Freedom Group, Inc., the parent company of  the Remington, Bushmaster, DPMS/Panther Arms, Marlin, Mountain Khakis, EOTAC and Dakota Arms brands, among others, reported sluggish results across the board for a second quarter that suffered from insurmountable year-ago numbers.


The Madison, NC-based company, which has been “preparing” for an IPO for almost a year now, made numerous headlines during the trailing 18 months, acquiring Dakota Arms, LLC, S&K Industries. Inc., Advanced Armament Corp., Barnes Bullets, Inc., and most recently Mountain Khakis, LLC.


The company confirmed in a recent filing that it will pay about $6 million for its 75% stake in Mountain Khakis, not including $1.6 million in debt the accompany assumed in the deal. Included in the Q2 results is $3.3 million Freedom Group paid when it closed the deal and an additional $1.0 million in June.


Freedom Group ran the deal through its Remington subsidiary, which now holds its stake in Mountain Khakis through Mountain Khakis, LLC. Charlotte, N.C.-based Mountain Khakis, which makes an expanding line of outdoor lifestyle apparel, retains 25% ownership. Freedom Group values the assets acquired, including $1.1 million in inventory, $2.6 million in accounts receivables and $5.6 million in goodwill, at $9.8 million. 


Consolidated net sales for the second quarter fell 23.8% to $179.2 million from $235.1 million in the year-ago period. Net loss for the quarter was $900,000, versus net income of $31.4 million in Q2 last year.


The primary catalysts for weak year-over-year results were Firearms sales, which plummeted 60.0% to $93.3 million from $149.3 million in the year-ago period. Management said Centerfire rifle sales decreased 44.6% as compared to the prior-year period, primarily due to reduced sales demand for AR-style firearms. Shotgun sales decreased 24.0% as compared to the prior-year period. Rimfire rifle sales decreased 18.2% as compared to the prior-year period. Gross margin for the Firearms segment was 30.1% of sales, compared to 32.0% of sales, in Q2 last year.


Management attributed the decline to lower sales volumes.
Revenues for the Ammunition segment slipped 1.5% to $80.0 million from $81.3 million in the year-ago period. 


Management said the drop in Ammunition segment sales is primarily due to a 28.6% decrease in Shotshell ammunition sales, offset partially by the impact of the acquired Barnes operations as well as a 4.9% increase in Centerfire ammunition sales.  The increase in Centerfire ammo sales is attributable mainly to strong market demand for certain handgun ammunition. Rimfire ammunition sales increased by 3.8% as compared to the prior-year period, primarily due to increased sales demand within these product categories.


EBITDA for Ammunition fell to $18.0 million from $27.2 million.


For the company’s Other Business segment, net sales were $5.9 million, up 4.5% from sales of $3.3 million a year ago. Management said primary changes within Other Businesses consisted of an increase of $2.6 million in its Various Accessories businesses, offset by a decrease of $0.9 million in the powdered metal product business and a decrease of about $300,000 in the targets business, which ceased operations and was sold in 2009.


For the future, management said the company will undertake an effort to “accelerate existing initiatives” in the areas of lean manufacturing, six sigma and other projects focused on inventory management, cost reductions and improved productivity. Also of note, management said the company will continue to seek out and take advantage of opportunities to “strategically grow and improve our business by identifying and pursuing add-on strategic acquisitions or investments…”