarter.
It's tough every day, but we're making our numbers. As I said earlier, we get on a call every morning at 8 o'clock
quarter. And Fred, you talked a little bit People and maybe some inflationary pressure in wages. Are there other places where you guys are maybe seeing some inflationary Pressure, any commodities or components that maybe either A, have seen price come up quite a bit or B, that are just hard to get?
Well, I think it's not been easy, but we've kept the factory running and we seem to find fiscal year. As you can see from our margins, we've done a great job of quarter. Raising prices when we had to, finding product when we had to, fiscal year. Nothing is easy today, but I think we got a great team of people fiscal year. And especially in purchasing that's and we've had to go outside the United States to buy a lot of primers and gunpowder and whatever.
But we feel comfortable with these numbers and we feel comfortable every day that quarter. We've got the right mix of product and the right mix of inventory coming in to supply our customers. Quarter.
Okay. Sounds great. Thank you, guys.
Thank you. Fiscal year. Our next questions come from the line of Brandon Belo with Marco Macro Ops. Please proceed with your question. Quarter.
Hey guys, great quarter. I've got one shorter term question and 2 long term Questions and I'm not going to take up too much of your time. So the first question on the shorter term, when it comes to the gunbroker.comlowhangingfruit, and you guys mentioned you're going to I think $25,000,000 was the number. That's from ammunition and other products. On a UI, UX deal.
How is that going to look on the site? Is it if I go to the ammo for sale, is it going to be ammo's products right at the top just kind of for buy now. How are you guys thinking of listing your products amongst others, to create kind of what you think is the optimal experience for the user?
I do not believe we're going to separate fiscal year. We'll put them up at the top, but there will be additional products we've taken. Fiscal quarter. Really, we've started a fair amount of initiatives to coincide with additional products that we are adding Credit, gift cards, loyalty programs, short term funding for the purchases. And as we came in as a cross selling, fiscal.
It's a platform which is easily leveraged with new products and services. And we're just trying to create a very robust experience that they've lacked a little bit in the past. Adding personnel in the service area. We're kind of changing, well, some of our promotional activities And being a little more surgical in the promotion and activities that we do with the existing clients. In other words, that was much
Got it. Okay, cool. Yes, thanks. And then the second, So last two questions. You have $118,000,000 in cash in the bank, more than double this time fiscal quarter over quarter.
What are your guys plans with that from the long term view, let's say, 3, 5, 10 years out. Are there any other verticals that you're trying to pursue to maybe strap on like what you did with Like Jagemann's stamping, something along those lines? Or are you just thinking about reinvesting back into the ammo business or investing into the gun broker marketplace. Where are you thinking in terms of allocating that $118,000,000 in cash?
I think you'd see some of that money moving into another vertical, something that would be accretive. We do generate, frankly, a large amount of cash, But there are opportunities out there that we look at on a regular basis. And if they do match our what we require,
There's not
one set thing where we would spend our capital.
Got it. And then This might be something you don't have to you might not be able to answer too much, but when you say ideas and verticals that meet your requirements, Is that some sort of internal rate of return that
you guys are shooting for?
Or is it more of a qualitative, just kind of it's got a strap on
I don't think there's a black or white answer to that. Fiscal quarter. It's part of the things that we've always done, whether it be the armor piercing or the street, everything has had fiscal year. A unique, let's call it just technology bend to it. So it possibly would not be accretive Then again, it could be something simple as unique projectiles, which will be immediately.
Got it.
Quarter. Yes. Okay, cool. And then last question, Fred, I know you said that you had no plans of retiring, which is very comforting to hear, as a long term shareholder. You said that you wake up at 5:30 every day and it sounds like you're excited to go into work.
So maybe if you could just give us kind of some reasons why you're so excited About what you're doing. I mean, obviously, given your history and your background, you could just be relaxing on a beach. So it is
I like business, I like balances fiscal year. And I guess when my partner Chris and I sat down 5 years ago and then fiscal year. 3 years ago, we said, I think we can build a nice little ammunition company that's profitable. Fiscal quarter. It's a thrill of the deal.
I like the deal. I like what I'm doing. I think we've got a great quarter. I think this company, I did $407,000,000 a year in sales one time fiscal year. With my old company, I think we can beat that in the next 2 years.
So my goal is record setting and beaten records. So I'm excited to be here.
Awesome. And I'm excited quarter. As a shareholder, hear that. So, again, great quarter guys. Keep up the good work.
I'm going to hop off and just listen for now. Thanks again.
Quarter. Thank you. There are no further questions at this time. I'd like to turn the call back over to management for any closing comments.
Quarter. Today, a important comment we'd like to leave you guys with is that, we're very excited about this fiscal year, and with us raising guidance. Quarter. We'd like to make is that we have over $31,500,000 in net operating losses coming out of our previous fiscal year and we expect to utilize these quarter by the end of our current fiscal year. So once again, thank you very much for joining us on the call today.
I will pass it over to Rob for some additional comments.
Just in closing and then I'll throw it to Fred. Just want to reiterate that the acquisition of the Gunbroker fiscal year. Our platform transformed ammo from a commodity focused product manufacturer to a marketplace. Quarter. Over 6,000,000 registered users and the structural competitive advantages.
Quarter. Most of the investors see commodity linked businesses like the straight ammunition business benefiting from short term Supply constraints, high geopolitical insight demand. Those who do miss the point, fiscal
quarter.
Quarter. Brett?
Yes. Thank you. Well, I want to thank everybody for participating in the call quarter. And watching our company grow, I firmly believe we've got a company here that's got a lot of excitement to it, fiscal year. Especially the gun broker thing, it puts us not in just the manufacturing and selling ammo, but We're a company now that in the marketplace and just happens to sell ammo and other items that we're going to put on that site.
Quarter. And I just hope everybody watches to see what we're going to do over the next several months with our marketplace company.
Quarter. Thank you. This does conclude today's teleconference. Quarter. Thank you for your participation.
You may disconnect your lines at this time. Have a great day.