Ammo, Inc., the owner of GunBroker.com and maker of ammunition and components, reported a loss in the fiscal third quarter ended December 31 as sales plummeted 40 percent.

Third Quarter Fiscal 2023 vs. Third Quarter Fiscal 2022

  • Net Revenues decreased 40 percent to $38.7 million;
  • Gross profit margin of approximately 32.3 percent;
  • 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 a 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; and
  • 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; and
  • Average take rate increased to 5.7 percent compared to 5.4 percent in fiscal 2022.

Fred Wagenhals, Ammo’s chairman & CEO, commented, “the 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 remain 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 and COO, support 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,” Wagenhals concluded.

Third Quarter 2023 Results
Wagenhals said, “We ended our third quarter with total revenues of approximately $38.7M in comparison to approximately $64.7M in the prior year quarter; his was a decrease of 40 percent 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 percent 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 percent 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 as 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 the 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
Wagenhals said, “Due to the decline in 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.”

Previously, guidance called for revenues in the range of $220 million to $240 million, EBITDA in the range of $30 million to $40 million and adjusted EBITDA in the range of $50 million to $60 million.