Freedom Group, Inc., the parent company of the Remington, Bushmaster, DPMS/Panther Arms, Marlin, Mountain Khakis, EOTAC and Dakota Arms brands, among others, said sales slipped 11.9% for the third quarter ended Sept. 30 to $207.6 million from $235.7 million a year ago.
Net sales of firearms continued to anchor consolidated revenue results, plummeting 28.6% to $104.6 million versus $133.2 million a year ago. Centerfire rifle sales decreased 36.3% due to reduced sales demand for modern sporting products, while rimfires and shotguns fell 13.5% and 6.5%, respectively.
Gross profit for Firearms was $29.7 million, a decrease of $14.5 million, or 32.8%, as compared to the prior-year period, primarily due to lower sales volumes. Gross margin was 28.4%, down 480 basis points from 33.2% in the year-ago period, primarily due to reduced sales demand in the higher margin modern sporting products, as well as unfavorable pricing and the impact of the accrual for the ACR product safety recall notice.
Adjusted EBITDA in the Firearms segment decreased $11.4 million, or 39.9%, for the quarter, primarily due to the decline in Centerfire rifles sales, primarily due to reduced sales demand for modern sporting products.
Total Ammunition sales were $95.3 million, down 2.5% from $97.7 million a year ago on decreased sales volumes of Shotshells (-14.2%) and Rimfire ammunition (11.0%). The company said sales of sourced products and components also fell for the period. Management said decreased sales were partially offset by the newly-acquired Barnes Bullets operations as well as increased volumes of Centerfire ammunition, which was boosted by increase demand for handgun ammunition.
Gross profit for Ammunition was $28.2 million, a decrease of $8.0 million, or 22.1%, as compared to the prior-year period. Gross margin was 29.6% down 760 basis points to 37.1% in the year-ago period. The decrease in gross profit was primarily related to unfavorable pricing of $2.2 million; higher material and other costs, net of favorable hedging gains of $4.6 million; and unfavorable sales volumes of $1.3 million.
Adjusted EBITDA in the ammunition segment decreased $7.5 million, or 29.1%, for the quarter, primarily due to higher material and other costs.
Net sales were $7.7 million in All Other businesses for the quarter, an increase of $2.9 million as compared to the prior-year period. Primary changes within the all other businesses consisted of an increase of $3.3 million in the company's various accessories businesses, an increase of $1.0 million in the apparel businesses, offset by a decrease of $1.1 million in the targets business, which Freedom Group ceased operations in and sold in 2009.
